When Dumpty Humpty fell off the wall the creditors started calling and sending threatening letters all about what they were going to do to you and your credit. With speed dialers and predictive dialing systems there is no escape from this onslaught of harassment. Only a positive and proactive plan can meet and beat this bombardment from the creditors. The pieces after the fall can be put together again and it won’t take all the king’s men, you can do it yourself. I’m assuming there is some cash flow and some continuing employment for what follows.

Like other challenges, whether it is medical, academic, work or whatever the case, a proper assessment of where you are at is the first step and by recognizing there is a problem is in the forefront and foremost to a solution. An inventory has to be taken of income, living expenses, luxury items, and monthly debt that must be met. If it is a married couple, both have to participate in this process from start to finish to have a chance at any success. A foreign term to many households is the word “budget”. After the eye rolling and plowing through the denials of any existence of a problem a decision needs to be made to address the challenge of being upside down on consumer debt. The alternatives are not pleasant. This single issue of consumer debt has plunged many a marriage into the divorce courts further complicating an already challenging situation. If an individual or a couple can come to grips with saying yes to working out a plan that is a winning point in the first skirmish of this battle.

All the credit debt has to be laid out on say the kitchen table from: the home mortgage payment obligations, all credit cards with balances, utility bills, cable bills, cell phone bills, water and sewer bills, garbage bills, club memberships, spas, book clubs, day care requirements, lawn service, health insurance, life insurance, disability insurance, maintenance contracts, gasoline cards, auto repair bills, auto insurance, school supplies and expenses, internet service, magazine subscriptions, team sports and leagues, recreational activities, vacation plans, 401(k) and IRA status or other retirement accounts, religious donations and pledges, charitable contributions, your current with holding exemptions for income tax and any other type of expenditure that is made on a monthly or yearly basis. From this step you can start prioritizing each expenditure by establishing separate piles and stacks of bills from the most important to the least important. In most cases the mortgage payment obligation will be in the highest priority pile then home utilities. Everything else would be secondary, otherwise, you may be moving soon. The credit cards would be stacked in a pile and by priority other stacks may be separated as well. All this information needs to be listed on a sheet with due dates with balances and required payments. The customer service numbers need to be listed along each item together with the account numbers. It is here that brutal honesty must prevail on what absolutely must be paid. If there are children involved and can be included in the discussion then all the cards must be laid on the table. They will figure it out by themselves soon enough. It will be an important life lesson for the future when they have the opportunity to start making their own way and have credit choices to make. The vision of the pile of bills stacked on kitchen table will be a strong example if credit privileges are abused. Likewise, when this situation is turned around the children can feel a real sense of accomplishment, as they were part of the process to a winning resolution.

There are many books at the local bookstore, which contain budget forms to guide you through this daunting process of putting the financial pieces back together for you and your family. When this information is quantified so that you can see the big picture then a strategy can be laid out to turn this predicament around. If necessary, depending on the severity of the shortfall, each credit card company can be contacted immediately and work out a repayment plan at a reduced monthly payment. Other items in the stack need to be dealt with similarly to get an accommodation for repayment. Cards need to be cut up and perhaps settling on using a debit card only. Ways to increase income including a part time job need to be considered right away. If you have been getting an income tax refund every year, adjust your W-4 for exemptions immediately and get more cash flow now. Once you decide to dig out and turn this around, there are really only three options. (1) Make more money. (2) Reduce expenditures. (3) Do Both. This situation can be turned around in a few years. A budget with a planned savings program has to be primary then start paying off the mortgage early and save even more cash. You can win this game.