Debt Adviser: Can young, single mom conquer debt?

Dear Debt Adviser: I am a 22-year-old single parent who is seriously in debt and needs help.

In March, I did a consolidation loan because I could not afford paying my creditors while I was on maternity leave. I used the credit I had because I was broke. I couldn't provide for my baby, and I couldn't watch my baby suffer. I have stopped paying the consolidation loan now because I cannot afford it. I have other responsibilities as well. I don't know what to do. I have even stopped answering my phone because I am scared. The anxiety has started taking its toll on my health. What can I do? -- Sithandwa

Dear Sithandwa: It's time to stop making excuses and begin taking charge of your life and of your baby's. If being a single parent isn't the road you willingly chose, it is still the road you have to travel. This means you have fewer options, incur more expenses and must do everything you can to avoid setbacks, as it will be especially hard for you to recover. But don't despair. You can do it, and I can help.

It is hard to solve a debt problem with more debt. Your situation is a great example of why consolidating debt sometimes only exacerbates the problem. For debt consolidation to be successful, you must stop charging and begin saving enough to pay off the new loan. In other words, change the behavior or circumstance that led to accumulating the debt in the first place. Since you didn't, you now owe more on top of the debt that was already consolidated.

Ignoring your creditors and not answering your phone will not help. I recommend you contact a nonprofit credit-counseling agency. You can find a reputable agency through the Association of Independent Consumer Credit Counseling Agencies or the National Foundation for Credit Counseling. Your certified credit counselor will review your income and expenses and help you build a workable spending plan. This will tell you how much income you will need to live, build an emergency fund and repay your debt.

Then you have to find the income. It may be that your current job will be enough if you trim expenses. However, you may need a second job or a new one that pays more. It won't be easy, but you have no choice if you want to do right by your child.

At 22, you shouldn't consider bankruptcy unless you consider yourself hopeless and helpless. A bankruptcy will stay on your credit report for 10 years (until you are 32 and your child is 10). It will make renting a decent apartment more difficult and buying a car or insurance more expensive. That's something you don't need.

Once you have a spending plan, the best way to avoid unwanted debt is to save as much of your income as possible while keeping your expenses below your income. That may mean making some drastic changes. For example, you may need to share your housing expenses with a roommate or family member. Any sacrifices you make now will be well worth it once you have your finances back in order and are no longer scared to answer your phone because of problem debt.

(Steve Bucci is a personal finance coach and author of "Credit Repair Kit for Dummies." Email him at debtadviser(at)bankrate.com. See more columns at bankrate.com.)

THE DEBT ADVISER
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