After 31-year-old Michelle R. Phillips of Dallas graduated from law school in 1999, she watched many of her colleagues at the law firm where she worked adjust to their salaries by spending lavishly on wardrobes, traveling, and pampering themselves. But Phillips couldn't participate in the spending sprees. She was still struggling to pay off the $12,000 in credit-card Debt--spread over ten cards--she had accumulated in college. "At one point I was unable to pay even the minimum amount due, and I wasn't applying anything to the principal," she says.

Debt has become a deadweight on an increasing number of African-Americans, according to "Costly Credit," a recent report by the public-policy organization Demos. The study found that nearly 20 percent of credit-card-indebted Blacks who earn less than $50,000 are in debt hardship, which means 40 percent of their income goes to debt payments.

But Phillips was determined to set herself free. She and three other now-debt-liberated sisters share their strategies for achieving financial freedom:

TAKE IT ONE STEP AT A TIME. Phillips began reading books on debt reduction and called her creditors and negotiated better terms. She had taken part-time jobs while in law school and put herself on a strict budget. "When people invited me to go places, I'd say no," she recalls. "I would grocery-shop instead of eating out. And I made do with the clothes in my closet." With the money she freed up from cutting back, she tackled the cards with the highest interest rates first, often tripling the minimum payment. She made a list, and when she paid off a bill, she'd cross it off and apply that money to the card with the next highest rate. It took Phillips six years to get out of the red. Now she uses one credit card for major purchases and is having her first home built. "I changed my philosophy because being in debt felt like being in prison," she says. "Today I feel free."