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Liz Lahm hates being in debt. Three years ago, during her divorce, she owed $15,000 and was "spending like crazy--a time share, furniture--major purchases that I couldn't afford," she says. "I was just moving my [credit-card] balances from one bank to another." But for the past year, Lahm has been working with a financial planner in her hometown of Lexington, Ky., to erase her debt, and she says she'll never carry a balance on her cards again. Now, when she shops, if the money isn't in her checking account, "I don't buy it."

A growing number of Americans are making the same decision. Mired in debt, struggling to pay the minimum amount due, transferring balances among credit cards to get a lower interest rate, dodging calls from creditors, consumers have tired of the treadmill. While headlines still scream about the growing number of personal bankruptcy filings, what's easy to miss is evidence that a new attitude toward debt--enough!--is taking hold. Consumer borrowing has slowed--it rose only 4 percent last year compared with 14 percent in 1995, according to Haver Analytics, an economics consulting firm in New York. But the clearest change is in the way people view their credit cards. More holders are using their cards for convenience, paying off the balance each month and generating no interest charges. In 1992, 29 percent of cardholders were convenience users; today the share is 42 percent. In January, Wirthlin Worldwide reported that 36 percent of all users had canceled at least one card in the previous 12 months. About 20 percent of those said they did so as part of a conscious effort to charge less.

Debit cards are gaining in popularity, too. These cards allow consumers to control their spending because money is subtracted directly from their checking account. In the first half of 1997, Visa and MasterCard saw 14 percent growth in debit-card accounts; credit-card accounts were up only 1 percent.

Plastic surgery. Some consumers are targeting all their debts, from mortgages to student loans to car loans. But the main problem is high-interest credit-card debt, and that's the one most tackle first. Gone are the impulse buys--dinners out, trips to the Bahamas, the latest video games; in are planned purchases with the money to back them up. "A lot of people are hunkering down and realizing they can't just spend, spend, spend for the rest of their lives," says Karin McKerahan, a financial planner in Temecula, Calif. Indeed, conspicuous consumption is giving way to a new status symbol: debt freedom.

The most compelling reason for this change in attitude is simple: "It makes no sense to buy $200 worth of groceries and then pay 18 percent on it for six months," says Jack Reed of Longmont, Colo., who has paid off $12,000 in credit-card debt. Reed now uses cash for most purchases. "The only way to really justify those kinds of interest rates--18, 19, 20 percent--is to have something that is going to be around when you pay it off," he says.

That's why consumers are drawing a distinction between unsecured debt like credit cards and secured debt like mortgages. The latter is pretty much unavoidable and is deemed OK. "A home holds value," says Thomas Stanley, coauthor of The Millionaire Next Door (Longstreet Press, 1996, $22). "You are living there and you are going to get something back out of it." Stanley says this new legion of debt-free consumers is on the right track, and he draws a lesson from the spending habits of the people he studied for his book. "Millionaires don't carry debt on things that depreciate," he says.

Most debtors don't get snowed under on purpose; many say the debt sneaked up on them. "It's kind of delusional," says Anna Christian, a graphic designer in New York City who is paying down $45,000 in debt with the help of a local credit counseling service. "You just feel like you have $5,000 mad money to spend because you have a $5,000 credit-card limit."

Many debtors cling to an unrealistic view of future income, pinning their hopes on a bonus or raise. "They really believed that when they made these credit-card purchases they would be able to handle them," says Lauren Locker, a financial planner in Totowa, N.J. "Instead, the debt grew like an insidious cancer." Typically, a catastrophic event--the death of a spouse, divorce, the loss of a job--was the catalyst for change, provoking the debtor to seek counseling or file for bankruptcy.

Fortunately, many of today's debt fighters aren't waiting for disaster to strike. The need to save and invest for retirement--which is nearly impossible when you're struggling--is prodding many. With the advent of self-directed retirement plans like the 401(k) and a questionable future for Social Security, the onus for financing retirement falls on the individual. "They are looking down the road at spending 30 to 40 years in retirement," says Pat Jennerjohn, a financial planner in Oakland, Calif. With that realization, having the hottest electronic toy fades in importance.

Despite a vibrant economy, corporate layoffs still have some consumers worried; just last week, Intel decided to cut 3,000 jobs. "I don't want to be stuck with a credit-card payment if something happens to my job," says Steve Wallace of Lewisville, Texas, who recently transferred his $4,200 credit-card balance to a card with a lower interest rate to pay if off quickly and more cheaply.

The overwhelming and often unendurable stress that accompanies indebtedness is motivating many to pay off their bills. "It gives one a sense of futility, hopelessness, and despair," says Jerrold Mundis, author of How to Get Out of Debt, Stay Out of Debt & Live Prosperously (Bantam Books, 1990, $6.99). Debt can be pervasive, subtly infiltrating every facet of life. And it doesn't just ruin credit records; debt can destroy marriages, families, careers, and self-esteem.

Debt leaves many people distracted and vexed. "I was just miserable worrying about how to pay my bills from month to month," says Linda Pickens of Greenville, S.C. "I would much rather have peace of mind than a new pair of shoes." In extreme cases, stress results in depression, embezzlement, even suicide.

On the job, such feelings manifest themselves in lower productivity. About 15 percent of workers have money problems that affect the bottom line, says Prof. Thomas Garman of the Personal Finance Employee Education project at Virginia Tech. "You're moaning and groaning at the coffee machine about too many debts and money problems," he says. "You're wasting time on the phone trying to get a debt-consolidation loan."

Part of the impetus to shun debt flows from the simple-living movement--the push for an unencumbered life, with the time and resources to do what you please. Debt is its antithesis. "When you are in debt, you lose your freedom," says Janet Luhrs, editor of Simple Living: The Journal of Voluntary Simplicity, a Seattle newsletter. "You simply can't be free if you owe a bunch of money, because you have to work whether you like it or not." A contributing trend is the growing Christian movement to get away from debt on religious grounds (story, Page 70).

A booming stock market provides another catalyst. Debtors who cannot afford to invest find themselves more frustrated than ever at their inability to save. Financial planner Locker says many new clients tell her that if they had put the money they have spent on credit-card debt into the market they would be rich by now. "They are probably right," she says.

How to get out of credit-card debt is no mystery. Owning up to the problem is the first step. Forget about the amount. Are your debts causing you any level of emotional or psychological discomfort? "If they are, you probably have a 'debting' problem," says Mundis, who suggests adopting the creed of abstinence that guides recovering alcoholics. "If you don't pay that card off in full each month when that bill comes in, you ought not to use those cards," he urges.

Beans and rice. The next step is to stop spending or get a supplemental income--or both. Greg Westley of Pompton Lakes, N.J., is a medical editor by day and moonlights as a personal trainer and bartender to delete a $30,000 debt he and his wife incurred for their wedding two years ago. They live frugally--no vacations, no dining out, no new clothes every season. With a baby on the way, Westley is extremely fearful of a debt-laden existence. "Everyone we know has mortgages over $1,500, and they eat peanut butter every day."