How to Survive a Financial Meltdown

It's not easy to put the breaks on the runaway spending that landed you in a financial wasteland. You're mourning your former solvency and are likely to work through anger, grief and denial until you reach acceptance. If the experience has taught you anything it's to making a promise that this won't happen again.

Instructions

1

Assess your current financial situation. List assets like your home, stocks, bonds, furniture and jewelry. Be brutally honest when reviewing these possessions. If you can sell something or several things to get out of debt, seriously consider this route.

2

Talley up your regular expenses and the not-so-regular ones. Write down everything you spent for the past six months. Make list of things you can't live without. Mortgage payment, food, utilities, car payment, kid's tuition and medical coverage are all essentials.

3

Treat your credit card debt as you would a diagnosis of a fatal disease. Commit to doing whatever it takes to survive. Ask VISA, Discover, AmEx and other creditors to charge off your account if you're willing to compromise your credit rating in the name of peace of mind. This action is equivalent to declaring bankruptcy and will remain on your credit report for the next seven years.

4

Learn to live on cash alone. Whether or not you declare bankruptcy or submit to settling credit card debt for pennies on the dollar, cut up your cards. If things aren't that desperate and you think you can dig your way out in a year or so, transfer all of your debt into a one-year, interest-free credit card. Do not do this if you have the slightest hesitation about paying off the balance by the due date.

5

Establish a formal debt-elimination system. Pay the smallest debts first to winnow down your list. Start settling big accounts according to the highest interest charges. Pay the minimum on other accounts and as much as possible on the target account. If at any time you believe you won't ever get out from under, you may wish to consider bankruptcy.

6

Keep your head above water by being innovative. Take a second job. Refinance your home to get a lower rate or see if you qualify for a mortgage modification.