Debt, in most American homes, is a way of life. The most common way to pay for things is with a credit card. 43% of households spend more than they earn. The average household has $8000 in credit card debt, although many have much more than that. With interest rates rising, that trend may be forced to come to an abrupt halt.

The first step in reducing debt is to get spending under control. Do not carry credit cards. Switch to a debit card and leave the credit cards at home, or better yet, cut them up. When you cut them up write a letter to the credit card company requesting that they cancel the card. Send a copy of that letter to the major credit reporting companies.

Next start paying off the debts you have. List them either in order of smallest to largest balance or highest to lowest interest rate. Determine the maximum amount you can pay on the debts monthly. Of course, this has to be more than the total minimum payment on all the credit cards. Make the minimum payments on all the cards except the first on the list. Pay as much as possible on that one. Continue paying as much as you can each month until it is paid off. Then do not reduce the amount you are paying on credit cards. Simply add the amount you were paying on the first card to the amount you were paying on the second card, and continue paying that total amount each month until the second card is paid off. Then add the amount you were paying there to payments on the third card. Continue this process until all cards are paid off.

When credit cards are paid off, start paying off car loans, furniture loans and other non-revolving loans. Then put the amount you were spending on debt into a savings account until you have six month’s living expenses in the account. Finally, start spending that money on your mortgage until your house is paid for. At that time you can use the money you have been spending on debt for vacations, or save up until you are able to buy a new car, boat or other luxury item for cash.

This process may take a long time. It could be years before the debt is completely paid off, but it will result in a new, much less stressful, lifestyle.