I’ve received several questions lately from young adults, just out of school, who are finding it difficult to make ends meet. Here’s one from Ryan, who is feeling overwhelmed by debt:

I’m 21 years old, working a full-time job and a part-time job, and going to school part-time on weekends and evenings.

After high school graduation, I immediatley fell into credit card debt, which I’m still drowning in. I had barely any financial guidance from my parents, and now have started some pretty terrible money spending habits. I think I’ve finally crossed the threshold that my expenses have overgrown my monthly income.

I’ve already called my credit card companies and negotiated a lower interest rate, and canceled them both. Right now I am making all the minimum payments (some on time), but I feel like I’ve finally hit a wall. I’ve tried the debt snowball, but it seems as soon as something is paid off, something unexpected comes out of nowhere.

I’ve been thinking about programs like Novadebt to consolidate everything and start again, but I’m worried about my credit score. I know that when you get involved with programs like this, you can’t be able to be approved for a car loan or mortgage for a few years in the future. I thought that if Novadebt can pay off my debts, it would be better to just pay one bill a month and I might just have the opportunity to start saving some money.

Can you give me some advice?

First, Ryan should stop taking on new debt. He needs to make sure not to sabotage himself. It sounds like he’s taking steps in the right direction. If he can stop spending and begin flexing his frugality muscles, he’ll be able to attack his debts without losing ground.

Next, Ryan needs to establish an emergency fund. He’s had trouble with the debt snowball because unexpected expenses keep cropping up. By saving $500 (or $1,000) as insurance against the unexpected, he’ll be able to follow his plan without being sidetracked.

Speaking of which, while digging out of my own debt nightmare, I’ve found it valuable to make a spending plan. This isn’t a budget, but a rough estimate of upcoming income and expenses. When I draft a spending plan, I write down all the money I expect to receive between now and the end of the year. I also list known expenses: every debt, every monthly bill, every special occasion (such as Christmas). After examining my cash flow, I create a list of financial priorities. This can be intimidating at first, but if you are patient and persevere, your cash flow will improve in time, and your debt will diminish.

After Ryan does these things, he can concentrate on the debt snowball. Or, if he decides it’s best, he can seek the help of Novadebt or some other consumer credit counselor.

What advice do you have for Ryan? What has helped you pay off your debts? What can you tell him about credit counseling and its effects?