Stop adding to your debt. Cut up the credit cards and throw away the checks so you can't bounce one. Do not sign up for any more credit cards or loan offers. Stay away from Loans. Remember - If you can't afford it today, you can't afford it tomorrow (meaning don't expect to pay tomorrow for debts incurred today at the gaming store)
Admit you are in debt and start living like it. Did you know that most millionaires live in modest homes and drive used cars? That's why they are rich. Don't expect to eat out at fine restaurants. You can't afford it, get over it. You will be able to go someday soon but not now. Don't buy Expensive clothes for a while. There is nothing wrong with what you already own. Saving that money for a few months will help get you back on your feet.
Total up your debt. Go ahead and face the music. You need to open all those unopened bills. Make a list of all your debt, big and small.
Pay with cash only. While debit cards are OK to use once you get in control they can still allow you to spend more than you should but at least it's not like a credit card.
Talk to your creditors. Don't ignore them, they won't ignore you. If you keep in contact with them, they will be more willing to work out a plan with you. If the first person you speak with is unwilling, then ask to speak to their supervisor and just keep going until they are willing to work with you. Be honest and pleasant, no one wants to help you if you're nasty.
Make a plan for which debts to pay first. You must pay everyone something every month even if it's only a rupee, but you need to have one debt that you are going to get rid of first. Target the one(s) with the highest interest rate. Also, call them and ask them to reduce your interest rate - many times they will do this, just because you asked! Review your finances thoroughly, crunch the numbers, and see which method would be the most effective for your situation.
Roll over the savings. Once you have one debt paid, apply that money to the next debt you are trying to pay off and just keep going.
Change your way of thinking. Instead of saying that something only cost a rupee think of it as keeping that dollar instead. That rupee will grow interest for you. So that item doesn't really just cost a rupee, it costs you your future!
Learn how to invest ... not just save ... but invest. Think of every rupee your money is not earning as future money just dribbling out of your pocket. Make your money work for you! Yes it takes time. But you can either have rs. 100,000 (and easily more!) when you are 40, or not! Just check out those compound interest tables. You cannot believe how easy it is if you just get started now. If you are young, you have time on your side ... and time is one of the major factors with compound interest. You really won't miss the money, but you know in the back of your mind that you have something good going for yourself.
Save for a rainy day. Try to put away 10% of what you make into savings. If you can't do that then put away whatever you can. Even if it's 50 cents. Make this your first bill that you pay. Because you are the most important thing for you to take care of. Then learn how to make your money work for you. If you want to play in the stock market make sure you can afford to lose the money. Learn as much about the stock market as possible and start small. Don't dump your last 5,000 in to stock that you know nothing about because tomorrow it could be gone.
Don't ever think that you're alone in this. So many people are trying to get back on their feet. Yes it's hard to give up a lot of the things that in the past have made you happy. Doing all the things above, as hard as it is, will help you in the long run.
- Manan Mankad
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