Raise extra cash to pay down credit debt now through liquidation of non-essential items. Borrowing new money to raise cash to pay off old credit debt doesn't make much sense. (The exception would be if the new money is interest free or offers some value generating perk that makes it a good deal where you can demonstrate that the benefit outweighs any cost.) Instead look for items in your house that could have value to someone else but are no longer of use to you.

     I suggest that everyone go through their home honestly question themselves if the old things they are finding are really needed. What can you give up? Do you really need two cars, or the ATV, or the motorcycle, or the drill press in the garage, or the refrigerator in the basement for the beer, or the old golf clubs or guns or the old computer? Get rid of it all. Sell it. Have a garage sale or sell your items through a free ad the PennySaver. I recently went through my garage. I discovered that I have three large ladders. I have no idea why. Each of these ladders would cost about $250 if you were going to buy one brand new. I could easily sell one for $100, and then use that money to pay off credit debt that is accruing interest. Also, don't rule out getting a part time job, using your hobby to earn money, or starting your own part time business.

     Be sure to do a "cost / benefit analysis" on your item prior to selling it. When you do find old things laying around that you are not using anymore ask yourself if it can be used for a new purpose. Ask questions such as "How much can I get for this item?" "Can I use this item to replace a purchase I was about to make?" "Can I use this item to save money in my house some how, and if so is it more than I will make by selling it?" "Can I barter with this item?".

     One fringe benefit of selling your "junk" is that the new, non messy space you now have in your home gives you the sense of a fresh start and gives you more motivation to get to work on your financial goals.

     This step is also important in allowing you to start the budget template I propose (mini accounts). Many people have said to me that they would have no problem following that budget if only they could get money to start with. They claim they have no money to budget! I find that hard to believe. I think they are not looking hard enough. There are two ways to generate money. Earn more and pay less. I imagine that we can all find ways to do both to some extent. Work overtime, cut grass, shovel driveways, take wedding pictures, recycle your beer cans, or turn the lights off. There are always ways to generate some more money.

     One other obvious way to raise money is pay less of it in taxes. You may find some things that are better off being donated to the Salvation Army or Goodwill for a tax credit. When you go to organizations like this and donate your slightly used things to them they will give you a receipt that shows the dollar value of your donation. You can take that dollar amount off of your taxable income when you complete your yearly tax return! The Salvation Army provides a convenient chart that lists the value you can expect to see on your receipt when you donate. You can also find the Salvation Army Valuation Guide on this site.