1) Get on the same page with your spouse. Chances are the financial situation has put a lot of strain on your relationship with your spouse. And you both need to come together determined to come out of this a stronger couple. Talk about what goals you both like to achieve throughout this process.
2) Set up a family budget. Your budget should be for paying only this items that your family need to survive. Chances are that you are already behind on your credit cards, so these are not a priority. Your credit has already taken the hit, so what you should focus on is getting the payment caught up for the basic needs. Focus on the mortgage note, utilities, car note, insurance and you also want to budget in grocery money. Your family does not to eat.
3) Any money left over from your monthly budget should be deposited into an emergency savings account. You want to save at least $1000 before moving to step 3. This money is to be used for any emergency that requires you make a one time payment on something that effects your family survive. For example, your car breaks down. You use the car to go to work, so you need it fixed right away. Use this money to pay for the repairs and replace the money in the account the next pay period.
4) Now that you have an emergency fund, use the extra cash flow to pay off your credit cards one at a time. Pay off the card with the lowest balance and move on up each month until each card is paid off. You should cut up the cards right away.
5) Once your credit cards are gone, start paying down your car notes.
6) Once your car notes are gone, start making extra payments to your mortgage notes. Paying off your car and mortgage will save you thousands upon thousands of dollars in the future.
For more information and free financial calculators, please visit Financial Answers.
