Attention: Money 101 will no longer be available after May 31, 2021. After that time the Enrich financial literacy tool will be available at moving forward.

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Credit - Head Matters


4.    Identify Ways to Avoid or Correct Credit Problems

c.    List Possible Actions a Consumer Could Take In Response to Excessive Debt

If you find yourself showing indicators of debt trouble as discussed in the previous sections, there are many things you can do. Even if you aren’t in debt trouble, but you are having trouble saving for something you want, the following information might be helpful. Check the following tables to identify your present circumstances in regard to debt.

Select the statement that describes your situation .

Step 1: Assess My Debt Situation

Directions: Select the statement that describes your situation.

  • I am in debt and I feel overwhelmed. I think I need help.
  • I am in debt and I cannot easily make my payments. I need to start getting everything under control.
  • I am in debt, but I can easily make my payments
  • I am not in debt

The higher up this chart you marked, the more you need to examine your debt and design a plan to help solve the problem

Assuming you could use some help, look at the following list. For each item, choose the priority order in which you will do it (1, 2, 3, etc). If you don’t plan to do an activity, skip it.  After you complete the list, bookmark this page and reference it as you work your way out of debt.

Step 2: Set Priorities for Getting Out of Debt

Directions: Assuming you could use some help, look at the following list of priorities. For each item, choose the priority order in which you will do it (1, 2, 3, etc.) by clicking and dragging the item using the ⇅ icon, or by typing in the order number and pressing the "Enter" key. If an item doesn’t apply to you or you don’t plan to do it, simply type an “X” in the input box and press the "Enter" key.

  • Call businesses you owe money to and try to negotiate for smaller payments - at least for a while. Call them before you miss a payment.
  • Talk to your family. They can be your ally in recovering from a financial mis-step - but it's up to you to show them that you won't make the same mistakes twice.
  • Call a nonprofit debt-counseling organization, such as the Consumer Credit Counseling Service (1-800-388-2227 ). They can help you set up a repayment plan with your creditors.
  • Talk to a friend who has good money-management skills and ask for suggestion.
  • Look for ways to cut expenses wherever possible. For example, can you carpool to school instead of driving?
  • Can you trade baby-sitting instead of paying for child care?
  • If you have more than one credit card, consider cutting up all but one. Keep the credit card in a safe place and out of your wallet until you plan to use it.
  • Get rid of store charge cards. They often charge the highest interest rates (often around 22 percent a year). Cut up the cards and call the stores to have the accounts closed.
  • Shop for a credit card that has no annual fee and a lower interest rate or call your current credit card company and ask them for a lower interest rate - many times they'll lower your rate to keep your business. Be sure to watch out for hidden fees, like balance transfer fees!
  • Pay off your high interest loans and credit cards first while making at least minimum payments on other loans.
  • Consolidate your loans and credit card debts into one low-interest loan. If you own a home, check into a Home Equity Line of Credit loan.
  • If you're still in school, temporarily attend school part-time to lower your costs and increase the amount of time you have to work and earn money.

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