Setting up a budget, sticking to it, and keeping track of everything you spend is the best way to fix and rebuild your credit after it has been damaged. Don't be tempted to file for bankruptcy; you'll ruin your chances for the future. Even getting a loan to pay off all your debts won't help. It will just add more debt to your life. You have to pay interest on the loan, and until it's paid off, you'll be worried about how to get by. The best way to get out of debt is to save money. It's a much better idea to keep track of your spending so you know where your money is going. Then you can cut out expenses that aren't necessary and start saving.
You might want to make a small first investment in software that will help you make a budget and save money. This small cost will save you a lot of money in the long run because it will help you keep track of things better. The first thing you need to do is make a budget. A piece of software will ask you all the questions you need to answer in order to make a budget. By answering the questions, the programme will put all of your income and expenses into the right categories and show you what you have left over. You can also do this on your own by using a form where you list all of your income on one side and all of your expenses on the other. Write down everything you spend money on each week, including how much you put in your savings account or retirement fund, how much you pay in taxes, etc. Write down what you make and how much you have left. If every week you don't have enough money to pay an important bill, you will need to change how you pay your bills. Try to pay as much as you can on each of your necessary bills, like rent or mortgage, electric, water, phone, etc., each week when you pay your bills. Then you have to live on what's left by giving up things that aren't necessary. You might have to stop going to the movies for a while and just rent cheap ones from the library. You might have to eat out less. Next, look at all of your important bills to see where you can cut costs. You can probably save a lot of money if you start to limit the number of phone calls your family makes and make sure to turn off lights and stop wasting water. If you can get all of your bills paid, making these cuts and giving up some things will pay off big time. You won't even remember what movies you missed while you were saving money to pay off all your bills.
Making a budget is another way to deal with this problem. What is the very least you and your family need to get by? Cut every expense down to its bare minimum. For example, eat cheap meals every night, don't pay for entertainment unless it's free, and only use basic water, basic cable TV, and a basic phone. If you stick to this budget for a few months, you'll be surprised by how much extra money you have to pay off your bills and debts. Some things, like health insurance and your rent or mortgage, are important to keep up with so you don't end up without a place to live or with medical bills you can't pay. But you should cut back wherever you can. Any money you save can be used to pay off bills or debt.
Your income is the other part of the equation you need to look at. Can you ask for a raise, look for a better-paying job, or maybe get a second job? Find any way you can (that is, any way that isn't illegal) to make more money and spend less, and your credit will be fixed before you know it.
