You're maxed out on payments and a pay raise or job switch isn't in the near future. It's a safe bet that improving your personal finances made it onto your list of New Year's resolutions. With outstanding student loans, car payments and moving away from home, some experts estimate that the 18-24 demographic may spend a whopping 30% of their income on debt payments. Add a few kids to the mix, and the older demographics aren't much better off.

How do you avoid bankruptcy, pay your debts, and still manage to enjoy life a little?

1. Reduce your interest payments

Call your credit companies and ask for a break on their interest rates. If you have cards that collect points, you can usually request to switch to a better rate instead of receiving rewards. You could go from a rate of 18-28% to 10% or less, depending on how eager the credit company is to keep your business. If they are not helpful, switch to a lower interest card and transfer as many of your other balances as you can.

2. Consolidate your debt

If you have multiple loans, ask your bank for a consolidated loan. This will lump all your small payments into one larger payment and give you a set payment each month which will help you budget. You may find credit unions have even better rates than big banks, but you may need to be a member of a specific group to qualify (e.g. military, religious affiliation, etc.).

3. Make a payment plan

Collect all your credit bills and note the minimum payments on each. Take the smallest loan (not smallest interest rate) and plan to double the minimum payment (make only the minimum payments on the other bills). When that debt is paid off, take the amount you were paying on that loan and add it to the minimum payment of the second smallest debt. When that is also satisfied, take the total to the next smallest, and continue until you are applying all the previous payments to the last loan. This way you are always paying the same amount each month and can budget better.

4. Pay yourself

Sounds crazy when you're strapped for cash as it is, but you'd be surprised how easily you can go from zero to a decent sized nest egg with very little sacrifice. Commit to an affordable amount that you will save every month. Set up an automatic withdrawal with your bank and have the funds placed in an interest-bearing savings account. This is your rainy day fund, so don't lock it into something you can't access but make sure you are getting the best rate your bank can offer. You want this rainy day fund to be approximately 3 months of living expenses in case of illness or unemployment. Once you've filled your rainy day fund, continue to pay the same amount (or more) into a guaranteed investment or mutual fund (e.g. 401K in US, RRSP in Canada). Find out if your employer offers incentives for retirement savings.

Some people say that you should save for retirement right away, but I have always believed that having a healthy balance in an account locked away for 40 years from now won't help you next week unless you are willing to pay the penalty for early withdrawal (which negates the investment, now doesn't it?). Make a firm commitment to start on the retirement fund as soon as your immediate need has been filled.

5. Budget!

Without a realistic budget, all the tips I've mentioned above will be stopgap measures at best. Let out your inner control freak and get down to the nitty gritty.

Start by tracking your expenses over a three month period. If you've kept your receipts or have itemized bank statements you can backtrack your spending, but if not start tomorrow. Break your expenses into defined categories: rent/mortgage & utilities, groceries & household supplies, entertainment, clothes & beauty products, vehicle expenses (including insurance and maintenance), gifts (e.g. birthdays, holidays), debt payments, etc.

Once you have 3 months worth of data, figure out your average monthly costs in each category. Identify non-critical expenses and make plans to reduce them. Don't eliminate all your frills, because it will only work for a few weeks and then you'll be so frustrated that you'll rebound with a spending orgy. For example: don't order take-out but cook instead, only buy clothes you actually need, create weekly menus to make grocery shopping more efficient, and try to drive less often.

Set limits on your spending categories and stick to them - $300 for groceries and household supplies, $150 on clothing and beauty products, etc. Make the limits realistic, but also ensure that you will actually save money if you follow them. After 3 months of living by your budget, take a look at your financial status. If you see an improvement, treat yourself to an affordable reward!

Do you have a tip for controlling your debt load that you are willing to share? Please add your 2¢ in the comment section!