It’s easy to blame outside circumstances for pushing you into debt- circumstances that seem beyond your control, like a layoff or the housing crash or a medical crisis.

However, if you look deeper, you’ll probably see that some of the blame lies with your priorities, and with spending money on the wrong things.

The top financial priority should be paying bills on time, saving for the future (retirement, kids college, emergencies), and THEN some fun money.

Unfortunately, most people put the “fun money” right after paying the bills.

If you have bought a television set, DVD player, ipod, stereo system, etc., on credit because you couldn’t pay it off right away…

You need to look at your priorities.

If you haven’t worked out exactly how much you can set aside for savings every month, and set up a way to transfer that amount into a savings account…

You need to look at your priorities.

If you spend money on anything that’s not a necessity but don’t save money…

You need to look at your priorities.

If you let what friends or your significant other or your children think influence you into spending money that you can’t afford to spend…

You need to to look at your priorities.

And if you do that, when times are hard, you will always have a savings cushion and you will be less subject to financial disaster because you”ll be well prepared.

When you have heavy debt weighing on you,  you may need to take some drastic measures to dig your way out.

Some options to getting out of debt are:

1.) Cashing in some of your 401k, or borrowing against it. Just keep in mind that cashing it in will cost you penalties, and borrowing against it should only be done in dire emergency, because it’s trading one type of debt for another.

2.) Taking on a second job until your debt is under control. Yes, it will likely be exhausting and stressful, so don’t do it forever. However, if it means saving your credit rating or keeping food on the table or the repo man away from your door, then it’s worth doing until you’ve paid done some of your debt and set aside some savings.

3.) Selling personal possessions. You can do this at a pawn shop, a garage sale, or on eBay. eBay is most likely to get you the best results.

4.) Selling your vehicle and taking public transportation. This also savings you money in car insurance costs and gasoline and repairs. Owning a vehicle takes a big chunk out of your paycheck every month.

5.) Selling blood or participating in medical trials for money, or both. Again, we said “drastic measures”.

But remember, once you have paid down your debt, do not turn around and start running up your charge card again. If you do, eventually you’ll run out of options and risk ruining your credit rating or losing your house or car.

A few years ago when housing prices kept going up and up and up, many homeowners turned their houses into piggy banks. Or so they thought, from the way they kept pulling money out of the houses in the forms of home equity loans.

Every time homeowners wanted something but didn’t have the money to pay for it, they just turned to their cash machine – the bank. Expensive new SUV, jet ski, swimming pool, spa, new furniture, remodel of the house…don’t have the money for it? That’s okay,  borrow against the home equity.

What they found out was that they’d made a terrible mistake. Their homes were not piggy banks. They were credit cards. And now the homeowners still owe the money, on houses which are worth far less these days then the outstanding mortgage and home equity loan.

What can debtors learn from this?

Never borrow unless it’s for an emergency, and don’t spend what you don’t have. A true emergency is when your lights are about to be turned off or you have no money for groceries – and no way to earn money for groceries. Wanting to go on a vacation is not a real emergency.

Borrowing puts you in an extremely vulnerable position, because as we’ve found out these days, nothing is certain. It is not certain that homes will always hold their value, it is not certain that once-steady jobs will always be there, it is not certain that education and the willingness to work will keep you employed.

So learn from all of those who are now losing their their homes because they borrowed against them, and every time you consider putting something on credit, ask yourself if it was worth it.

When should you start taking action about your debt?

The best time to do it is BEFORE you even get in debt, of course. How do you do this?

Several ways:

By setting aside a percentage of your paycheck in an interest earning “rainy day” account EVERY single month, so that when the inevitable emergency strikes – medical issues, layoffs, business folds, etc. – you are prepared.

By only buying what you can afford – and by refusing to run up credit card debt to buy things that you can’t afford. If you can’t afford something right away – save up and pay for it all at once.

By only taking out loans for things that you truly need, like a house (that is affordable for you!) or a car or a student loan. And by shopping around for the best deal, and never taking out an adjustable rate mortgage loan.

By keeping a good credit rating so that if you DO have an unavoidable financial crisis, you can pay for it if necessary. Do this by having at least one credit card, and paying it off on time every single month, with perhaps a VERY small balance carried over every month. Also, make sure that you only charge about 20 or 30 percent of your available credit, monitor your credit report constantly for identity theft, and don’t apply for credit at a whole lot of places at once.

If you do all of these things, you will be prepared when a financial crisis hits. Everyone has one at some point or another – the roof leaks or a tree falls on your roof, or a hurricane sweeps through town and your insurance company doesn’t cover what they should, or you or a loved one become ill and run up huge medical bills…

But the people who come through their crisis relatively unscathed are those who have been preparing for it all along.

You may be afraid to access your credit score out of concern that doing so will lower your score, but this is a myth.

It is true that too many inquiries by creditors will lower your score, but it does not lower your score when you make inquiries yourself.

The reason that it lowers your score when loan companies make inquiries is that it sends a signal to the credit scoring company that you are about to take on more debt.

That’s why it’s not generally a good idea to apply for a department store credit card just to save 10 percent on your purchase – because it will lower your credit score, which may end up costing you more in the long run.

When you check up on your credit score, it is considered a “soft” inquiry which does not affect your credit.

When a prospective employer checks on your credit, or when credit companies check on your credit without checking with you first (say, if they want to offer you a loan, or a free cell phone), that is also a soft inquiry.

When you apply for a loan, for a cell phone plan, for a new car, for a mortgage loan, THAT is a “hard inquiry”.

Sometimes it is necessary to apply to for credit, but never do so casually and try to limit the number of places that you apply for credit with.

Common sense would tell you that if you are trying to fix your credit score, you should cancel your credit cards, right?

Unfortunately, wrong.

This hurts your credit score, and in more than one way.

Credit scoring companies examine your credit history, and they want to see older lines of credit because they want to know how you handle credit. If all of your lines of credit are brand new, they feel they don’t know enough about you and your history and are going to view you as more of a risk than someone with a long, well established line of credit.

Also, it reduces the amount of credit that you have available. That seems like a smart thing to do, right? Not in the eyes of the credit scoring companies. They want to see that you have charged no more than 30 percent of your credit limit (for a perfect credit score).

Okay, so how about never charging anything? That should be a smart money move, right?

Again, what’s good for you and your wallet and your budget is not necessarily good in the eyes of the credit scoring company.  If you never charge anything – they don’t know what kind of credit risk you are. The ideal solution is to charge, but to pay off your balance every month, on time. Or at least pay off most of your balance.

Okay, so if charging nothing is bad, then you should charge a lot, right? Only if you can pay off most of it and if you don’t charge too close to your credit limit. If you have a $10,000 credit limit but have charged $9,000, this will severely hurt your credit score.

The best thing to do to get a good credit score is have a couple of credit cards that you pay off every month, on time, and that you do not close. Let those credit cards age, keep your balance low, pay your bills early or on time, and you will be the golden child in the eyes of credit card companies.

In times past, when the economy was good, the conventional advice was to make paying down credit card debt and other high interest debt as fast as possible.

That advice has changed somewhat these days.

The unemployment rate is the highest it’s been in decades, and layoffs, hiring freezes, and wage cuts are the rule of the day.

These days it makes sense to have, as a first priority, enough of a savings cushion to pay off at LEAST six months worth of bills – mortgage or rent, phone bill, car payment, insurance, groceries, utilities, a couple of hundred dollars a month for emergencies, and any other bills that might come up.

You should still strive to pay more than the minimum on your credit cards and other high interest loans, even if it’s only $10 or $20 more than the minimum. But most important is making sure that you can keep a roof over your head, the lights on, and food on the table if you are laid off or, worse, if you and your spouse are laid off.

So it makes sense these days to sit down and calculate how much you would need as a minimum to support yourself for at least six months if you lost your job…and put as much money into your savings account every month as possible. When you reach the amount that you decided on, THEN it makes sense to start aggressively paying down your credit card debt – but not before.

To get out of debt, you need to figure out what got you into debt in the first place.

Even if you are in debt because of a medical issue, a layoff, or other unavoidable life catastrophes, there is almost always an underlying issue which caused you to spend money where you shouldn’t have, which means you didn’t set aside enough money for emergency savings.

Do you spend too much on your family? Do you buy lavish gifts, pay for private lessons, splurge on expensive vacations? You need to realize that doing so is ultimately hurting your family, not helping them. If you don’t have a year’s worth of emergency money set aside, and a healthy chunk of money going into your 401k and your children’s college fund every month, you CAN NOT afford any extra spending.

Do you spend money try to impress others? If so, when you are laid off or your mortgage resets or you are laid off or your company goes out of business, are those “friends”, neighbors, et cetera, going to pay your bills for you because you spent all your money and have no savings? Highly unlikely. You need to put your needs and your family’s needs FIRST before you buy expensive toys or a house you can’t afford or a Hummer instead of a VW.

Do you spend money to feel better about yourself, to fuel some inner need? If you can’t stop yourself and rein in your spending, you might want to seek counseling so that you can find healthier methods of rewarding yourself.

Do you spend money to impress a significant other? Keep in mind that if you want a long term relationship to be successful, you need to be financially compatible and you need to be honest with that person. Spending money that you can’t afford is not being honest. If they will only stay with you as long as you are spending money you don’t have, you’re going to run into problems sooner rather than later.

So if you are in debt, you need to examine what caused you to be in debt in the first place if you are ever going to truly get a handle on your finances.

The credit card companies are getting sneakier than ever in their attempts to squeeze every last dollar out of consumers – but you don’t have to fall for it.

You do need to remain vigilant these days to catch credit card companies when they try to pull a fast one, however.

Many credit card companies, for instance, are lowering credit card spending limits, even for customers with great credit and great payment histories.

Why is this bad?

Because if you charge too much and get close to your credit limit, this hurts your credit score.

Let’s say that your credit card company promised you a $10,000 credit limit. You charged $3000. That is not a problem for your credit score; it is recommended that you charge no more than 30 percent of your credit limit.

But then, let’s say your credit company suddenly slashes your credit limit to $3100. You have now charged almost the maximum amount of your credit limit.

This will send your credit score plummeting, through no fault of your own.

And furthermore – OTHER credit card companies or lending institutions may suddenly raise your interest rate and charge you more every month, because your credit score dropped! That’s another sneaky trick they’re pulling these days.

They also may change your credit payment cycle and make it shorter – it’s never changed in your favor! So instead of 31 days you may have 28 days to pay off your bill. This increases the chance that you will pay late, so they can then hit you with huge fees and jack up your interest rates.

You need to read all mail from your credit card company immediately and read through it thoroughly, because they are required to notify you when they make changes.

If you have been a good customer and have always paid on time, try to negotiate with them. And if they refuse to cooperate, it is most likely time to seek out another credit card company.

Once upon a time anyone with a pulse could get a credit card. ANYBODY. Or anything. There were news stories about credit companies mailing credit cards to people’s dogs, and to infants, and to deceased people.

As homes soared in value, people were able to take out easy home equity lines of credit as well.

People bought gigantic television sets with this easy credit, and jet skis, and yachts, and expensive cars and motorcycles, and lavish vacations, and designer wardrobes, and Rolexes.

In other words they bought expensive toys on credit, back when money was flowing freely and interest rates were reasonable.

Now banks are facing record numbers of loan defaults. As people lose their jobs or their spouses lose their jobs or they face pay cuts, they can not pay off their credit card bills or home equity lines of credit.

Easy credit, and the banks, were not their friends. They were a trap that led these people to believe they could spend and spend without consequence.

When people can not make their payments on times this is reported to the credit agencies, and scores plummet. Then, when people want to take out loans for things which really are necessities – a car or truck, a home loan, a student loan – it is near impossible to do so.

A bad credit score also makes it difficult to refinance and get lower interest rates on existing loans.

The fact that it is now difficult for many people to get easy credit is not necessarily a bad thing. It means that people need to save up and pay for things in cash, or not buy things that they can’t afford.

So by all means work on improving your credit score, but don’t make it your goal to get new lines of credit and increase the amount you can borrow. Instead, think of how much trouble easy credit has caused for you and for many others in the past, and make it a goal to live within your means and delay purchases, and to use as little credit as possible.