Being More Frugal

We owe, and owe more than ever before. But what is America's obsession with credit doing to the family budget?

Debt. Most of us have it; all of us want to get rid of it. It can keep us awake at night. It can wreak havoc with everything from our vacation budget to our retirement plans. It's becoming a more pervasive presence in our lives, and you'd think we would do everything we could to avoid it. But the statistics tell a different story. America is a society addicted to credit. Indeed, almost all of us have been touched by the dreaded kiss of debt.

And if you think soaring corporate profits, low taxes and high employment are helping families dig their way out of their credit woes, think again. In 2005, the total American consumer debt was $2.2 trillion - a staggering 41 percent increase since 1998. In 2005, the average American household debt was $11,840. The statistics speak for themselves: Americans owe more than ever before.

Yet strategies for managing our debt have not kept pace with the debt itself. Putting off retirement savings has become a way of life for too many. Setting aside enough in our children's college funds has become a monthly struggle. And more and more Americans are relying on revolving doors of credit to get by - using one credit card to pay off another.

This has led to a stunning increase in the number of bankruptcy filings in the past 25 years - from 300,000 in 1980 to more than 2 million in 2005. Pressured by the lending industry, the U.S. government responded to this trend by passing the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which makes it more difficult for consumers to file for bankruptcy.

So with all this bleak news, how do we go about managing our spiraling debt loads? The answer for most of us is to find practical and innovative ways to be more frugal with our discretionary spending. In fact, the consensus in the personal finance blogosphere is that frugality is the new cool. Bargain hunting has practically become a sport as debt-ridden consumers look to create more breathing space in their budgets. These strategies can include:

Not all strategies are created equal, but if you're living with an unmanageable debt, you're going to have to implement one or more of them. The worst strategy, of course, is to have no strategy at all.

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