According to the Federal Trade Commission, many people go through at least one period in their lives of financial stress and run into problems paying for their debts. Some potential pitfalls of being deeply in debt include paying bills late, having creditors call you and worrying about losing your home or vehicle. It is possible to take control of your finances and get out of debt.
Step 1
Compile all of your bills. According to Forbes.com, the first step in taking control of your finances is knowing exactly what you owe to whom and what it is costing you each month in finances charges and interest. Make a list of the minimum payments, and note when each bill is due to avoid late fees.
Step 2
Stop using your credit cards and accruing other debt. Forbes.com suggests paying cash for everything until you get your credit issues resolved.
Step 3
Call your creditors. The Federal Trade Commission recommends contacting your credit card and other credit-lending companies and explaining that you are having trouble paying your bills. They may be able to suggest an alternative payment schedule.
Step 4
Set a budget, and stick to it. Allocate specific amounts of money to specific bills. Cut unnecessary spending, and use the extra money saved to begin paying off your credit card debts.
Step 5
Use the "snowball method." Once you pay off one debt, financial guru Dave Ramsey suggests applying that monthly payment to the next debt that you'd like to pay off. By paying a larger amount of money each month, the debt will shrink rapidly, enabling you to apply that money to a third bill.
Tips and Warnings
- Consider using a credit counseling service to help you manage your debt. Other options for getting out of credit card debt include debt consolidation plans, debt management and, in some cases, bankruptcy.
- The Federal Trade Commission warns that some debt management services may be unscrupulous, charging high fees or asking you to make payments before your credit companies approve them. Avoid scams by inspecting all contracts and paperwork that they send you before signing anything.
Things You'll Need
- Monthly bills
- Cash
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