Debt Warning Signs, and Ways to Dig Out

Tip No. 1. Prioritize your bills. Write down exactly how much you owe and what your monthly bills look like. Prioritize this list so that bills covering your health, food and shelter (mortgage or rent payments) are at the top. No matter what happens, those are the bills that need to get paid first -- getting sick or losing your home will make it even harder to dig out of debt.

Tip No. 2. Stop using credit cards. Cut them up, freeze them in a block of ice or feed them to a wood chipper. Just plain stop relying on credit. Limiting yourself to cash will help control your spending by forcing you to account for the money you spend when you spend it, rather than dealing with it months down the road.

Tip No. 3. Set up a plan to pay down your debt. Call creditors to whom you've made late payments in order to work out lower rates, or get them to waive fees or set up a new payment plan. Most creditors are willing to help, but you have to ask first. When paying down credit card debt, target those with the highest interest rates first before moving to the next highest, and the next. (For more, check out Pay Down Your Consumer Debt.)

Tip No. 4. Get help. Credit counseling services are available to help you review your spending habits and work out an affordable debt repayment plan. But be careful: many organizations charge too much and recommend illegal solutions that leave you worse off than where you are now. To find a reputable debt-counseling agency in your area, search the National Foundation for Credit Counseling Web site under "First Steps." (For more help on choosing a credit counselor, check out Now More Than Ever, Dig Out of Debt).