Are you receiving payment intimidation notices from creditors? Then this article is for you. In either case, everyone should read this article for leading a better financial life.

Many are those who at some point in their lives face a financial crisis. Whether the problem is because of medical emergency in the family or personal illness, loss of employment or business, or simply by spending more.

In reality, the important thing is to prevent your financial situation from going from bad to worse. If you’re going through a financial storm, consider the following options:

• Realistic budgeting
• Credit counseling by a reputable organization
• Debt consolidation or bankruptcy

How will you know which is the best alternative for you? This answer will depend on the level of your debt, your degree of discipline, and your future prospects.

Budgeting

The first step in taking control of your financial situation is to make a realistic assessment of all your income and all the money you spend. Begin by listing all of your sources of income. Then, list all your fixed expenses and those that are the same every month such as your mortgage payment, rent, car payments or insurance premiums.

Then make a list of variable expenses, such as entertainment, recreation or clothing. Writing down all of your expenses, even those that seem insignificant, can be a great help in tracking your spending schedule, identifying those that are needed, and prioritizing the rest.

The goal is to ensure that you can meet all the basic requirements: housing, food, health care, insurance and education.

Contact your creditors

If you have difficulty paying your debts, contact your creditor immediately. Let them know why you are struggling to pay and try to agree on modifications to your payment plan that will allow for a more manageable level of repayment. Don’t wait for your accounts to be referred to a debt collection agency. At that point, creditors will have lost faith in you.

Dealing with debt collectors

The Fair Debt Collections Practices Act (FDCPA), which deals with fair and just collection of debts, is the federal law that stipulates the manner and times or occasions when the debt collector must contact you. A debt collector may not call you before 8 a.m. or after 9 p.m.; nor may he call you at work if your employer disapproves of such calls. Collectors may not harass you, make false statements, or use unfair practices in the exercise of debt collection. Debt collectors must follow a written request from you to stop future contacts.