You’ve seen it all. You miss a payment, and the same company which a few months back was so eager to provide you with a generous line of credit is now breathing heavily down your neck.  A sardonic smile flashes on the bank manager’s face everytime you visit, and impudent notes start appearing on your statement.  You miss one more payment, and the phone starts ringing.  You start to panic, especially after your account was turned over to collection, and the guy on the phone sounded as if he were going to break every bone in your body.

Keep Your Chin Up

The last thing you’d want to do is to let the rude behavior get the better of you. You’re in financial trouble, you don’t need another problem like loss of self-esteem add to your present one. Besides, you have every intention of paying off the debt, it’s just that you’ve lost your job. This is not even something that you need to hide from your friends and associates. Owning up to your financial problems will signal to all that you have the inner courage to admit you’re in trouble, and, more important, that you’ll very likely get over it.

Take a Long, Hard Look at Your Debts

Before you go any farther, try to see what got you into trouble in the first place. You’ve lost your job, but surely you have something stashed somewhere just for this possibility. Besides, you must have seen it coming – few companies are healthy one day, and tank the following day. And what about your exit? Surely, the company must have provided you with a parachute?

If the cause of all your misery is overspending, rejoice, yours is not a hopeless case. It’s not going to be easy, and you will have to bite the bullet, but if you want to bounce back urgently enough, you can do it. Remember: you have the rest of humanity wishing you’ll succeed.

List Every Creditor and the Amount of Debt

Start listing all your monthly household expenses: food, rent, utilities, insurance premiums, medicines, medical supplies, cable TV, association fees, maintenance fees. Now list all your creditors for the mortgages, auto loans, credit card companies, banks, finance companies, medical bills. Indicate which are secured, and which are not.

If you have listed mortgage payments or auto loans with the household items, move it to the creditors list. Secured creditors are treated differently. Losing collateral is to be avoided at all cost. Otherwise not only will you lose the asset, you’ll also lose everything that you’ve paid so far, and, should the sale of the asset fall short of the loan balance, you’re liable for the difference. A house appreciates quickly . Generally, it’s worth more than you got it for after only two years. The difference is your equity, one reason why you wouldn’t want to lose your house in a foreclosure. Memorize that word—foreclosure , and dread it like you dread the Ebola virus. Nothing will hurt your credit standing more than a foreclosure. Everybody’s afraid of bankruptcy, but there’s a nastier word: foreclosure. Avoid it.

Now, Start Cutting

Now that you have all your expenses listed and totaled, you can start cutting. Yes, cutting. You’re into this mess because you spent more than you earned. In a very real way, to make both ends meet, you have to cut.

Obviously, the mortgage and the auto loan payments are essential. They’re exempted. But take a look at utilities. Do you really need the thermostat where it is now on the heater? Might not putting on a sweater and turning down the thermostat a bit do? Or you might try turning up the thermostat on your air conditioner a bit and save a couple more dollars.

How about your lights? Couldn’t you perhaps replace your incandescent lights with fluorescent lights? They’re now available in the same warm and mellow tones as incandescent, and they last four to six years longer, and use only a quarter of the energy required by incandescent lights. And your water. Couldn’t you take showers instead of a dip in the bath tub?

Take a look at your phone bill. Are you still making long distance calls using your phone? And how about cable TV? Couldn’t you ditch it, maybe read a book instead? You might also be surprised at the savings you can get simply through a more purposeful use of your car. Have you tried meal planning? How about generic brands or store brands of the medicines you use? And how about a quiet time with the family instead of a drink with the boys?

Slaying the debt dragon has its costs, one of which could a change in your present lifestyle. Don’t let it bother you too much though. Who knows, it might be for the better, like spending time with the family is way better than spending time in the casino. Besides it will save you the need to have recourse to bad credit debt consolidations which will show on your credit history, even if it’s so easy, and free online debt consolidation advice abound.