When household debt spirals out of control, consumers can feel imprisoned by their mounting financial obligations. More than $200,000 of debt burdens the average American household, but you can end that destructive cycle by using personal finance software or following these simple debt strategies.

1. Pay Off a Small Debt First
Lack of motivation or a feeling of hopelessness can prevent consumers from paying off their household debts. To energize yourself in the face of debt, pay off a small bill first. You'll want to reproduce the resulting sense of accomplishment by tackling larger debts down the road. Start by paying off the credit card with the smallest balance, for example, to get the snowball effect rolling.

2. Calculate the Cost of a Credit-Based Purchase
When you swipe your credit card at an electronics store or clothing boutique, you probably don't think about the final cost of the item in your shopping bag. Force yourself to face that reality with a cost-of-loan calculator. Determine how much you'll pay in interest and associated costs, and only then decide whether your purchase merits the expense.

3. Leave the Cards at Home
To whittle down a high balance, stop carrying your credit cards when you know you won't need them. Lock them in a safe for a potential emergency, and use cash or your debit card for daily purchases. You'll slow your debt accumulation while living within your means and paying off existing balances.

4. Understand the Psychology of Credit
Why does U.S. household debt continue to grow? The answer lies in the human brain. When you hand over a credit card instead of cash, you experience less pain with the transaction. To stem the tide of debt, understand why you reach for plastic and train yourself to spend only what you already have in the bank.

Additionally, avoid using your credit card's limit as your spending limit. Because high credit-card usage negatively affects your credit score, restrict yourself to a lower limit, such as 20 or 30 percent of your actual credit-card limit.

5. Write It Down
Create a spreadsheet or buy a ledger at an office supply store. Keep track of every penny you earn and spend. When you pay a bill, enter the amount in the expenses column; when your paycheck arrives, record it in the income slot. Seeing your finances in black and white (or ones and zeros) can help you curtail excess spending. To simplify the process and gain access to advanced tools, use budget software instead.

6. Pay Yourself Interest
The debt cycle ends when you stop relying on credit for major purchases. If you want to buy a new car, for example, open a savings account for that purpose. Deposit a car payment into the account every month just as you would send to the bank if you had a loan. When you have saved up enough to buy the car, use that money to pay cash. You'll spend less on the car because you'll avoid interest payments, and your savings account will accrue interest as you add money to it, effectively boosting your cash reserves.

When your personal finances reflect less than the average household debt, you'll enjoy more financial freedom and less guilt about the things you buy.

More Top Stories