Advertiser Disclosure

Pay Down My Debt, Strategies to Save

Finally, The Actual Amount You Should Save For a Baby

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Cat_pregnant_lg

When my husband and I decided to start a family, I approached the process like I do everything in my life, with careful planning and research. If I was going to bring a child into this world, I wanted to be prepared. I wanted to have a savings account in place, and I wanted to make sure not to go back into credit card debt after successfully pulling myself out of it.

The problem was that every time I asked someone how much money I should save for a baby, everyone had a different answer. Not only did they have different answers, their answers were on opposite ends of the spectrum.

The personal finance community had post after post about how children don’t need to cost that much money. To many of them, the idea of spending $245,000 raising one was preposterous. My mom told me you could never have enough money so don’t worry about an actual number. Many of my friends just seemed to wing it or put their expenses on a credit card to worry about later.

So, since no one seemed to be able to give me a number, I set out to find the number on my own.

Health Insurance

This was the most important cost that I considered, and it’s one I urge all potential new parents to carefully research. Adding our children to our health insurance plan cost an additional $2,000 per year, and the out of pocket max for our health insurance was $4,000.

I ended up being pregnant with multiples, which required far more exams, ultrasounds, and tests than the average single pregnancy. Not only did we hit our out of pocket max of $4,000 in addition to the $2,000 to add them to our policy, but we had countless other extra expenses related to their health in terms of prescriptions, gripe water, baby Tylenol and other various products that parents purchase to try to make their baby stop crying or feel better in general.

If parents want to prepare fully in this department, I would recommend having your health insurance deductible and out of pocket max ready to use in a savings account. If that is not possible try to save as much as you comfortably can.

In general, based on my own experience and that of friends and family, having $5,000 saved to prepare you for any and all possible medical issues as well as to pay to add your child to your health insurance policy would be a good start and would make you feel safe and prepared. Feel free to adjust this number up or down depending on your own situation.

The Nursery, Clothing, and Other Gear

Someone will likely throw you a baby shower for your first baby. At this baby shower, you will likely get most of the clothing, car seats, high chairs, and nursery items that you need. We went to IKEA and purchased about $400 worth of items, like bookshelves and picture frames to decorate the nursery. Some people can spend $1,000 on a designer crib, but we were cost conscious. I found my changing table for free on Craigslist, and our cribs were from Wal-Mart. I purchased most of their clothes second hand or at outlets for about $100, and they went through them faster than you can imagine.

Obviously you can spend as much or as little as you like here, but brand new babies really do not need that much. Most people don’t even put their babies in a crib until a few months in (even though we put ours in their cribs from day one.) Instead, they buy a bassinet and place it next to their beds. If you can let go of the idea of having the perfect designer nursery, you can really save.

Again, this is one category that is very flexible, but having $500 to take care of items in their nursery, clothes for their first few months, and items you did not get at your showers should be adequate if you save, get creative and accept hand-me-downs.

Diaper Gear

We opted to use cloth diapers, which will save us $2,000 with our twins. However, that’s a personal choice and again, most people will use disposable diapers. Sure, you’re going to get lots of diapers as gifts, and maybe your family members will buy them for you. However, if you want to save money for this just in case, you should also include the cost for wipes and various medicines and diaper creams to fight diaper rash if your baby gets it. Lots of people use coupons and score awesome deals to get diapers on sale so if you use some coupons and then factor in last minute exhausted runs to the store to buy them full price, $30 a month or $360 for the year is a good estimate for one baby.

Feeding Your Baby

Many people like to say that breastfeeding is free, but there are costs associated with it. I used Target gift cards I got from my shower to buy maternity tanks, maternity bras, creams, etc. to help make the process easier. I also bought a pump and storage containers for breast milk. Some people choose not to pump at all but I had to since my twins were in the NICU for two weeks unable to breastfeed. Again, you won’t know about these potential issues until they happen, so it’s important to save for them.

If your baby has trouble breastfeeding or you need to supplement or just want to feed them formula from the start, that’s a cost to factor in too. Some babies end up having health issues or milk allergies that require specialty and very expensive formula. Some health insurance plans cover this and some don’t. Again, you won’t know what your baby is going to do or how they will respond to milk or formula until you try it. I advise saving $1,000 for costs associated with the early days of feeing your baby, which would give you a great head start if you decide to formula feed and would be a cushion if you decide to breastfeed.

Child Care/Household Help

This is one category most people consider when they want to have a baby. Do an estimate of childcare in your part of the country and put it into a baby cost calculator to get the best idea of how much it will affect your budget. Consider that during the first few weeks, you’re going to be a walking zombie so it would be nice to have someone to take care of your dog, clean your house, or play with your older kids if you have them. This is going to vary for everyone but I would advise stay at home moms to still have someone in mind to come watch their baby if they need a break, even if it’s for two hours in the afternoon. Some people have family who will help them for free, and some people live across the country from their families like I do. Again, $1,000 in childcare savings to start would cover the first month or two of full time day care or a few months of part time care to help give you a cushion and ease your transition into parenthood.

The Grand Total

If you add up all of these categories, you get a good, safe number to save for a baby. Keep in mind this will not cover all of your expenses for the first year. This is just to help you get what you need and some of what you want before they arrive. This is also to help you with some of your childcare and medical bills so that the numbers aren’t so shocking when you encounter them.

Sure, you could always save more to feel comfortable and you could always save less and get by. However, just saving something especially if it’s the amount below will allow you to feel safe and ready to bring a child into this world. It will also help get you through the first few months, which are truly the toughest.

  • Healthcare: $5,000
  • The Nursery and Baby Gear: $500
  • Diaper Gear: $360
  • Feeding Your Baby: $1,000
  • Childcare and Other Help: $1,000

Grand Total = $7,860

We personally saved $10,000 for our twins, and I can tell you we used every single penny of it and more thus far in the first nine months of their lives. We’ve been as frugal as possible and we’ve saved ahead of time for the big items, but we definitely believe that children are expensive and that everyone should save money to be prepared to take care of them.

Don’t forget to follow us on Twitter @Magnify_Money and on Facebook.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Cat Alford
Cat Alford |

Cat Alford is a writer at MagnifyMoney. You can email Catherine at cat@magnifymoney.com

TAGS: , , ,

Get A Pre-Approved Personal Loan

$

Won’t impact your credit score

Advertiser Disclosure

Balance Transfer, Pay Down My Debt

The Fastest Way to Pay Off $10,000 in Credit Card Debt

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Disclosure : By clicking “See Offers” you’ll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.

Before you read on, click here to download our FREE guide to become debt free forever!

Screen Shot 2015-02-03 at 1.30.44 PM

Updated – January 10, 2019

Digging out of credit card debt can feel frustrating, intimidating and ultimately impossible. Fortunately, it doesn’t have to be any of those things if you learn how to take control.

Paying down debt is not only about finding the right financial tools, but also the right psychological ones. You need to understand why you racked up credit card debt in the first place. Perhaps it was a medical emergency or a home repair that needed to be taken care of immediately. Maybe you’d already drained your emergency fund on one piece of bad luck when misfortune struck again. Or maybe you’re struggling with a compulsive shopping problem, so paying down debt will likely result in you accumulating more until the addiction is addressed.

You also need to understand what motivates you to succeed. Do you want to pay down your credit card debt in the absolute fastest amount of time possible that will save more money or do you want to take some little wins along the way to keep yourself motivated?

Here’s a couple strategies consider as you learn the best way to handle credit card debt — and pay it off quickly.

2 common credit card debt repayment strategies

These repayment strategies can help you pay off credit card debt quickly. Keep in mind, you can use these strategies even for non-credit-card debt:

  • Debt avalanche: Focus on paying off the credit card with the highest interest rate first. Then, work your way down. This strategy can save you money on interest and get you out of debt sooner.
  • Debt snowball: Pay off your smallest debts first. Doing so can motivate you to continue making payments as you climb out of debt.

You don’t necessarily need to pick the repayment strategy that gets you out of debt the fastest. After all, if your repayment strategy doesn’t keep you motivated, you may not stick to it.

Using a personal loan or balance transfer credit card

As you seek to repay your debt, you could consider a personal loan or balance transfer credit card with a lower interest rate than on your existing debt. Transferring your debt to one of these financial products could help you reduce long-term interest costs.

But you’ll first need to learn whether or not you’re eligible. Your credit score will play a big role in determining your eligibility for a personal loan or balance transfer card. Use our widget below to figure out if a personal loan or a balance transfer is the best option for you!

What’s the best option for me?

Please enter information below and we’ll provide the best option to consolidate your credit card debt!

If you have a credit score above 640, you have a good chance of qualifying for a personal loan at a much lower interest rate than your credit card debt. With new internet-only personal loan companies, you can shop for loans without hurting your score. In just a few minutes, with a simple online form, you can get matched with multiple lenders. People with excellent credit can see APRs below 10%. But even if your credit isn’t perfect, you might be able to find a good loan to fit your needs.

Not sure what your credit score is? Click here to learn how and where to find out. If you know your credit score needs some work but not sure of what can be done, click here.

If you have a score above 700, you could also qualify for 0% balance transfer offers. We will talk more about balance transfers below but this option is the best way to pay off credit card debt if you’re able to qualify for a 0% APR balance transfer credit card.

A credit score of less than 600 will make it difficult for you to qualify for either option. If you have a credit score less than 640, struggling to make monthly debt payments and would like to explore your options to reduce your debt by up to 50%, then please click our option below to customize a personal debt relief plan.

Custom Debt Relief Plan

Now let’s talk about the financial tools to add to your debt repayment strategy in order to dig out of the hole.

Let’s say you have $10,000 in credit card debt, and are stuck paying 18% interest on it.

You already know that putting as much spare cash as you can toward paying down your debt is the most important thing to do. But once you’ve done that, so what’s next?

Use your good credit to make banks compete and cut your rates

You could save $1,800 a year in interest and lower your monthly payments based on several of the rates available today. That means you could pay it off almost 20% faster.

Here’s how it works.

Option One: Use a Balance Transfer (or Multiple Balance Transfers)


If you trust yourself to open a new credit card but not spend on it, consider a balance transfer. You may be able to cut your rate with a long 0% intro APR. You need to have a good credit score, and you might not get approved for the full amount that you want to transfer.

Your own bank might not give you a lower rate (or only drop it by a few percent), but there are lots of competing banks that may want to steal the business and give you a better rate.

Discover it® Balance Transfer

APPLY NOW Secured

on Discover Bank’s secure website

Rates & Fees

Read Full Review

Discover it® Balance Transfer

Annual fee
$0
Intro Purchase APR
0% for 6 Months
Intro BT APR
0% for 18 Months
Balance Transfer Fee
3%
Regular APR
14.24% - 25.24% Variable
Rewards Rate
5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate, 1% unlimited cash back on all other purchases - automatically.
Credit required
good-credit
Excellent/Good Credit

MagnifyMoney regularly surveys the market to find the best balance transfer credit cards. If you would like to see what other options exist, beyond Chase and Discover, you can start there.

promo-balancetransfer-halfIt also has tips to make sure you do a balance transfer safely. If you follow them you’ll save thousands on your debt by remaining disciplined.

You might be scared of a balance transfer, but there is no faster way to cut your interest payments than taking advantage of the best 0% or low interest deals banks are offering.

Thanks to recent laws, balance transfers aren’t as sneaky as they used to be, and friendlier for helping you cut your debt.

Sometimes the first bank you deal with won’t give you a big enough credit line to handle all your credit card debt. Maybe you’ll get a $5,000 credit line for a 0% deal, but have $10,000 in debt. That’s okay. In that case, apply for the next best balance transfer deal you see. MagnifyMoney’s list of deals makes it easy to sort them.

Banks are okay with you shopping around for more than one deal.

Option Two: Personal Loan

If you never want to see another credit card again, you should consider a personal loan. You can get prequalified at multiple lenders without hurting your credit score, and find the best deal to pay off your debt faster.

Personal loan interest rates are often about 10-20%, but can sometimes be as low as 5-6% if you have very good credit.

Moving from 18% interest on a credit card to 10% on a personal loan is a good deal for you. You’ll also get one set monthly payment, and pay off the whole thing in 3 to 5 years.

Sometimes this may mean a higher monthly payment than you’re used to, but you’re better off putting your cash toward a higher payment with a lower rate.

And you’ll get out of debt months or years faster by leaving more money to pay down the debt itself. If you want to shop for a personal loan, we recommend starting at LendingTree. With a single online form, dozens of lenders will compete for your business. Only a soft credit pull is completed, so your credit score will not be harmed. People with excellent scores can see low APRs (sometimes below 6%). And people with less than perfect scores still have a good chance of finding a lender to approve them.

LendingTree

SEE OFFERS Secured

on LendingTree’s secure website

LendingTree is our parent company

If you don’t want to shop at LendingTree, you can see our list of the best personal loans here.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brian Karimzad
Brian Karimzad |

Brian Karimzad is a writer at MagnifyMoney. You can email Brian at brian@magnifymoney.com

TAGS: , ,

Advertiser Disclosure

Pay Down My Debt

How to Manage Debt as a Single Parent in 2019

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

managing-debt-as-single-parent
iStock

When student loan deferment ended for Samantha Gregory, a single mom and founder of site Rich Single Momma, she had one reaction to her payments: sticker shock. “The amount they were asking for was so astronomical, it was bananas,” she said.

As a single mom in debt, these high payments were added to the already steep financial demands of covering household expenses and supporting her children, including one with special needs — all on one income.

Adding debt to the significant challenges of single parenting “puts a strain on not just your finances, but your emotions, your mental health,” she said. “It’s like, ‘I have this burden over my head so how am I going to take care of it and take care of my family?’”

It’s a question any single parent in debt may find themselves asking. There’s no one right answer, but the good news is that there are smart steps a single mom or dad can use to tackle debt. Here are some tested and certified strategies for how to manage debt as a single parent.

8 strategies for a single parent in debt

1. Keep debt on your radar

A key to managing money as a single parent in debt is to keep an eye on what you owe. Gregory warned against letting debt slip in your money management juggling act. “I know for me in the past, I’ve tried to ignore it and hope it would go away,” she said. “But it doesn’t go away. It’s still there, lingering.”

Keep your debts on your radar, so you’re not losing track of them, falling behind on payments or damaging your credit. If you don’t know what you owe, pull your free credit report and look up each outstanding debt you have and record the balance, interest rate, monthly payment and due date. Start a habit of reviewing these accounts regularly.

2. Work with your lender

Once you know what you owe, see if your lender offers any help or accommodations that can make this debt easier to manage.

You’ll have the most options for dealing with federal student loans, as servicers must provide you with options to forbear or defer payments, or switch to a different repayment plan.

Even for other types of debt, it can’t hurt to ask your lender if they’re willing to work with you. They might be open to giving you an extension on your payment, and some lenders will let you skip a payment now and tack it onto the end of your repayment period instead.

3. Claim benefits and support

Help isn’t always easy to come by as a single parent, so make sure you’re claiming the benefits and child support to which you’re entitled.

Federal assistance programs such as Women, Infants and Children (WIC), Supplemental Nutrition Assistance Program (SNAP) and school lunch programs can ease pressure on your budget while keeping everyone fed, for example. Other programs can assist with fixed monthly costs such as housing, child care or health insurance. Many state and local programs can offer additional help.

Single parents should also consider filing for child support. If you’re already entitled to such payments but the other parent isn’t paying, or you feel it’s not enough, consider pursuing legal steps to get adequate support for your family.

4. Revisit your budget

As a single parent with debt, living within your means is the foundation of your financial security. Review your budget to see if there are areas you’re wasting money on things you don’t need or use, whether it’s a neglected gym membership or a house you’re realizing is roomier than necessary. Consider lifestyle changes and sacrifices — big or small — that you could make to lower your monthly costs.

Look for ways to free up some of the mental space you’re using for your money, too, Gregory suggested. She likes to automate payments, for example, to ensure they’re going out on time with less effort on her part.

5. Sell your extra time and stuff

To the single mom in debt, Gregory suggested looking for ways to generate some extra cash. “I’m a firm believer in side hustles,” she said. “There are so many options out there available to create a side hustle, start a business or just get another part-time job or work-from-home job.”

Then, “look around your house and if you have something valuable you can sell, sell it,” she said. Doing so can bring a fast cash infusion that can help you stay current on debt payments, or even make an extra payment.

It can be a tough and even emotional to sell some belongings, Gregory acknowledged. But, “It’s just things and they’re replaceable, whereas your peace of mind, your family and kids, and your health are not replaceable,” she said.

6. Make extra debt payments

If you can carve out extra savings, that’s money you can use to pay off your debts faster. One method to do so is the debt snowball:

  • Figure out how much more of your monthly income you can afford to devote to making extra debt payments. Include this as a line item in your budget.
  • Put that extra cash toward your debt with the lowest balance, and make the minimum payment on all of your other debts.
  • Watch the balance on your high-priority debt decrease faster.
  • Once your first debt is gone, “roll over” the funds budgeted for your monthly payment and the extra payment and apply them to the next low-balance debt.

Making extra debt payments will lower your principal faster which will, in turn, lower your interest costs. As a result, this strategy could avoid hundreds of dollars in interest and shave months or even years off your debt repayment.

7. Consider debt consolidation

For a single parent, debt consolidation can be another way to get ahead. Consolidating debt makes the most sense when doing so will lower the interest rates you’re paying.

A credit card balance transfer is one way to accomplish this. You can open a credit card with a 0% introductory rate. Then, transfer existing balances to this new credit card (note that this will often incur a balance transfer fee) and you can repay this debt interest-free.

If you have higher debt balances or prefer a fixed repayment plan, a personal loan could be the way to consolidate debt. To do so, you can take out a new personal loan with the rates, term or payments you would prefer and use the loan funds to pay off and replace existing debts. You can compare various lenders with our debt consolidation comparison page to get an idea of the terms and rates for which you could qualify.

8. Tap your community for support

Managing debt as a single parent can be hard on you because, at the end of the day, paying them comes down to you alone. “In the back of your mind, you’re thinking ‘There’s no one who can help me with this,’” Gregory said.

However, you don’t have to go it alone — there are often people who are ready and willing to help as close as your own backyard. So let them! Family and friends can help you out in a variety of ways, from spotting you cash in a tight month to helping with child care. You can also get assistance from your church, community and local nonprofits or programs.

Even if you don’t always find the help you need right away, asking around can start you on the track to getting the recommendation or referral that leads you there. Gregory also suggested online communities, such as local or single-parent Facebook groups, as a way to crowdsource solutions and get connected with helpful resources.

Pass your debt and money lessons on to your kids

Debt can be a big regret for many single parents. “If I had more information when I was going to college, I wouldn’t have taken out so many loans,” Gregory said.

But these ideas for how to manage debt as a single parent can help you push past regret into action. In doing so, you’ll be creating the financial security that your kids need, all while modeling what good money and debt management look like in action.

Gregory, for example, used her experience with student debt to warn her daughter away from borrowing to pay for college. As a result, “She’s really blessed that she doesn’t have to take out student loans, so she won’t be saddled with that big debt when she graduates from college,” she said.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Elyssa Kirkham
Elyssa Kirkham |

Elyssa Kirkham is a writer at MagnifyMoney. You can email Elyssa here

TAGS:

Get A Pre-Approved Personal Loan

$

Won’t impact your credit score