Sometimes people reach a time in their lives when their financial situation is in chaos and debt has totally overwhelmed them. They don't know which way to turn. If you are one of these people, you are not alone. In this tough economic downturn, almost everyone is feeling the pinch, and a lot are downright scared. Some are in danger of losing every material thing they own, and some have already done so. In this worst case scenario, they have, or are in immanent danger of having, to declare bankruptcy. For some people this is the only way out. They will just have to pick up the pieces and start all over again. But at least they can have a new start. Before going to this extreme length, however, there are some other options open to you.The first thing you need to do is get everything down on paper. You can not do anything until you know where you stand.Then look at your monthly debt commitments. What are the minimum amounts that you have to settle each month.After this, what is your income? It is not possible to get out of debt unless your income exceeds your debt payments.The next step is to write down your monthly living expenses and commitments. It is at this point that you need a thick red pen. You can in no circumstances raise further debt for your monthly living. Affordable education, basic healthy foods, and health care for your children should never be compromised. Everything else is negotiable. The important point is not to be in the position of paying off luxuries or unnecessary items.Now that you have done the painful pruning, set by an amount each month towards emergencies, be it ever so small. Don't get back into the position where you absolutely have to pull out the credit card.Try, if possible, to settle the smallest debts first. As soon as you have done this, add that amount to the payments of the next smallest. As you go along, you repayment rate will escalate, and consequently your interest amounts will go down. When you get to the last and largest debt and all your spare cash is going on that, you will be amazed at how quickly you are rid of it. Don't stop paying and start spending until everything is paid off. If you slow down, you could easily find yourself sliding back into the debt trap again.If these steps seem insufficient to solve your problems, you would probably be well advised to seek out an honest debt counsellor who can give you good, impartial advice and perhaps help you consolidate your debts into one monthly payment that you can afford. They will probably give you assistance in budgeting and help you take control of your financial affairs and negotiate with you the best way out of your dilemma. Remember, they generally have plenty of experience and know the best ways of reducing that terrible drain on your finances, interest.If you have financial problems and need helpful debt advice it is best to act fast. This is because the sooner you act the easier it is for professionals to arrange debt relief for you.
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