4. Prepare a budget"We all need to do what is right for us," says Gail Cunningham, senior director of public relations for the National Foundation for Credit Counseling. "Some people might want to use Quicken or another computer software program and others might want a pad and pencil. It's just a matter of knowing what works for them."
If possible, send a set percentage of your income straight to a savings account and try to configure your budget as though that money doesn't even exist.
Cunningham recommends that people divide their spending plan into separate categories with necessities taking top priority. Necessities would include housing, utilities, medical insurance, food, child care, secured loans, car payments, insurance and co-signed loans. Then comes the unsecured debt, miscellaneous and entertainment expenses -- plus any other applicable categories.
Plug in your income and the amount of money shuttled into each category every month. You may see areas where you can trim some fat. For instance, you could save hundreds of dollars a year by requesting lower interest rates on credit cards or shopping around for car insurance. Unnecessary drains on funds will become apparent and you have the foundation in place to take action.
"A spending plan will let people understand exactly what bills need to be paid first -- or if they need to put a little extra cash toward a bill," says Dave Jones, president of the Association of Independent Consumer Credit Counseling Agencies.