Millions of Americans collectively owe trillions of dollars to various types of lenders, and even Uncle Sam is deep in the hole. There is plenty of blame to go around for this state of affairs, from corporate shenanigans and questionable political leadership to a lack of financial literacy and the gradual transformation of old-school luxuries into new-school necessities.

More important than how we got here, however, is what we're going to do about it now.

The ideal approach is neither to continue our old overleveraging ways nor to swear off all manners of debt. Those are merely opposite extremes of a debt-dictated lifestyle; refusing to get a mortgage or a business loan, for instance, could serve to delay the American Dream in its own way. True debt freedom entails wielding leverage with responsibility and purpose, rather than out of necessity or rashness. It requires the discipline to borrow only for appreciating assets and when it's truly affordable, as well as the wherewithal to adjust your saving and investment strategy as your station in life changes.

With that in mind, WalletHub would like to offer some tips, information, and resources in support of your pursuit of financial independence.

How to become debt-free

  1. Figure out where you stand: The first step in freeing yourself from debt is getting a clear sense of your starting point. So gather all relevant documentation -- including all of your latest bank account and credit card statements, pay stubs, etc. -- and determine exactly how much you owe, the rates of interest you're paying, and how much money you have coming in each month. This will enable you to make a plan of attack.
  2. Use a debt-free calculator: While optimism is great, a hope-for-the-best attitude will not pay off your balances. Rather, it's important to devise a realistic, commonsense plan that will get you out of debt by a particular time by steadily chipping away at your debt each month. A debt-free calculator will help you determine how much interest is costing you, how long it will take to pay off your balance based on different monthly payments, and even whether there is a credit card deal available that will save you money.
  3. Visit a nonprofit credit counselor: The process of eradicating debt often calls for a fresh perspective and a bit of expertise. As such, you shouldn't be afraid to ask for help. The best sources for such information are typically nonprofit credit counselors and university-sponsored clinics, as they'll be inexpensive (often free) and impartial. You don't have to listen to everything they say, but you can ask questions and at least gather some potentially helpful information.
  4. Make a budget: A well-thought-out budget is the centerpiece of any plan to reach debt freedom. The best approach is to make a list of your monthly expenses (based on previous months' bills) and cut as much of the fat as possible in order to make room for increased monthly debt payments and savings contributions. This process will be difficult, as it will require sacrifices and the redefinition of necessities into luxuries, but you'll find that it will all be worth it.
  5. Evaluate your career: Sometimes, no matter how much we scrimp and save, we simply cannot make a significant dent in our debt given our current earning potential. Addition becomes just as important as subtraction in such situations. In other words, you may need to consider ways to supplement your income -- such as switching employers, entering a new field, or getting additional education -- in order to make ends meet in the long run.
  6. Explore your other debt solutions: Depending on how much debt you've accumulated and the state of your credit history, the debt solutions at your disposal may range from transferring a balance to a 0% credit card to entering into a debt management plan to speaking with a bankruptcy attorney.

How to live debt-free

  1. Stick to that budget: A budget is not just for exorcising your debt demons. It should be employed on an ongoing basis and adjusted based on changes to your income or monthly expenses. Most importantly, it should serve as a reference point, enabling you to compare your actual personal financial performance to what you've planned in order to make sure you stay on the debt-free path moving forward.
  2. Build an emergency fund: True debt freedom is not complete without an emergency fund. Without some rainy-day funds, you're only an unexpected expense or income disruption away from having to borrow to get by. Ideally, you should gradually save around a year's worth of take-home pay in order to insulate your household finances from the future unknown.
  3. Remove temptation if necessary: You shouldn't give up on credit entirely just because you want to live a debt-free lifestyle. There are many reasons to use a credit card, chief among them being plastic's ability to build your credit. That's important because the influence of your credit score extends well beyond debt to your car insurance premiums, job prospects, housing options, and more. And because you don't actually need to make purchases with a credit card to build a good credit score, you can always cut up your card or lock it in a drawer in order to benefit without the temptation to overspend.
  4. Use the "island approach": The island approach is a credit card strategy that involves using different cards for different types of transactions in order to save money and promote financial clarity. The centerpiece of this strategy is typically an everyday spending card that should be paid off in full every month. If ever you fail to do so, you'll know you're spending too much and need to cut back.
  5. Automate payments: Sometimes debt is borne of simple forgetfulness, e.g., failing to pay a bill on time and thereby incurring finance charges and potential credit score damage. Setting up automatic monthly payments from a bank account -- for the minimum amount required, your full balance, or a custom amount -- will help you remain in good standing and give you one less thing to worry about.
  6. Take advantage of rewards: Folks who pay for things exclusively in cash effectively subsidize the expenses of those who use plastic, as prices are typically the same for both payment methods and everyone therefore helps foot the bill for payment processing and rewards programs. You can maximize this inherent plastic price advantage by making a rewards card that offers attractive earning rates for your biggest everyday expense categories your primary spending vehicle and paying your bill in full every month.Occasionally supplementing what you earn with a lucrative initial bonus can be beneficial as well.
  7. Save early, often, and for specific reasons: Putting your money to work and allowing compound interest to work for you, rather than against you, is the easiest way to accumulate long-term wealth. Setting specific spending goals (e.g., retirement, college, or even a vacation) and allocating funds in different accounts will make it easier to track your progress, garner various tax benefits, and manage your liquidity.
  8. Invest wisely: You don't need to be a genius to benefit from the stock market. You just can't be reckless or greedy. Most people are best off with a low-cost mutual fund or ETF that mirrors the broader stock market, such as the low-risk SPDR S&P 500. If you decide to pick individual stocks, remember to stay diversified and don't try to time the market.

While becoming and staying debt-free can be difficult, it is an eminently noble goal. After all, if we all work together, our societal addiction to debt can one day be beaten.