If
you have gotten in over your head in credit card debt, you are in good
company. The Federal Reserve says Americans have accumulated nearly $1
trillion, a record amount, in what it calls ”revolving credit.”

But while the financial experts are urging people to pay down debt —
particularly expensive credit card debt — that is easier said than
done.

It may help motivate you to look at your debt in a new light, said
Hersh Shefrin, a professor of behavioral finance at Santa Clara
University. Although many overstretched consumers think of paying off
debt as a form of self-denial, Professor Shefrin said they have got it
wrong.  Debt, he said, is actually a form of borrowing against future
consumption. In other words, paying off a credit card with a high
interest rate now means you will have more money to spend on yourself
later.

For example, the typical American carries a $9,000 credit card balance
from month to month. Say this card charges an annual 18 percent
interest rate and allows paying as little as 2 percent of the balance
each month. Even if no more charges are made on the card and the
minimum payments is made on time every month, it would take 47 years to
pay it off, according to the National Foundation of Credit Counselors.
By then, total payments would be $32,994, including $23,994 in interest.

For those now persuaded that paying off their credit cards is a good thing, the question is how.

Using the language of a 12-step program, Gail Cunningham, the
spokeswoman for the National Foundation for Credit Counseling, said the
first step was ”admitting that you have a problem.”

”So many people walk into our offices every day with grocery bags filled with unopened bills,” Ms. Cunningham said.

Many consumers can figure out how to get their finances back in order
on their own, she said. But for anyone who needs  help, nonprofit
credit counseling agencies that are  members of the foundation are
available in all 50 states, the District of Columbia and Puerto Rico.
(You can locate the counselors on the Web site, www.NFCC.org or by calling (800) 388-2227.)

The next step is taking a good look at your income and expenses, just
as you would the balance sheet of a company whose stock you are
thinking of buying. Does your financial life more closely resemble
Google or Bear Stearns?

Ms. Cunningham says she routinely tells clients to cut back spending. 
But if there are not many expenses that can be cut, she said, perhaps
more income is needed.  Taking a second job may sound hard, she said,
but it is not as hard as living with debt.

Beyond figuring out a way to get income and expenses into better balance, credit counselors have a few basic dos and don’ts.

The most common advice is to pay off credit cards or other loans that
have the highest interest rate first, and then keep working down the
list. Of course, each situation is unique. If you have many debts, some
experts recommend paying a few manageable bills first. Even if these do
not have the highest interest rates, you get a sense of accomplishment
that may keep you going.

One thing to keep in mind when setting priorities on which debts to pay
first is which debt is secured and which is unsecured. The biggest
secured debt that most Americans have is the mortgage on their homes.

During the mortgage boom, experts say, many Americans made a huge
mistake by taking out home equity loans to pay off high-cost credit
cards. That may have sounded like a good idea because the interest
rates for home equity loans
are generally much lower than those for credit cards. But what these
consumers were really doing was transferring unsecured debt to secured
debt, ”and that is never a good idea,” said Nancy Register, the
associate director of the Consumer Federation of America in Washington.

Ms. Register is the director of America Saves, a national campaign the
federation runs in coordination with more than 1,000 governmental,
nonprofit and corporate entities. ”Getting to zero debt is a
wealth-building strategy,” and a cornerstone of the America Saves
program, she said. (For more information, go to www.AmericaSaves.org.)

But, of course, getting to zero debt is not exactly what the card companies encourage. Indeed, Ms. Register blames ”relentless marketing” by credit card companies for the historic levels of consumer debt in America.

So do not be surprised if once you start paying off debt, your mailbox is flooded with new credit card offers.

”Credit card companies love to get you to take on more debt again,” said Douglas Heller, the executive director of Consumer Watchdog, an advocacy group based in Santa Monica, Calif. But he said there might be a silver lining to those new offers, if you know how credit scores work.

Those who fall into debt, he said, are often trapped in a downward spiral. ”The higher your debt load, the lower your credit score,” he said. ”And the lower your credit score, the more you will pay for any loan.” That, Mr. Heller added,  ”just makes it harder and harder for people to climb out of these holes.”

But these same forces can work in your favor, once you start paying off your debt. Lower debt should improve your credit score and help you negotiate lower interest rates on your remaining debt. That, in turn, makes it easier to pay it off.

Consumers may be hoping for a respite from high credit card interest because of recent cuts by the Federal Reserve.  But even if the credit card companies do lower their interest rates — and they tend to lag behind the Fed — the few percentage points in Fed rate cuts do not amount to much when compared with the typical rate on a credit card.

A decrease of two percentage points, for example, may be a big proportion of what you are paying for your mortgage. If you have great credit, you may even be able to refinance your home for a good fixed-rate mortgage now. But if you are paying 18 or 20 percent on your credit card, a cut of two points does not mean much.

Paying down debt can have a much bigger impact — though not overnight. ”You can’t just cut up your credit cards on Monday, and expect a change in your credit score on Tuesday,” Mr. Heller said. ”Credit scores move more like a large ship than a speed boat.”

He also warned that some paths to debt reduction might damage your credit score, especially negotiating a lower balance on your credit card. Creditors will accept less money if they fear that someone is on the verge of default or bankruptcy. ”In their eyes, they are cutting their losses,” Mr. Heller said. But if a creditor agrees to excuse a portion of your debt, that will hurt your credit score and may cost you in the long run.

So what about  those low-cost credit card offers that will start appearing in your mailbox? Mr. Heller suggests using them to try to negotiate a lower rate with your current card company because having a long history with one company improves your credit score. But if your issuer will not match the lower amount, he said, you can always take one of those other offers.

Douglas Heller is the executive director of Consumer Watchdog, a
consumer advocacy group. (PHOTOGRAPH BY ANN JOHANSSON FOR THE NEW YORK
TIMES)