I’m a Young Single Mother, Buried in Debt and Student Loans. What Do I Do? – Lea

“Dear Steve,

25 year old single mom, about $12,000 in consumer debt. also with about $60,000 in student loans.

as is the usual story, i started using credit cards while i was in college and spent more than i earned. i had an unplanned pregnancy about a year and a half ago, right after starting a new job. with very little vacation time built up, i ended up using my credit cards to finance my maternity leave and have been using them to help make ends meet since then. i also got behind on some payments, so i have late payment demerits.

my son was in and out of the hospital after his birth, so i have about $1600 in medical bills that have now gone to collections because i was unable to pay the hospital what they were asking for.

i owe about $1200 still on my car, which i’ve actually made every payment for (on time!), and it’s at a “lower” interest rate than my credit cards (those are now in the 25-29% apr range, eeek).

i have no savings account or emergency fund, and live very paycheck to paycheck. i get paid once a month. i do receive child support, but it is irregular and goes pretty much to daycare. here are my basics:

salary: $36,000/month
child support: $965/month

monthly expenses:
rent: $595
cell phone: $106
daycare: $862
car insurance: $55
health insurance: $92
internet: $30
gas: $100
food: $300

credit card: $950 at 25%
credit card: $1500 at 29.99%
credit card: $3000 at 29.99%
credit card: $250 at 27%
credit card: $2300 at 14%
car loan: $1200 at 12.6%
medical bills in collection: $1600
student loans: approx. $60,000

i am feeling so overwhelmed by the debt that i have wracked up… i don’t even know where to start. i would like to be able to make just one (or a few) payments a month, instead of the 15-20 that i’m currently making. i can’t keep track of them all, nor do i feel like i’m making any sort of dent. i do have some unavoidable expenses, so the amount of money i can pay towards the debt is limited.

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i just don’t know what to do. should i do debt consolidation? credit counseling? how do i find a reputable company? are there good resources for young, single moms?

i really, really, really want to get to a good place financially to set a good example for my son. plus, i’d like to be able to buy a home someday and provide for our futures. please help!


Dear Lea,

You have a duty to care for yourself but more importantly to care for your child that depends on you. In order to do that you need to make decisions which create a safer financial environment, even if those decisions are tough to make.

I really don’t see where you have any other logical option other than bankruptcy and here’s why.

  • You situation does not allow you to work a second job. You can look for a job with a higher salary but in this job market that is not a reasonable expectation.
  • Right now you are just making it paycheck-to-paycheck.
  • You have no savings and are unable to save.
  • Things are so tight that one unexpected event is going to be a disaster.

It looks like you need to do three things:

  1. Ask for help form the court to enforce the child support payment so you receive it on a regular basis. Take the father to court if you have to. The payment is not for you, it is so you can properly care for the child.
  2. Find out what government benefits you may be eligible for.
  3. Click here to find a local bankruptcy attorney and go talk to them. Once you discharge the debt you will be better able to make ends meet and SAVE SOME MONEY.

If your student loans are government backed loans then look into the income based repayment program (IBR) to get your payments reduced on the student loans. They won’t be discharged in bankruptcy.

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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