Posted by DebtKid :: April 22, 2008 @ 12:58 pm

As home values across the country have declined, and new credit is more difficult to come by, Americans all across the country are reaching for their credit cards more than ever before.

Data from the Federal Reserve released this month showed American credit card debt has reached $951.7 billion. This number is up 8.2 percent from a year ago and is the highest amount ever recorded.

What's going on here?

1. Falling home prices have nearly eliminated the HELOC (home equity line of credit), one of the most popular ways to pay off high interest credit cards.
2. Homeowners are choosing to pay their credit card minimums (thus keeping lines of cash flow available) and giving up on their mortgage payments.

Here are some simple tips to avoid reaching for the plastic:

1. Freeze your credit cards. No, really.

To put your credit card spending on ice....put your cards on ice. Literally. Commit to paying cash and stick all your cards in a large plastic bottle. Fill the bottle with water, and stick it in the freezer.

This little technique isn't quite as drastic as cutting up your cards completely, but at least if you feel the urge to splurge, you'll have to wait for the cards to thaw out.

2. Choose one credit card

If you can't live without your cards, commit to using just one credit card. Preferably the one with the lowest APR. Start paying down your other cards as you learn to rely on just one credit card.

3. Get a battle buddy

Find a friend who's in a similar situation financially as you are. Make a pact to go over your credit card bills together each month. If you have a spouse, you should be doing this with him or her as well. Either way, it's good to have a battle buddy when it comes to using credit cards responsibly.

4. Spend less than you earn

It sounds so simple: spend less than you earn. Yet more and more Americans are spending more than they earn each year. Set up a budget and stick to it. Yeah, budgets may not be cool, but what's really not cool is having to choose between paying a mortgage or a credit card bill.

If this means you have to sell your home and rent for awhile, then do it. If it means giving up eating out, then do it.