“I’ve seen a lot of people going back to basics in the last year and a half,” said June Walbert, certified financial planner practitioner with USAA Financial Planning Services. “They’ve gone back to the whole needs vs. wants discussion, which is very healthy. We Americans have been subsidizing our lifestyle for years — dare I say decades.”

But the problem with living beyond one’s means is that it’s “difficult, if not impossible” to reach any other life’s goals, such as retirement or educating your children.

“Americans have about $1 trillion in revolving debt,” Walbert said.

But credit lines across the country are being cut, and interest rates are going up, which effectively reduces the “income” consumers and businesses have become accustomed to.

Walbert recommends that people “face the music” — and “put on their big-girl shoes and open their statements and see what position they’re in.”

With a highlighter in hand, illuminate three items on each statement: the interest rate, minimum payment and the total balance owed.

Then add all the totals.

“That can be a sobering experience,” Walbert said. “Many people have seven to 10 credit cards and don’t know how much they owe.”

Next, “rack and stack” your credit card statements.

(At least she manages to make it sound exotic or fun.)

Method No. 1:  “Figure out how much money you can throw at the card with the highest interest rate, while making the minimum payment on the other cards,” Walbert said.

These involves — gasp — developing a budget (aka), a spending/savings plan and calculating how long it will take to pay off the first card. After the first card is paid off, take that monthly payment (the most you can afford, remember?), and apply it toward the card with the second highest interest rate and “aggressively go after paying it off while still making minimum payments on the other cards,” Walbert said.

If you’re starting to see a pattern here — well, that’s the whole point, because this method will eliminate credit card debt.

For those of you who are tempted in get a consolidation loan, Walbert doesn’t recommend it.

“People need to feel the pain of paying each card off one at a time,” she said, so they learn a life lesson.

But that’s not all.

The problem with a consolidation loan, she said, is that such loans don’t change behavior, or as she calls it, “overspending ways. Then you end up with both a consolidation loan and fresh balances on credit cards.”

Egads — then you’re really in trouble, like being halfway up the Incline when the lightning and hail start with a Rocky Mountain vengeance. (Been there, done that, don’t recommend it.)

However, there is one thing Walbert sees as an advantage with consolidation loans — it’s one bill to pay, with an end date, so people know they will be debt-free in, say, three or five years.

Although the average credit card/revolving line of credit debt per household is $8,000 to $9,000, in reality, some people have no debt, while others have “much, much more.”

“Living within your means is the cornerstone of financial success,” she said. “If you can master that, you’ll be credit-card-debt free and able to live the nice life in retirement, buy that summer home or whatever your goal is.”

Now, there is an alternate method of destroying credit card debt, which, Walbert points out, is not as “mathematically efficient,” but is more effective for people who need instant gratification.

It’s simple: Pay off the credit card with the smallest balance first.

Then, of course, with all that positive momentum, move on and decimate the balance on the next card, and so on.

“It’s a quick win,” she said. People are motivated by the rapid success of paying off one card, so they continue with the plan.

But don’t haphazardly cancel each credit card after it’s paid off. Ideally, consumers should only keep one to three major credit cards.

Consumers should keep open the cards with the longest payment history, so it doesn’t “negatively impact” their credit score.

The FICO score, used by credit agencies and financial institutions to evaluate credit worthiness, determines a consumer’s interest rates.

And by managing credit responsibly, consumers can get lower interest rates on installment purchases such as homes or cars.

FICO has five components: 30 percent is debt to maximum allowable balance ratio, 35 percent is payment history, 15 percent is length of credit history, 10 percent is types of credit and 10 percent is applications for new credit.

Walbert advises clients not to owe more than 10 percent to 30 percent of their maximum allowable balance. If your total allowable balance is $10,000, then don’t owe more than $3,000.

Rebecca Tonn covers banking and finance for the Colorado Springs Business Journal.

The Senate passed the bill Tuesday, 90-5.

“Card issuers raise rates for unclear reasons, use billing methods that consumers do not understand, and assign fees and charges without warning,” said Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee.

President Barack Obama is expected to sign the bill into law. Treasury Secretary Timothy Geithner on Tuesday said the bill would “create a more fair, transparent and simple consumer credit market.”

Of the five senators sympathetic to card lenders, two were from South Dakota, where thousands of jobs depend on the industry. Republican Sen. John Thune estimated the bill would cost as many as 5,000 jobs in his home state.

Sen. Tim Johnson, also from South Dakota and the only Democrat to oppose the bill, agreed it could be devastating.

“This is a time when millions of consumers are already facing lower credit limits and higher interest rates on their credit cards because of decreasing credit availability and continued economic instability,” he said.

Also opposing the bill were GOP Sens. Lamar Alexander of Tennessee, Robert Bennett of Utah and Jon Kyl of Arizona.

But their voices were drowned out by lawmakers who said their offices had received dozens of complaints from voters.

“We said that big banks can no longer take advantage of hardworking Americans,” Senate Majority Leader Harry Reid, D-Nev., said of the Senate vote.

Senate Banking Committee Chairman Christopher Dodd, D-Dem., on Wednesday brushed aside talk that credit will be more scarce if Congress approves the bill.

Calling Tuesday’s Senate vote “a great day for consumers,” Dodd also said people still must handle their money responsibly and pay their bills on time. But he also said the measure was “a long time coming, a long time overdue.”

Dodd said any assertion that credit will be hard to get is absurd, “a little like Chicken Little.”

The Pew Health Group estimates that 82 percent of cards available to consumers include the stipulation that the cardholder’s rate can increase to any amount indefinitely if the lender determines the person is too much of a credit risk. Consumer advocates say it is these types of practices that can bury consumers in debt if they make one mistake.

Under the new bill, a customer would have to be more than 60 days behind on a payment before seeing a rate increase on an existing balance. Even then, the lender would be required to restore the previous, lower rate after six months if the cardholder pays the minimum balance on time.

Consumers also would have to receive 45 days’ notice and an explanation before their interest rate was increased.

Some of these changes, including the 45-day notice requirement, are already on track to take effect in July 2010 under new rules being imposed by the Federal Reserve. But the legislation would put these changes into law and go further in restricting the types of bank fees and who could get a card.

For example, the Senate bill requires those under 21 who seek a credit card to prove first that they can repay the money or that a parent or guardian is willing to pay off their debt if they default.