About two years ago, I went “public”, so-to-speak, about my financial difficulties.  I chose to share my story because I knew there had to be others out there just like me, only maybe too ashamed to say anything.  I also knew that I had survived my struggles through persistent navigation through the nearly impossible procedures of mortgage loan modification, bankruptcy, and credit card nonsense….but that not everyone would be so persistent, or even know where to begin.  I have been fortunate.  I was one of the lucky ones.

While I do not claim to know all there is to know about the hullabaloo and fine print of this financial crisis, I do feel that I have learned a great deal, and my learnings may help someone else get through their struggle.  In fact, I have already had a handful of people ask “how did you do it?” since I went public with my struggles.  Please know that each situation is unique, and ultimately you should consult with a legitimate credit/debt counseling service or attorney.  However, here are some tips for beginning to trim those things that are ultimately causing you to feel like you are drowning:

1.  Sit down and write out all expenses for every month, as well as your income for each month.
Be honest.  “Fluffing” numbers will only cheat you.  Once you have written down income and expenses, compare what you have listed with three months worth of checking account and credit card statements.  If you are like me, you may think that you have trimmed extras and are living on the bare minimum…but in reality, you are still overspending.  When I really looked into my bank statements, I was amazed at the amount I was spending on eating out and having social drinks with friends.  (Once you have your list, hold onto it, as you will need it later when you begin calling to negotiate rates and fees with credit cards, etc.) 

2.  Trim excesses. (And when you think you have, trim again.)
Stop eating out.  Turn off those premium cable channels.  Stop buying clothes just because they are on sale.  Stop going to movies.  And when you’ve done all of that, take a look again at those financial statements to see where else you can trim.  You will be amazed at the amount of money you’ve been flushing down the toilet on things that aren’t important in the grand scheme of things.  I’m talking hundreds of dollars spent on nonsense – there’s your car payment right there.

3.  Stop using credit cards – period.
Now, if you are like me, the thought of that sends chills down your spine and sends you into panic mode.  But you just have to do it – cold turkey.  Stop using them TODAY, or you will never end this vicious cycle.

4.  Call your credit card companies.
Set aside a couple of hours, because this step will be a process all by itself.  Grab that list that we created in #1, call each company one-by-one, and explain that you are experiencing financial hardship due to _____________ (pick your reason: loss of job, underemployment, pay cut, medical bills – whatever it was that was the straw to break your proverbial back).  Most companies will work with you to lower your rate and put you on a fixed (and many times, lower) payment each month.  However, be prepared that, in order to do so, they will end your spending privileges (again, I refer you back up to #3).  In some cases, your privileges are only revoked temporarily while you are on the payment plan, and once you have fulfilled the terms of the payment plan and/or get back on your feet, they will extend those privileges once again.  Other companies will close the account altogether.  In the latter case, ignore those who tell you this will hurt your credit.  In the long run, you will be better off that you are paying down a debt instead of incurring more.  The benefits you will reap from paying it down will far outweigh any temporary bumps to your credit score.

5.  Call your utility companies and anyone else to whom you pay money each month.
Believe it or not, even your phone and cable companies may have a special payment plan that they can put you on for a limited time while you are working through your financial difficulties – especially if you threaten to leave or turn off the service altogether.  Call them, explain your financial hardship, and see how they may be willing to work with you.  
By the time I talked to all of my credit card and utility companies, I had trimmed another $100-$150 off of my expenses – there’s your electric bill.  Add to that the “extras” of eating out, socializing with friends, and impulse shopping, and I found about $500 to put towards things that were much more important, such as house and car payments, gas, and groceries.  The fact that you have downsized your expenses will counterbalance the fact that you are no longer using your credit cards, especially when most of what you were probably using the credit cards on has now been trimmed from your life.

No one said this process would be easy, but I promise the hard work pays off.  You will have to make sacrifices for a little while, but the dedication and diligence will provide you with more breathing room and more control over your finances (and in the grand scheme, more control over your LIFE).  

Once going through this process of trimming, I found that – even though I was making nearly half the salary I had been making before losing my job in the downfall of the economy – I felt like I had more.  For the first time in my life, I was following a true budget – and it made all the difference in the world between drowning and living.  And now, I am WINNING MY LIFE!