If you have $10,000 or more of credit card debt, no money in savings, and student loans or vehicle loans on top of the credit card debt, then you are in financial trouble.
It can be very scary to look at your finances in this way, and it should make it clear to you that you need to make some serious changes in your spending and saving behaviors.
The first thing you need to do is make a list of every single thing that you pay out each month using Microsoft Excel or some other type of spreadsheet software. Make four columns and label them; name of the bill, amount of the bill, whether it is essential (such as Netflix, Cable TV, etc.) or not and label either yes or no, and for your loans make a column to enter the interest rate.
Now you need to go through anything that is non-essential and ask yourself if you really need this service or not, or could you possibly get a reduced rate. You may end up cancelling several services (Netflix, Cable TV, etc.) and possibly reducing several others (like maybe a cheaper cell phone service). In the end, what you decide to cut your monthly spending by can help you get out of debt faster.
The next step is to go back to your essential bills and look at the loans carefully. Your goal is to reduce or eliminate these while adding some money to your savings account. Your primary focus should be on using most of your extra money to pay off any credit cards with interest rate over 10% immediately, beginning with the one with the highest rate. Depending on how much extra money you have you should at least start putting a few dollars into savings for an emergency.
It should only take a few months of commitment to do this and start to see your balances vanish. So, then you will be able to remove a bill from your spreadsheet and dedicate even more to paying off the other debts. Seeing these come off the spreadsheet will help you feel like you are accomplishing your task.
The first phase is basically sitting down and being honest with yourself about the fact that you’re drowning in debt, but you also have to tell yourself that you have the power to pay it off.