Time to get out of debt

When money was easy and housing was booming, piling on debt seemed to pose little risk. Now it is time to dig yourself out.

Not so long ago, living a little beyond your means was not necessary. Just live well, knowing you could always tap your equity once those credit-card balances got a bit too high. But that gamble is no longer paying off.
If you are in over your head, you have got to think strategically about managing your debt portfolio so that it does not crush you. The plan that follows can help you bear the burden.

Reset your priorities
Sometimes the best thing you can do is defer savings and instead put every available cent into paying off debt until you get your finances under control.

Stretch it out
If you own a house and you are now tapped out, lowering your payments with a 40-year loan could be a good move. You will spend more in interest charges, but if the alternative is falling behind in your bills and having to sell your house in a falling market, a longer mortgage is the lesser evil.

Shop like crazy
It is a reminder that you will need to shop around more than ever for the best deal.

I think this is a good plan to get your finances back under control. But if I was you, I would not let it get this far.

Kathleen

Source:
http://money.cnn.com/2007/11/02/pf/chatzky_november.moneymag/index.htm?postversion=2007110210