Phone cords that are routinely stretched, twisted or twiddled tend to tangle over time. It's easy to undo the wildest of tangles using the following approach.
Unplug the cord from the handset and let the cord drop. Sometimes the cord will simply unravel into its proper shape.
If the cord is still tangled, start at the end that's plugged into the phone and work out the tangles with your fingers. Avoid any unnecessary stretching or twisting.
After you work out all the tangles, start again at the phone end and run your fingers along the cord's length, resetting coils that are twisted in the wrong direction to prevent future tangles.
Allow the cord to fall into its natural coils and plug the cord back into the handset.
Avoid twisting the cord in the wrong direction when you pick up and hang up the handset. These minitwists uncoil the cord and cause tangles. Buy a swivel jack for the handset to prevent tangles.