J.D. at Get Rich Slowly has made his final payment and is now free of consumer debt. He still has a mortgage, but has eliminated $35,000 of consumer debt that began with a $500-limit department store credit card.

Here's a taste of how he did it:
Using the ideas I learned from personal finance books, I set out to eliminate my debt. I stumbled at first -- I made plenty of mistakes. But eventually I developed a system that worked:

1. I set goals. I can't stick to a budget to save my life, so I developed what I call a spending plan. Like a budget "lite", this tool simply gives me a rough idea of my income and expenses so that I can determine where best to put my money. It's like a roadmap to my money, and it has helped me reach my goals.
2. I read everything I could find. I continued to read personal finance books of all sorts. I learned that even the worst books generally contained a piece of advice I could use. I developed the ability to extract the stuff I could use from a book and to discard the rest. I subscribed to personal finance magazines. I read personal finance web sites.
3. I tracked every penny I spent. I never realized how easy it was for me to overspend simply because I didn't keep track of my money. I'd kept rough records in Quicken before, but now I became precise. By paying close attention, I was able to spot weaknesses and correct them.
There's lots more info at Get Rich Slowly. Congratulations, J.D.!

Have any Consumerists gotten themselves out of consumer debt? How did you do it? Share your strategy in the comments.

Robert and Helena shredded all their credit cards and arranged them to spell out "NO NEW DEBT" to cement their commitment to getting out of credit and living a debt-free life. According to the Today at 9:30 a.m., Senator Carl Levin (D-MI) will continue his investigation into the unfair and deceptive practices of the credit card industry. Today's topic: arbitrary rate increases for cardholders in good standing. The hearing picks up where Senator Levin left off in March, when he questioned the use of excessive fees, interest charges, and the abuse of grace periods.

Today's hearing will feature two panels. First, three aggrieved consumers will share their horror stories. Then, the presidents of Discover, Bank of America, and Capitol One will explain that the three consumers who just testified are not at all representative of average cardholders. Right.

The tears and lies start flowing at 9:30 a.m.
(Photo: samwilkinson)

9:25: Two choices for your viewing and listening pleasure: Video Link—Audio Link
9:34: And we're off. Levin has arranged for an interesting hearing. The first consumer we will hear from is Janet Hard. Janet is married to a steamfitter. She has a Discover card that jumped from 18% to 24% because her FICO score dropped. When Janet complained, the rate dropped to 21%. Discover's President will testify today.

9:37: Levin is most incensed by the retroactive nature of rate increases. Take a consumer whose debt jumps from 15% to 27%. That new rate applies not to new debts, but to all incurred debts.

9:41: Bonnie Rushing has two Bank of America cards. One is associated with AAA. Both cards had an 8% rate. BoA bumped the AAA rate from 8% to 23% because Bonnie's FICO score fell. It didn't matter that her payment history was perfect. Bonnie isn't sure why her FICO score dropped, but she thinks it may be because she opened a store-branded card at Macy's to receive an immediate 10% discount on a purchase, unaware that it would affect her FICO score.

9:43: When Bonnie received the rate-increase notice, she opted-out and closed her account. BoA tried to pressure her to keep the new, higher rate, but after she complained to state and federal authorities, BoA let her close her account. BoA's president will testify today.

9:44: Capital One raises rates by looking for accounts that haven't been bumped in three years—but they don't use FICO scores.

9:44: One consumer was hit by three rate increases in three months. Oftentimes the rates doubled or tripled. The consumer was able to reduce her rates by calling and fighting the credit card companies.

9:46: Levin: "If you shop with a credit card, as most consumers do, dangers lurk."

9:46: Most people don't realize that their FICO score drops even if they approach—not exceed, approach—their credit limit.

9:47: The Committee asked who determines a FICO score, who determines when a rate jumps because of a FICO score. The answer: computers.

9:47: Issuers don't know why a FICO score drops. They have four "reason codes," generic statements like: "balance grew too fast compared to credit limit," or "balance on bank cards is too low."

9:48: By law, consumers are entitled to know who supplies credit data. Even with this data, few consumers realize that a rate hike was caused by a lower FICO score.

9:50: When Janet Hard received her rate increase notice, she was told that it was because her balances were too high and her accounts were delinquent. When pressed, Discover couldn't explain which balances were too high, or which accounts were delinquent.

9:51: Levin does not want any increases for consumers who pay their bills on time. At least not retroactive increases.

9:53: Credit card companies have drop rates when the Subcommittee calls to inquire about an account.

9:55: Levin's solution is S. 1395, which would:"bar companies from charging interest on debt paid by the due date, cap penalty interest-rate increases, prohibit interest from being charged on late fees or over-the-limit fees and prohibit late fees if a card-issuer delays crediting a payment."9:55: Senator Norm Coleman (R-MN) is claiming that the nature has credit has changed. It used to be something you earned. Now, creditors are tossing cards like confetti.

9:56: It seems like a personal problem, but it has nationwide implications.

9:57: For background: Abusive credit card practices affect everyone. In a country of 300 million, we charged more than $1.8 trillion dollars on over 691 million credit cards in 2005. Back in the eighties, Americans charged about $70 billion per year.

9:57: Coleman argues that the democratization of credit has helped America, but it has been tainted by federal regulations that raise rates. Eh? Coleman asked credit card companies to regulate themselves so Congress can focus on something else. Apparently, his strategy of "Be Nice, Please" is working. Double-cycle billing is now a thing of the past. See, no federal regulation needed. "These are serious steps and constitute self-reform."

9:59: 'There is a competitive advantage to offering fair user-friendly offers.' Sure, but nobody does. At least he realizes that there still massive problems, with universal default and rate increases out of the b