Debt - Strategically Pay It Back
By Kevin Erickson, Thu Dec 8th

When paying back debt, a little strategy goes a long way. It canliterally save you hundreds, even thousands of dollars ininterest charges. And the best part is that the best, mosteffective strategy is so easy to follow.

List Your Debt Make a list of all your debt: The amount of each,the monthly payment and the interest rate. You may have troublefinding this information, but it's worth bringing it alltogether into one place and documenting it in a format you canfollow. You can't manage your debt strategically if you don'teven know the full extent of it, now can you?

Remember to include your credit cards (be sure to include thedifferent rates and balances for purchases and cash advances)other cards, loans, mortgages, and even money you've borrowedfrom friends or family. All debt counts when you're trying topay it off completely or to get it down to a manageable level.

Bad Debt and Good Debt Go through your debt and organize theminto "good" and "bad" debt. This may sound a bit odd, but alldebt is not created equal - certain types of debt are nowherenear as bad as other debt. A mortgage, for example, is aninvestment in a house, paid over a fixed term - there's no realrisk of paying a ridiculous amount of interest or never gettingit paid off. On the other hand, the interest you're paying on acredit card isn't tax deductible and isn't associated with anasset of value and so that debt is "bad" debt. Below are a fewexamples of both types of debt:

Good Debt - Mortgage, Student Loan, Car Loan Bad Debt - CreditCards, Store Cards

As a rule, good debt is for a fixed amount of time and allowsyou to buy something of value that without the debt, youcouldn't otherwise afford. On the flip side, bad debt is"revolving" and is used as a substitute for cash to purchase

inmany instances, non-essential products and services.

Prioritize For the time being, cross your good debt off thelist. You shouldn't consider paying your good debt off earlyuntil you've paid all your bad debts off.

First, arrange your debts by interest rate, with the highestinterest rate at the top. Odds are that the debt at the top willbe a store card or credit card, which could have a very highinterest rate. Next, try to transfer as much money as you canfrom the high-interest cards down the list to the lower-interestones.

Once you've done that, focus all your energy on repaying thedebt with the highest interest rate. Pay the minimum oneverything else and throw as much money as you can find atpaying that debt off as quickly as possible.

A few ideas to come up with some additional monthly income are:Cancel any non-essential monthly commitments and put that moneytowards your payments. Until you pay off your bad debt - stopsaving. Keep track of where your money goes, for a month or two.This will enable you to find areas where you're spending moneyfrivolously that you could be using to pay off your debt.

Do your best to give up any expensive habits you might have.You'll be shocked at how fast your debts can go down if you putthe money you normally spend on smoking, drinking or gamblingtowards them! I'm not trying to spoil your fun here. Simply makea few small sacrifices for a while, and your life will be somuch better in the long run.

You have to be aggressive against your high interest carryingbad debt and focus on eliminating at all costs. This is a war,be the aggressor, win the monthly battles and before you know ityou'll win your war against debt.

About the author:Kevin Erickson is a contributing writer for:http://www.aneyeondebt.com and http://www.debtmergeresources.comand http://www.debtmgmtresources.com. This article may bereproduced only in its entirety.