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Recent studies show that most families spend more than they have coming in. How is this possible? Credit and debt makes it possible, but it does not make it advisable. We can use the current economy as a stark example. The economy has collapsed primarily because of credit spending and the breakdown of family finances.

Take a moment to see how your finances add up. If your budget shows that your expenditures exceed your income, you are in serious trouble. Immediate action is necessary if you wish to keep your current lifestyle and secure a financially independent future. Before we get into ways that you can reduce your debt, let’s take a moment to look at the most common types of debt that lead to financial problems:

* Credit cards * Auto loans * Impulse shopping

All three of these types of debt put a huge dent in your finances. Exorbitant finance rates jack up the price of everything, turning good deals into expensive luxuries that you cannot afford. It’s true; that economically priced KIA could cost you more than you ever dreamed. Fortunately, there is a way to reduce debt and turn things around. The following tips will help you take control of your debt and secure financial independence.

* Reduce Expenditures – You must dramatically lower the amount of money that you spend each month. Separate your needs from your wants and start eliminating bills. Some areas where most families can cut costs include entertainment, travel, clothes, gifts, home improvements and new auto purchases.

* Pay Off Credit Cards – Purchasing items with credit cards is the most expensive way to shop. If you owe balances on your credit cards, you are throwing away money in interest each month. Think about it this way: If you pay off a credit card with a 19 percent interest rate, you will save the same amount of money that you would earn placing the balance owed in an investment account with a 19 percent yield.

* Consolidate Debt – Consolidate everything that you can into accounts with lower interest rates. Transfer credit card balances to cards with low rates and flex-pay features. Take out a second mortgage to pay off all of your high-interest debts.

* Debit Don’t Credit – Avoid using credit cards at all costs. Freeze them, cut them up…do everything that you have to do to make your credit cards inaccessible. Use your debit card for internet purchases and other purchases that require a credit card. It is very tempting to let credit card purchases accumulate interest charges.

* Borrow – The greatest thing about borrowing money from family is the interest rate that you will receive. Nowhere else will you be able to obtain a loan with a 0 percent interest rate.

Your financial future is completely dependent on the steps that you take today. If you are struggling financially now, things will only get worse if you do not do something to change your circumstances.