Do you believe in life after debt?

Paying down debt isn't enough, Manning said. You must set specific goals. He suggests looking at your life as "chapters in a book," with different goals for each stage. For example, the time to work a lot of hours and to diversify your portfolio is while you're fairly young. That gives you breathing room when you're older plus, maybe, the chance to retire early.

According to Manning, a financial plan helps people move "from debt management to wealth formation." He and other experts suggest reading books, taking classes or seeking professional guidance if you don't know how to manage money.

In order to manage money, though, you need to have some first.

"AllisonT," a teacher in her early 30s, knows she should be building an emergency fund and a retirement account. She dreams of buying a home and starting college funds for her two preschoolers. But none of this can happen until she and her husband finish paying off student loans, credit-card bills and two vehicles.

About $6,000 worth of debt remains, down from a high of about $30,000. That's progress, but years of stress are wearing on her. "I know there is an end, but I can't see it," she said. "I get very depressed."

It's not hopeless -- it just feels that way

Some readers of the Smart Spending message board have trouble thinking about saving; it's all they can do to pay their bills.

"I feel like I am never going to be out of debt. Somehow hubby always keeps screwing me up," wrote a woman posting as "Libra007." A reader who calls herself "Ohio Belle" wished for "a comfortable life, (so) if something breaks I do not have to worry about how to pay for it."

In fact, a recent survey by LendingTree found that 26% of us expect to die in debt.

A reader posting as "Marie38" believes that "being totally debt free is impossible." She makes $42,000 a year, and savings and 401(k) contributions are automatically deducted. Marie38 does not defer vacations and other extras, although she does pay cash. "My plan is to live while I am still young enough to do it," she wrote. "No one can predict the future. . . . None of us are guaranteed even one more day."

• Video: Budget your way to smart spending

Manning sees it differently. "Do you want to live it up now and live in poverty in retirement, or create a plan now?"

"Those are choices that people have to make, but most people don't want to make a long-term decision," he said.

"If you don't start asking that question, you're not looking for any answers."

A game plan for the rest of your life

If you're in debt, you can't get there without following basic, common-sense advice:

• Do whatever it takes to pay off consumer debt. (See "8 signs you're headed for debt disaster.")

• Build an emergency fund, then pay cash for unforeseen expenses. (See "Save your emergency fund for the real thing.")

• Live within your means -- or, better yet, below them. (See "9 money rules to live by.")

• Aggressively fund retirement. "You should save at least 20% of your salary. The old rule of 10% to 15% just isn't cutting it," said Bridget Smith of LendingTree. (Run the numbers on MSN Money's Retirement Calculator.)

Published July 31, 2007

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