This is a very timely post for me, since I've been sick for over a week now. Luckily I didn't miss any work this time, but it has happened before. Bad things happen to good people. It's important that you prepare now.
The most common excuse for carrying credit cards is "What about emergencies!" I've already shared my thoughts on this once, but it bears repeating. Your debt is an emergeny and using credit cards only makes it worse.
I think it's important to first define exactly what an emergency really is. Once you've done that it will be easier to find ways to deal with those emergencies without resorting to credit cards.
There are basically only three things that a person needs to survive -- health, transportation, and shelter. In other words, you need to be able to work, have a way to get to work, and have a place to go when you get off work. Beyond that, most things are more wants than needs.
A new car is not an emergency. Neither is a new CD or DVD. New clothes or shoes are not emergencies, unless your current clothes are so worn out you can't wear them to work.
As long as you're in debt, you need to ask yourself "Will buying this help me pay off my debt?" If the answer is no, then you probably don't really need it right now and you certainly don't need to charge it.
Here are a few ways to deal with real emergencies without having to resort to more debt.
Problems with your health definitely classify as emergencies. If you don't already have health insurance, you need to find a way to work it into your expenses as soon as possible.
Next, look into life insurance and disability insurance. Term life insurance is very affordable. Don't leave behind a lot of bills for your family to take care of if the worst should happen to you.
Disability insurance is needed in case you're ever unable to work. It will help pay your bills when you're not able to pay them yourself.
Also, if you're renting look into renters insurance. It's usually reasonably affordable and will protect your possesions from things like fire or theft.
No one thinks insurance is very important until they need it.
You need to have some money in the bank for things that aren't covered by insurance. If you're in a car accident, your insurance will pay to have it repaired. If your car just breaks down, you're out of luck.
Think of this money as a "cushion" between you and the rest of the world. Sometimes you will fall down, but this should be enought to keep you from hurting yourself.
Everyone always wants to know how much they should have in an emergency savings account. The trouble is different people have different needs. Anything is better than nothing. So if you don't have a savings account, now is a good time to set one up.
I would try to save at least one month's worth of bills as quickly as possible. This should be enough to keep you going no matter what happens.
I talked a few days ago about my favorite online savings account. Go back and read that post if you need some help setting up an account.
I saved my favorite way of dealing with emergencies for last. If you have a useful skill to offer someone, then bring it up when it comes time to pay your bill.
I've bartered with everyone from accountants to mechanics. They provide a service for me and I return the favor. In my case I work on computers, but I know other people who trade services like carpentry, painting, and even house cleaning.
I've also worked on people's computers in exchange for food. I've been paid with everything from fresh vegetables to fresh fish. I've also had a few people prepare meals for me.
My family always jokes about washing the dishes at a restaurant to pay the bill. I've never actually done that before, but if I was hungry and broke I might ask the owner if that was an option.
The most important thing to remember is this: Now that you've committed yourself to getting out of debt, make sure that nothing can stop you. Obstacles will arise so be prepared to overcome them without bringing on more debt. Never charge again.