In order to get out of debt and relieve credit problems, you first need to gain an understanding of your financial situation. Take the time to create a balance sheet by listing all of your assets and then all of your debts. Subtract your debts from your assets, and what is left is your net worth. If your net worth is positive, you have something to work with. If it is negative, you have a problem.
Renegotiate Credit Card Rates and Shuffle Balances
Stop using your credit cards. Don't add to the problem. Negotiate the lowest interest rate you can on your accounts. Transfer as much of the balance as you can from higher-rate accounts to the lower-rates. Pay the minimum on the lower-rate accounts and throw everything you can at the higher-rate accounts. In the meantime, cut back on other expenses. Several months of frugal living can go a long way toward changing your spending habits.
Borrow from Yourself
Look to other assets you have, like life insurance policies, 401(k), savings accounts, mutual funds, stocks, bonds, or equity in your house to raise cash and beat down your debt. Sell jewelry, coin or stamp collections, comic books, baseball cards or anything you may have of value on eBay or Craigslist. If your financial crisis continues to escalate, you could face bankruptcy and be forced to liquidate these items of value anyway.
Options
Finding a second job may be one of the smartest things that you can do to reduce your credit balances. Consider borrowing money from people you know as a last resort. It is better not to go this route unless you have a high degree of confidence that you can repay the loan as agreed. Alienating people who trust you is too great a price to pay in the long run.
Stick With Your Plan
Stay with your plan to pay off balances and ratchet up your activity if necessary. You will have to make big changes in your life, some of them permanent. If you have a family, this means everyone has to be on board. Seek credit counseling if you feel you are not making progress. Many credit unions, military family service centers, churches or religious organizations offer low-cost or free credit counseling.
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