how can finances be managed when its going down the drain?

Yes, this happens with lot of people and here are some simple steps to start afresh. Step 1: Acknowledge your situation And I mean really understand how much deep you are down in the financial mess. The best way to do it to really jot down on paper to every last penny that you owe to someone (credit cards, personal loans, money taken from friends, family, every single bit). Dont just add up the principle, but interests too. This will give you a fair idea. Step 2: Discuss this with family Yes this is an important step that every adult member of your family should know, understand and acknowledge the financial mess. Step 3: Dive into details This is another key step, where you need to jot down your incoming and outgoing cash flow. Dont round off to larger values. And do not count money available on credit card here. Just pure cash, that comes in and that goes out. To calculate non-regular expenses, find out in last six months how much you spent and average them out. So for e.g. if you go out for dinner/lunch (which is non-regular expense), find the total amount you spent in last six months and divide by six, which is your monthly expense on dinner/lunches. If you spend money on gifts, do it for last one year. Step 4: Put your credit cards into lockers if possible Yes I am serious. I do that often. I simply put all my/wife's credit card in the locker away from my wallet. Develop a habit of spending via debit card or cash card or pure cash. Step 5: List out your loans and expenses which you really don't need. To cleanup your financial mess, you need to live a really frugal life. Start paying off your most expensive loans like credit cards/personal loans as much as possible. Stop all your unnecessary expenses (yes it is hard, but necessary). So no dinners/lunches out, no going to movies (you can rent out or share with friends), no expensive gifts (try hand-made home stuff for a chance), no electronic item purchase (use whatever you already have), no upgrade of car (use public transport if possible). Check out some awesome blogs (e.g. simpledoller) which will provide you tons of ways to reduce your expenses. Step 6: Sell off items that are lying idle, rarely used, old stuff, old books. De-clutter your house, which will not only bring you money to pay off loans, but also brings positive energies Step7: Start upgrading your skills and networking with people to improve your income side. work hard on your day job to earn that bonus/increment or a promotion. Step8: Take steps to improve your and family's health. This should help in long term in reducing your medical expenses. Step9: Use some smart financial tracking apps which will immediately warn you if you are exceeding your any allocated expense. It is really handy once you get used to it. Step 10: change your habits (e.g. window shopping or drinking binge, smoking etc) and engage in positive activities. Bringing your life out of financial mess is not simply a matter of re-allocation of your money, but rather a change in the way of life. This will ensure that you never get into this mess again.