Q: I don't have wealth and have a lot of debt from a business that has been draining my personal funds for several years. I need to make some lifestyle changes and I believe I need help sequencing some of the changes (selling house, debt management plan, etc.). I need to "reset" in order to build assets to invest.


A: You're situation is all too common these days. I have a couple of suggestions. The core of your stress is your debt. I would get a copy of "Reduce Debt, Reduce Stress'' by Gerri Detweiler, Nancy Castelman and Marc Eisenson. Their advice is practical, and it offers blueprints for dealing with debts. The time frame they work with is five years. If the strategies they describe won't realistically slash yours debts sharply within five years, you might want to explore bankruptcy. Working with a book like this will also help you pull together a quick monthly income statement.

Armed with this information — debt reduction strategies and budget — I would seek out some people to talk to, gathering additional insights. You could make an appointment with a credit counselor to get advice. Unfortunately, credit counseling is an area ripe with scams. You can get a local referral from the National Foundation for Credit Counseling (www.nfcc.org), the largest national nonprofit credit counseling organization — and a legitimate one. I would set up a conversation with some of the retired businesspeople at SCORE, the nonprofit association of volunteer small-business counselors. There is no fee to the service, and hopefully it will help you get a handle on your business.

That's step one, which will help establish your immediate priorities and develop a plan of action. Part of the process is reviewing expenses to funnel more money to debt payments. But I bet you've done that, and in my experience it sometimes takes a much bigger step to free up sufficient cash flow to make a difference.

Step two is looking at your home with an eye toward downsizing. Larger homes cost significantly more to maintain and come with higher property taxes. The ­savings from a smaller home, perhaps a townhouse or condo or rental, can compound over time. That said, you'll need to run the numbers to make sure you really come out ahead and by how much.

"Look at the home first. Can she stay there? Does she want to? If she moved and rented, could she save quite a bit or not?" said Mark Zoril, founder of PlanVision in Plymouth. "If she is OK with a move, would she have some cash from the sale of the home to pay off some of her debt?"

The "reset" focus of steps one and two is on freeing up cash as quickly as possible, paying down debts and downsizing. With time, however, I would like to add step three to your reset list — a look farther down the road to build a better future.

Where would you like to be and what would you like to be doing five or 10 years from now? Concentrate on discovering what you want out of your current and future life — the why — with retrospection and by talking to family, friends and others in your extended network. Once you have a better sense of what you want, there are a number of ways to get there — the how. For example, a key part in this stage of the reset is thinking through what role work will play in your future as you age, Zoril says. Good luck.

Chris Farrell is economics editor for "Marketplace Money." His e-mail is cfarrell@mpr.org.