The very first step is to understand where you are at in terms of personal finances. Many people are so overwhelmed with their debt that they may even forget about some obligations (unpaid debts), leading to unpleasant consequences and even more debt.
Now that you know how much debt you actually have, you see the big picture of what is going on with your finances. In this step, consumers may understand that their total debt is larger than they expected.
Once you craft your monthly budget and know how much you need to allocate toward repaying the existing debt, you need to reduce spending. You should clearly understand your current position and aim to improve it to become financially free.