Life is a rollercoaster ride, and sometimes we find ourselves tough situations that seem impossible to fix. Whether you have the money, but aren’t spreading it evenly enough across your expenses, or you simply don’t have enough money to meet your needs, it can be very scary. We have all heard the financial horror stories of power shut offs, eviction notices, foreclosures, and those nasty debt collection agencies. There’s no way to avoid the consequences once you’ve descended that far into debt hell, but there are things you can do to make it easier. So we have put together some steps to take to help keep your head above the water.

Figure out where you’re at
The first thing to do is stop and look at your situation. It’s never easy and can be really daunting, but it’s important to figure out where you are to make a plan of how to get out of there. Sometimes all it takes is to sit down and look at your expenses vs income to see your situation isn’t actually as bad as you thought. As overwhelming as it may be though, this is the first step to getting back on track of things.

Stop digging yourself a bigger hole
If you can’t afford to make ends meet now, there is no way you can take on any other expenses. That means the new car you’ve been needing will have to wait, because there’s no way you can afford it until you’re back on top of things. It also means that you should sit down and figure out any expenses you can get rid of until you are out of debt. This could include your cable tv, cancelling your high cost mobile plan for pre-pay, or using public transport instead of filling your car every week. Re-evaluate your lifestyle because there is no point in trying to maintain a lifestyle that’s going to send you homeless. This calls for smarter shopping choices, and unfortunately means buying budget instead of organic!

Prioritise
Start with your basic living necessities. Your house, electricity and water should always be the main priority. You might not have enough money to spread evenly across all of your expenses but keeping a roof over your head should be your first concern. Trust me, it will be a lot harder tackle your debt if you’re out on the street. Next you need to identify any expenses vital to your income preservation. There’s no point in covering specific bills if you can’t afford to drive to work. Maintaining your income should be your next main concern. If you have to drive to work or bus you should figure out how much this costs you per week. Once you have listed your priorities you need to rank them by importance. It should look something like this:

• Mortgage/rent
• Electricity
• Water
• Gas/bus fare
• Groceries
• Any prescriptions

Any other expenses, including debt repayments, should be at the bottom of your list. You need to focus on funding what you need to get by first, and you can sort the others out later.

Discuss your options
Lucky for you, most companies will only discuss payment negotiations when you’ve fallen behind. Make the most of your leverage and give them a call to explain your situation. Of course you should try budgeting your money better so that you can afford to pay, but if there’s no way that’s going to work it’s always best to let them know and find out what options you have. Explain that you know you’re behind but you’d like to get back on track with payments and get your account up to date. Find out what payment arrangements and hardship plans they offer to prevent your account from getting any worse. The collections teams are more concerned about retrieving money than sticking to the terms, and can sometimes even reduce the amount if you can make a lump sum payment.

Make a plan
Now you need to put everything together and make a plan of action to tackle your debt. This is an example of what it should look like:

• Your updated and prioritised expenses list. Include any payment arrangements you’ve made and organise them in order of what will be paid first.
• Reduce your expenses! Eliminate any wants to fund your basic needs
• Increase your income. Do anything you can to get some extra money, if it means taking extra hours at work, walk the neighbourhood dogs, or even look at a part-time job.
• Stay motivated. Rome wasn’t built in a day, but the longer you work at this the easier it will get. Measure your progress and be proud of your hard work. Not only will this get you out of debt now, learning these habits will benefit you in the future even if (fingers crossed) you never end up in debt again.