- 1). Start spending less than you earn. Create your budget by writing down your monthly expenses and your income. Find ways to cut back in order to save money and pay off debt owed to creditors. For example, if you spend $200 a month on dining out or entertainment, reduce this to $50 a month and use the difference to pay off debts.
- 2). Keep one credit card for emergencies and destroy the rest. Canceling credit cards will drop your credit score. Instead, hold onto the card with the lowest credit limit and then use scissors to get rid of the rest to curtail your spending. Store your one credit card in a lock box or drawer and only use it for emergencies.
- 3). Speak with credit counselors. Contact debt consolidation/credit counseling agencies to receive help to manage your debt. Professional non-profit agencies will not charge a monthly fee, and they'll work with your creditors to get you a better interest rate and lower payments.
- 4). Lower monthly expenses to create disposable income. If living paycheck-to-paycheck and you don't have extra money to reduce debt owed to your creditors, consider a major move such as downsizing to a cheaper home or trading in your vehicle for a cheaper one. Put the monthly savings towards debt and pay down balances sooner.
- 5). Re-think employment. Pull out the classifieds and check for opportunities that offer a higher salary. Ask your employer for a pay increase, or consider part-time employment in addition to full-time work.
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