Look in the mirror and be honest. This means you have to stop ignoring the problem and hope it will either magically fix itself or go away. It won't. You can't begin to move forward until you admit there's a problem and commit to change. Stop charging! Cut up all your cards except for a Visa or MasterCard with a low interest rate, only to be used for emergencies!
Air your dirty laundry. Clear the kitchen table and lay out all your bills and statements and letters and anything else relating to the money you owe others. Scour your home or office and don't leave anything unchecked.
Get organized. Arrange all the above into their respective groups. It's amazing how things can become manageable once you know exactly where you stand.
Create a budget. This starts by making a list of everything you spend money on, not just creditors but everything from phone to electricity to food to entertainment; all spending. Spend some time on this, it's critically important to your success. You need to break down how much you're spending each and every month on everything. Everything. There is software out there to help you with this, many of you may already have something on your computer and not even know it. Microsoft Money is a common program often shipped with a lot of computers anymore, check it out.
Once that's done, you need to look at where you're spending your money and where you can cut back. If you're spending $300/month on entertainment that's an easy way to save money, stop going out. There is no simple answer, everyone has a different set of circumstances and needs to tailor their budget and lifestyle to their income. We all waste money, some just more than others.
Make a list of all household income. If it's just you then it will likely be a short exercise, if not get everyone in the home on the same page and find out exactly who makes what. $50 here, $200 here, it all adds up.
By now things should becoming more clear. You know how much you spend, how much you make, and the difference between the two. Hopefully there's more money coming in every month than going out.
Back to your creditors. The goal here is to contact the people you owe money to and consolidate. It's amazing how much you can accomplish by just a simple and courteous phone call. Be persistent. Remember, these companies want you to pay. They may act like they won't bend, but when push comes to shove they will if it means you pay them every month. When calling be as polite as possible, you catch more flies with honey than vinegar. Reason with these people, ask for a lower interest rate and explain your financial situation. They want to be paid. If you show that you are concerned about paying, they're going to be more inclined to work with you. Don't just call and say I'm broke, I can't pay. That will make your life much, much worse.
After you've called all the people you owe money to and hopefully reduced some of those interest rates, consider transferring any high interest debt to lower interest accounts. A lot of credit card companies allow you to do this online, or a phone call works just as well.
This means the credit cards or loans with the highest interest rates need to be addressed first. If you have $1000 on a card with a 22% interest rate and $500 on a card with a 15% rate, try to transfer the balance to the lower rate card. This isn't rocket science. The lower rate cards are most important right now. Hopefully they're not maxed out. If so, call those companies and ask for a credit extension-NOT SO YOU CAN GO OUT AND CHARGE A NEW FLAT SCREEN! We need to move as much debt as possible from the higher cards to the lower cards. If you can transfer all of the balance from a higher rate card, close the account when completed. Remember we're turning over a new leaf and that means living within your means. Yes, it can be done.
By now you know how much is coming in, how much is going out, and you've consolidated that debt to the lowest rate possible. There is light at the end of the tunnel. You should earmark a chunk of money every month to paying down this debt. Don't be shy, you need to cut back in other areas like entertainment in order put more money towards your debts. When you've figured out how much you're going to spend on paying off debt every month, you need to decide where it's going to go. This step is pretty easy. Pay only the minimum on all but you're highest rate card. The rest of that money goes to your highest rate card until it's paid off. This could be a year. So what. This is how you spend the least to pay off the most. Once that account is paid off, move to the next highest rate card and pay the most to that one. Do this until there is no more debt.
If you've made it to this point, congratulations! You've created good financial habits. Keep them. Don't you dare go back to your old ways and spend money on things you don't have. Share your knowledge with others so they don't make the same mistakes you did.