Education directly impacts a person’s earning potential over his or her lifetime, and this affects important factors like quality of life and lifestyle. As a parent, you understandably need to prioritize your child’s education, but there are costs to this. These include everything from a quality preschool program to college tuition, room, and board. Many families struggle under the burden of high debt balances. Paying even the minimum payment amounts on time is challenging or impossible. Something like saving for college or helping an older student pay for college now is seemingly impossible. While you may feel helpless given your financial circumstances, there are effective ways to pay off debt while meeting your goals for your child’s education.
Debt Negotiation and Settlement
Debt settlement is a debt reduction strategy that involves negotiating with your creditors for a reduction in your balance. For example, you might owe $10,000 on a credit card, and your creditor may agree to reduce the outstanding balance to $8,000. Often, the creditor requires the account holder to make a large payment in good faith to secure the lower balance. Also referred to as a consumer proposal, debt settlement can negatively impact your credit score. However, the net benefits of reducing your debt balance in a large lump sum and paying off debt faster could outweigh the impact on your credit rating.
Downsize Your Lifestyle
If you’ve been struggling with high debt balances for a while, you may think that you’ve already reduced your expenses as far as reasonably possible. However, for many people, there is additional room for cuts. This may mean making more dramatic sacrifices by adjusting your lifestyle significantly or relocating. However, the efforts made today can have long-term benefits for the entire family.
Debt Consolidation
With debt consolidation, some or all of your unsecured personal debts are rolled into a single account. For example, you may have thousands of dollars on high-interest credit cards. Transferring these balances to a low-interest, fixed-term personal loan enables you to save a substantial amount of money on interest charges and lower your monthly payments dramatically. In addition, because this is a fixed-term loan, you can pay off the debt in a matter of years rather than decades.
Bankruptcy
In some cases, opportunities like debt consolidation and settlement are not feasible. This may be due to very high account balances, the creditors’ inability to settle the debt, or the inability to qualify for a personal loan. In these situations, some people seek financial relief through bankruptcy. Bankruptcy will impact your credit rating for seven to 10 years, so this strategy should not be taken lightly. However, the relief of filing for bankruptcy can be immediate, and it can allow you to start focusing on your child’s education.
Supporting your child’s education and paying off debts are usually opposing goals, but it doesn’t have to be that way. While your debts are a financial obligation, there are solutions for alleviating financial stress and paying your creditors faster. Consider these options for your current situation today. Research all of your options and ask any questions you have to make the best financial decisions for you and your family.
