Self-Help Tips and Techniques

Options to do it yourself

Though not recommended if your situation is dire, it is often possible, with a little dedication and grit, to take control of your own serious debt situation. More than anything else handling your own debt requires an attitude adjustment, which is also where a debt counseling service can come in handy. If you're determined to handle your situation on your own, however, here are a few tips to help get you started.

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First - Understand the Full Scope of your Debt

Taking stock of personal debt is something that most people do in terms of minimum monthly payments. This is not realistic and actually quite dangerous. Making minimum payments on a $5,000 credit card balance at just 10% interest will take nearly 10 years to pay off. Paying the minimum is not an acceptable way of "handling" a debt situation. You need to be prepared to attack your debt with aggression in order to get it paid off as soon as possible. That means knowing your total debt amounts and being realistic about what it is going to take to eliminate that debt with your current income.

Second - It's Budget Time!

To far too many Americans the word 'budget' is about as foul a word as excrement, which is terribly unfortunate. If more people would simply take the time to design and manage a monthly budget, the entire American economy would be much better off. A budget is simply a written expression of your monthly expenses versus your monthly income. You can do it simply with a sheet of paper or more complex with a spreadsheet programs such as Microsoft Excel or Lotus Notes.

1. Make a list - Start at the top by putting in your total monthly income from all sources. This is what you have to spend.
2. First take care of the basics - Below your income subtract the cost of your housing expenses, (mortgage or rent), food, electricity payment, and gas for one vehicle... the one you use to get to work.
3. Now pay the rest - Below these put your debts such as the rest of your utilities, your credit card payments, your car payments your cable bill, phone bills, gas for any additional vehicles, etc. Arrange all of this in order of personal importance to you from top to bottom. When you are finished, all of your debts should be listed on this sheet. In addition your other expenses such as eating out, your date nights, clothing, etc. should each get some space on this list - even if the amount is set at zero. Don't worry if you run out of money because you're not done yet.
4. Start slashing now - If you've run out of money before you reached the end of your list you should draw a line at the last bill on your list that you were able to pay before the money disappeared. Start cutting from that line on up. If the cable bill can be reduced, reduce it, if you can drive less and commute more, do that, if you can cancel that 2nd cell phone do that. Keep cutting until it hurts and you just can't take it anymore. Understand that anything left below that line is you saying to that debt: "I just can't afford you anymore, sorry, you have to go." None of your debts such as credit cards should be allowed to fall below that line.
5. Make adjustments as needed - Absolutely no one, and I do mean no one, makes the perfect budget the first time out. Fortunately it is not written in stone, but rather on paper or in a spreadsheet and is easily changeable. At the end of your first month when you look back on your budget and see how much you deviated from it, don't get discouraged. Just make adjustments to it and try again next month and the month after that until you get it right.

Try a Second Job

Something that very few people think of is the option of getting a second job to help pay for their debts. It's not a permanent situation and it's perfectly understandable that you don't like the idea of going to work at one place from 9 to 5 and then going to work delivering pizzas from 6 to 10, but if that's what it takes to bring in an extra hundred bucks a week, that extra $5,000 that year can pay off a credit card or get rid of your car payment much more quickly.

Attack your Smallest Debts First

Paying off your debts with the smallest balances first allows you to set and achieve an easy goal that will encourage you to keep going. Once you've paid off one small debt, take the payment you were making to that and roll it and any extra to the next smallest debt. Keep going in this fashion until all of your debts are gone.