You know the drill.  You receive your bills and they pile up on the table unopened with the subconscious hope that they will magically disappear.  You know you are carrying more consumer debt than you can handle and just the sheer thought of opening your bills is enough to set off a streak of procrastination, not to mention feeling like your life is spinning out of control.  Sound familiar?

The good news is….you are not alone. Everyone has been there at one point or another in their life.  The difference is in what you decide to do about it.  In reality you know the bills are not going to go away so the best thing to do is face it head on by rolling up your sleeves and start finding your way out one step at a time.  Once you get started you will find that getting debt free is easier than you think.

Gather All of Your Bills

Open up a blank spreadsheet in a program such as Microsoft Excel or Open Office and create a set of categories that relate to your finances.  The categories should be broken down into columns that reflect your utilities, credit card bills, loans, and other bills that relate to your finances.  Enter in the amount you owe for each, come up with a total amount for each category so you can see the amount for each and then add up the grand total.  If the total is more than what you bring home then a lifestyle change is in order and you must come up with a plan of action.

Create a Plan of Action

The plan of action should involve prioritizing the bills that should be paid first and should include the bills you have that charge a high rate of interest such as credit cards.  Cut up the high interest credit cards, stay consistent with your repayment plan, and take things one step at a time.  If you look at the big picture you will get overwhelmed.  Only keep one card.  You do not need multiple cards that tempt you into spending money you do not have.

If necessary, consider a lower-interest consumer consolidation plan that allows you to place all of your debt into one payment.  This way you can pay down what you owe faster without the high interest rates eating into the principal payment.  With regular base bills such as utilities, use an automatic payment plan to ensure the bills are paid.  This will also help you to gradually restore your credit rating over time.

Eliminate the Things You Do Not Really Need

Next, use another spreadsheet to make a list of all of the assets you have including those that you are regularly spending money on such as computer games, eating out, unnecessary play toys such as ATV vehicles, and any other things that are considered to be extra or unnecessary in most people’s lives.

Decide if you really need all of these extras and determine if there is a way you can find an alternative that does not cost as much money.  For example, if you are always getting the latest PlayStation perhaps you can cut back on this luxury while you pay down your debt.

Most of your items you can sell on sites like eBay and other online auction sites or you can choose to hold a yard sale.  Use the money that you make from selling non-essentials to pay down your debt.

Meet with Your Creditors

Meet with your creditors and do not be afraid to tell them all of the steps you have taken to date.  If you wish, you can bring a credit counselor with you that will help you deal with your creditors such as banks and other financial institutions where you have debt.  The fact that you have taken the time to meet with your creditors personally to provide documentation on what you have accomplished so far will add a lot of credibility to your meeting.  Additionally, if you are working with a credit counselor this will show your sincerity as well.

Stay Out of Debt

Once you are out of debt….stay out. Period.  In the long run you will find that it is well worth the piece of mind and it is a good feeling knowing that once again you are in control.