1. Take any opportunity to generate cash.  Best if part-time or “on-demand” so that a main business can be developed or employment maintained.  Ideas include:

• household services—lawn mowing, pet sitting, pet walking, newspaper   delivery, house-sitting, babysitting
• substitute teaching & tutoring
• retail (evening)
• sell stuff on ebay

2. Build your local business or search for a job by obtaining and calling a set number/goal of potential clients or employers per day. 10 can be called within 2 hours. Follow up with email, then another phone call. Use a prepared script—one if you reach them, one if you reach voice mail, one for follow up. Always ask if they know anyone else who might use your services.

3. Develop a side business.  Make a goal of how much you want to earn in a month then focus your efforts on finding a way to do so. $500-$1000 is doable even with a regular job. Good websites: www.iwillteachyoutoberich.com, www.theabundantartist.com, www.ducttapemarketing.com For sales of craft products: www.etsy.com

4. Cut living expenses. The biggest expense that most people can cut is their rent or mortgage. Get a roommate, rent out a garage (check with your insurance first), and get a house-sitting gig for a while (perhaps realtors would know of a place that can be house-sat). Rent or buy a cheaper place.

5. See whether credit card balances can be transferred to “no interest for first x days” deals. Then DO NOT use that new card AT ALL. Be sure you understand all the terms before you do this. Alternatively, see if you can negotiate a lower interest rate on current cards.

6. I recommend the Dave Ramsay “debt snowball” method. Here it is:

• Put some portion of the “new” money in emergency savings. If you put everything toward debt repayment, you will never get out of debt because every time there’s an emergency, you’ll charge it again. Try to build to an emergency fund of at least 6 months of bare bones living expenses. Don’t start paying any extra on debt until you have $1,000 in emergency cash.
• Take most of whatever money you generate by #1-4 above and put it toward the SMALLEST debt
• Pay the minimum balances on all the others
• As soon as you pay off the smallest debt, take the money you were paying and add it to your minimum payment on the next smallest debt.

7. Apply for any state or federal benefit you might qualify for—food stamps, Veterans Disability programs, Social Security disability (hard to get) immediately. Your doctor should be able to help you with this. These programs are designed to help the needy, and if you are needy, they’re for you.

8. Don’t touch your retirement funds. These are essentially immune to creditors, even in bankruptcy, except for debts to the IRS. If you have no other assets, you are essentially “judgment proof” and most creditors will not be able to collect against you, although liens can be placed on bank accounts, wages, cars and homes. People are often tempted to clean out retirement funds to pay off debts and relieve the stress. Then what? Unless you are on the verge of being homeless, don’t do it.

9.  Consider whether you should investigate bankruptcy. One indicator: figure out whether you can meet living expenses + pay off the debt within 5 years. If not, at least talk to a reputable bankruptcy attorney. Bankruptcy exists to give people a fresh start. If you have already thought through a plan to change your financial situation (better job, side job, change in spending), then you deserve a fresh start.

10. Seek professional help, but be very aware of how your advisors are being paid. Make sure any non-profit credit services are reputable. A fee-only planner can take a comprehensive look at your situation. A bankruptcy attorney who is also a CPA or can work with a CPA might be very helpful.

When you’re in such a stressful situation, it’s very difficult to think strategically and not be depressed. Nevertheless, the best way to start over is to focus on a problem solving (rather than self-blaming) approach. This situation is an opportunity for some real life transformation.

These ideas will not work for everyone in every situation and should be regarded as ideas only, not specific advice. It is very important to get advice that is specific to you and your situation.