Solutions for a Personal Credit Crisis

It can happen any number of ways. You can lose your job. Have an expensive medical emergency. Find yourself with three children in college. Be an adult during a national financial crisis. Whatever causes it, you may find yourself in crisis mode money-wise, and need some quick solutions.

There are a number of ways to get through it, to see light at the other end. But it'll take assertiveness and perseverance, and you will have to make some sacrifices. Here are some suggestions.

• Be proactive, not reactive. Start working on the problem when you see it on the horizon, not when you can't bear to answer the phone or open the mail for fear of a bill collector.

• Assess your situation. And take enough time to do it thoroughly. Record your regular expenses and liabilities. You can do it on paper, in an Excel spreadsheet, or in a personal finance program or Web site. Pick one system and stick with it, so all of your planning will be coordinated.

• Build a budget. Based on that information, create a budget you can live with using paper and pencil or computer software.

• Write down everything you spend. Everything. Then compare this regularly to your budget.

• Calculate the money that will come in every month and everything that's due every month, quarter, and year.

• Identify payments that must be paid in full. This probably includes things like your mortgage or rent, utility bills, and insurance payments.

• Contact creditors and negotiate short-term payment reductions. Of course, you can't do this with everyone, or maybe even the majority of your creditors. But you can, for example,  try to refinance or consolidate student loans, get the interest on your credit cards lowered, and set up budget plans with your energy company.

• Scale back on expenditures where possible. Do you really watch all 800 channels on your cable system? Cut back to basic cable. Go to the library for books and DVDs. Take advantage of resources like Mary Hunt's Debt-Proof Living columns. Use coupons, visit garage sales and Goodwill for clothes and household goods, and avoid high-end groceries and restaurants. You don't have to go into austerity mode, but cutting back $10 here and there will add up.

• Do not increase your debt. You don't have to cut up your credit cards, but put them in a drawer and don't use them unless you have a dire emergency. Concentrate on paying them off.

• Consider a credit card balance transfer. But only do so if you're sure you can pay off the balance in the stated time period.

• Save $1 a day on something and bank it. Apply it to a credit card, put it in savings, or use it to buy something you need and have been avoiding buying.

• Consider adjusting your retirement deductions. This should be way down on your list. 401(k)s and such are too important to skimp on unless you absolutely must.

• Ask your doctor about switching any medications to generics.

• Do not rob Peter to pay Paul. For example, do not use credit cards to buy groceries or pay bills.

• Save on energy. Raise or lower thermostats more than you usually do. Combine car trips where you can. Use the vehicle with the best mileage whenever possible. Have your furnace tuned every year. Use cold water in the washing machine.

• Make gifts instead of buying them. It'll save money and mean more to the recipient.

• Adjust your tax withholding. If you're getting a refund, you're giving the government a loan. Adjust your withholding at work to decrease your estimated payments, and you can use that money now.

• Evaluate your phone service. Do you know what extras you have, and do you need them? Can you get by with just your cell phone and drop your land line? If your contract is nearly up and you don't use the phone much, consider a prepaid cell phone.

Any one of these ideas taken alone wouldn't seem like it would save enough money to make it worthwhile. But do enough of them, and you'll probably be surprised how much you can save. Use that savings to retire debt, and you'll eventually have enough money to spend on things you've been avoiding. But try to stay out of debt and in the money.

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