How to Overcome Financial Problems

The best way to overcome financial problems is to create a plan for reducing your debt while increasing your income. It's not always possible to significantly increase your income, but even modest gains can be helpful as you try to overcome financial problems. An additional job working part-time could result in enough additional income over time to pay off a credit card bill or an installment loan. The key is creating a reasonable plan and sticking with it.

Instructions

1

Make a complete list of all your debts and expenses. Keep a diary of all your spending for at least a month to understand how you really are spending money. Write down every expenditure no matter how small. Gather copies of all of your contracts, promissory notes, credit card statements and installment loan agreements. Also get copies of mortgage loan or apartment lease agreements and utility bills. Gather pay stubs and statements detailing money available in savings or retirement plans as well.

2

Seek advice from a reputable, nonprofit credit counselor. The U.S. Trustee Program maintains a list of government-certified credit counselors. Check the website for a counselor near you (see Resources).

3

Provide the counselor with a complete review of your finances, including your lists detailing your debts, income, financial assets and monthly spending. Ask the counselor to help you create a budget allowing you to get your finances under control while reducing debt. Entertain various scenarios, including trading down to a less expensive automobile, moving into a cheaper apartment, eliminating vacations and more.

4

Discuss long-range plans for eliminating debt after creating a new budget. Ask the credit counselor about a debt management plan which allows the counseling agency to contact your credit card companies and others to negotiate lower interest rates and a reduction of fees to allow you to pay off the balances sooner. Also ask the counselor about debt settlement, which allows you to pay off unsecured debt for less than the full balance due, and bankruptcy, which can eliminate many debts.

5

Overcome your financial problems by following a budget allowing you to live below your means. Also evaluate advice from the credit counselor on eliminating debt. Seek additional advice on debt reduction, if necessary, from a trusted financial advisor such as an accountant. Seek a free consultation with a bankruptcy attorney if you are considering that option.