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Cash Solutions For Single Moms

There's a sense of hopelessness in the letters financial expert Dave Ramsey has received from single moms.

Combine the financial stress with the pressures of being a single parent and it's no wonder single moms are looking for help. Ramsey offers advice on The Early Show.

He says the most common financial mistake that he sees single moms commit is that after a divorce many women hold on to their homes, hoping to maintain a sense of normality for kids whose family has just been torn apart.

Unfortunately, Ramsey says, these women can't honestly afford the mortgage. They pay it, but they wind up spending too much money each month on housing. Financially, many single moms would be better off moving into a smaller home with a smaller mortgage payment.

Here are the questions he received and his advice:

    I am a single parent of one daughter who is 14. I am at my wits end on what to do to get out of debt. I was divorced two years ago and was left with a lot of credit card debt, and not a very high paying job. I do have a better job now, but I feel I cannot pay off the credit cards or make ends meet. I have a monthly income of $2,200 and more bills than I can list at this time. I would appreciate any advice you could give me as to where to start.


Ramsey says Sharon needs to start with a budget. She needs to write down everything that she needs to spend money on each month, from groceries to credit card bills. She then needs to write down how much she has available to spend each month. Sharon should plan to take care of all basic necessities first. She needs to budget for food, the utility bill, etc. After setting aside that money, she will clearly be able to see that she can't afford to pay all her bills/debts.

So how does seeing that she can't pay all of her obligations make her feel better? She should receive a sense of accomplishment knowing that she is providing all basic necessities for her family, Ramsey says. Also, although she won't be paying all of her bills, she will be doing so consciously, she will be choosing what to pay and not pay. In this sense, she is taking control of her debt. Additionally, having everything written down on paper will help Sharon see where she can cut her spending and spark ideas for using her money more wisely. In this way, she will slowly be able to begin putting more towards bills, etc., each month.

Michelle in Wisconsin writes:

    I am a single mom trying to make ends meet. I make just over $23,000 a year, but pay $400 a month in daycare. I have $20,000 in student loans and about $3,000 in other debt. I can barely make my monthly utilities. How do I get somewhere on my other bills?

Ramsey says Michelle needs a support system. The daycare issue is a financial hardship and also can be a scheduling and emotional nightmare. Michelle needs a neighbor or an older friend at church to "adopt" her and help take care of her kids from time to time. If Michelle doesn't live near family, maybe it's time for her to consider moving.

Ramsey has two specific financial suggestions for Michelle. First, he believes she — and all other single moms — needs to find an "accountability partner." One of the hard things about being a single parent is that you feel isolated, like you have to make all big financial decisions by yourself. Single parents need to find someone they trust — a sister, a friend a pastor — to discuss the family finances and to assist in decisions like buying a car or replacing a dishwasher.

"This partner has to be someone who truly loves you," Ramsey says, "because he or she also has to be able to 'bust you' when you make a stupid financial decision. The accountability partner has to be willing to say things like, 'Don't you dare take a shopping spree and put three pairs of shoes on your credit card this month.' "

Ramsey also says that Michelle needs to look for ways to increase her income. A temporary solution is the dreaded part-time job. But Michelle needs to look for a long-term solution, too. He believes she should take advantage of any free time by reading or taking a class because "you get paid for what you know, not what you do."

Michelle needs to formulate a plan for making more money. If she works in a salon, she needs to really learn the business so that one day she can own the salon, for example. She needs to continue to learn and grow so she's prepared to move up the career ladder, he says.

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