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Raising kids and starting a family is one of life’s greatest responsibilities. However, many adults carry their student loans, mortgage, car loans, and credit card debt well into their 30s, 40s, and even 50s. It becomes challenging to raise kids and support your family when struggling to pay off debt.
Raising kids is an expensive affair because of the extra expenses involved, from medical fees, diaper costs, babysitting, and childcare expenses. However, having debt should not stop you from having kids, especially if you and your spouse are prepared to walk the parenting journey. Here’s how you can juggle between parenthood and debt management to give your kids the best start to life and still achieve financial freedom.
● Start a Budget
The best way to prepare for a new baby is to have a well-thought-out monthly budget. A budget will give you insights into how much you can afford to spend in each expenditure category. Without this crucial financial tool, you are likely to overspend and prolong your journey to financial freedom.
When creating a monthly budget, gather all your financial statements for the past three months. Group your expenses into housing, utilities, healthcare, groceries, transport, entertainment, and clothing. Once you have a clear outline of personal expenses, include a babycare category to cover items such as nursing supplies, baby food, clothing, and daycare.
Find out the average cost of daycare and baby suppliers by consulting parents in your locality. Finally, sum up the total expenses and compare them to your monthly income. If your income falls short of your monthly expenditure, look for a way to bridge this deficit, such as canceling unnecessary memberships and subscription services. Remember to update your budget whenever there are changes in your spending habit.
● Consult a Debt-Relief Specialist
It can be challenging to take control of your debt situation if you lack the proper knowledge and tools. Sometimes, the arrival of a new baby can complicate an already difficult financial situation for your family. In such situations, you are better off consulting a debt relief specialist to help you find the best solution to your financial situation.
Debt relief specialists are well-placed to help struggling parents by suggesting a combination of repayment strategies that include debt consolidation, restructuring, and consumer proposals. As its name suggests, debt consolidation is a method to pay off multiple debts by taking one huge secured loan. The new loan terms will likely be more favorable and flexible, unlike when you have numerous debt commitments. Looking into debt consolidation Burnaby is an excellent strategy and route to take if you still have a good credit score and need more time to pay off your liabilities.
A consumer proposal is another debt relief option where a credit specialist negotiates with lenders on your behalf to find a suitable debt settlement program. These proposals can offer you adequate legal protection and eliminate the need to file for bankruptcy.
● Use the Snowball Method to Clear Debt
Debt snowballing is a debt management technique that entails settling small debts before moving on to the more considerable debt. To use the snowball method effectively, you first need to consolidate all your debt and group it into short-term and long-term debt. Most people tend to owe more money in student loans, car loans, and mortgages than they do in credit card debt.
Once you have set aside funds for your future child’s daycare, you can commit to paying off your credit card debt and other small loan commitments. Credit card debt carries high interest that can quickly mount if left unchecked. As soon as you clear your short-term debt, commit the extra money to settle larger debt such as student loans and mortgage debt. Student loans can be challenging to tackle, but with a good payment strategy, it’s possible to service this debt without postponing your parenting goals.
Other tips
Parents, especially those with school-going kids, know the importance of having an emergency fund. This fund acts as a contingency savings account that caters to unforeseen events such as rising tuition fees or job loss. Having kids will likely push up your fixed monthly expenses, thus making it essential to maintain an emergency fund. Visit the site below for more tips on effectively managing debts while raising kids.
