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Living in a debt-free society…What a novel idea! The sad fact, however, is that the average American family is swamped with debts.

Dr. Gordon Botting reports in a recent issue of The Stewpot that nearly 43 percent of American families spend more than they earn each year. In addition, the average household carries nearly $10,000 in credit card debt at an annual interest rate of 15 percent. No wonder personal bankruptcies have doubled in the last decade to over 2 million per year!

Take a Steady Pace

Getting out of debt is not easy. But it is possible. Dr. Botting recommends taking the following steps at a steady pace to rid yourself of debt:

1. Recognize and admit the problem. Be absolutely honest concerning what has caused your debt situation. You cannot change your behavior or your situation until you identity and deal with the root problem. Donald Olsen once said, “The average American is busy buying things he doesn’t want with money he doesn’t have to impress people he doesn’t like.” Making debt disappear requires reordering your life style priorities and letting go of the secular attitude that says you “never have enough.”

2. Determine your current overall financial situation. Many people in financial trouble have no idea how much they owe or what exorbitant interest they are paying. Make a list of all the amounts you owe on your home, vehicles, credit cards, student loans, etc. When you see the true picture of your debt situation and the amount of interest you are paying per month, hopefully you will be strongly motivated to become debt free.

3. Seek assistance. If you are married, commit with your spouse to work together in the same direction with a well-defined plan. If you need help in putting together a plan, see a professional financial planner. Having a written financial plan with specific goals and a timeline seals your commitment, not only on paper but also in your heart and mind.

4. Discontinue all credit purchases. Close your store brand charge accounts. Use only cash. You must break the cycle of debt by not borrowing any more money for any purpose. Pay off all your credit cards as quickly as possible by using the “snowball method” of listing all debts (excluding home mortgage) in ascending order with the largest balance owed in the top spot and the smallest at the bottom. Continue to make the minimum monthly payments on all of them, but double the monthly payment on the smallest debt to pay it off quickly. When that debt is paid, add its payment amount to the monthly minimum of the next smallest debt until it is paid off, and so forth, until you have paid all your debts.

Barring tragedy, this plan will work if you are committed and persistent. Disentangling yourself from the obsession of materialism is not easy, but those who have done it will testify that the resulting freedom is definitely worth it.

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By Brenda Forbes Dickerson. Copyright © 2009 by GraceNotes. All rights reserved. Use of this material is subject to usage guidelines.

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