The average American household carries a credit card balance of between $7,500 and $8,000, according to a Frontline report called “Secret History of the Credit Card.” The PBS report also states that bout 35 million Americans pay only the required minimum of their balance each month, which means it will take years to pay off their debt and that “they’ll end up paying far more than the cost of the items or services they bought.” The show goes on to report that many of these people could possibly even pay off their balance in full each month, but they don’t for inexplicable reasons.

And according to a 2001 report on the NewsHour Extra by Jim Lehrer, by the end of 2000, Americans owed 7.2 trillion dollars in household debt. “American families owed 100 percent of the money they earned from work.”

Getting out from under that debt may seem insurmountable, but it is crucial to achieving financial freedom. The way to do this is to first take a month and log all your expenditures – from that morning coffee to that monthly mortgage. Organize your expenditures in categories such as eating out, groceries, gas for car, entertainment, and so on.

After doing this, most people are astonished by how much of their income they are just piddling away with nothing to show for it. Then, carefully look at where you can cut. Depending on your motivation, you could shave tens or hundreds of dollars off that monthly amount. Whatever that savings amounts to, you need to allocate it to pay off your credit card with the highest interest rate. Keep making chunks of payments until it is paid off and then move onto your next debt until all you have left are low-interest rate student loans, a car loan and/or your mortgage.

Once you pay off all your other debt, then take that amount you spent on debt reduction each month and stick it in a money market account that will be readily accessible in case of emergency. When you have enough money in that account to pay for, say, six months of your living expenses, then it is time to start thinking about whether you’d like to start paying off your other debts: student and car loans and finally, a mortgage.

Some people are satisfied to stop right there, maybe keeping a mortgage for the tax write off and using the money they previously spent on debt for vacations or other treats. But there are some people who keep right on going until they are completely debt free and then invest their money and live on the returns. This is true financial freedom. It is tough, but it has been done. Those people who have accomplished this ultimate financial freedom, such as Vicki Robin and Joe Dominguez, the authors of “Your Money or Your Life,” claim to have found a richness to life that no money can buy.