GOOD VS BAD DEBT

Debt is an amazing tool. It has the power to make you rich and it has the power to ruin you financially. Like any tool, the secret is knowing how to use it properly to get the results you want. Most people don't realize that there are two kinds of debt - good debt and bad debt.
There are many programs to help you learn how to create good debt in a way that will get you out of the rat race much faster. This article, however, will focus on tips you can use to reduce your bad debt. Bad debt is anything you buy that doesn't help increase your assets. We call them "doodads."
When you find yourself deep in a hole, you need to stop digging. And that means curbing your spending - avoiding the temptation to buy doodads like a robot lawn mower, a car that gets ten miles per gallon, or a second pair of high-end athletic shoes. Admittedly, this requires willpower. Even today as people are realizing that they need to cut back due to difficult economic times, most people still have not been able to learn the old-fashioned virtue of delayed gratification.
By cutting back on doodads, you'll increase the percentage of income you keep. It's important not to consider this a temporary step. If you truly want to stay out of debt and enjoy security, comfort, or riches, you ought to make purchasing assets instead of doodads a life-long practice. Once you've built up your assets that provide you income, then you'll have the extra money you need to buy as many doodads as you want.
There are hundreds of ways to trim a budget. If you save $25 a week- and most people can easily trim that much - you'll have $1,300 a year to put towards your credit card balance. Save $40 a week and you'll have $2,080!
The Waste-Watchers Diet
Take a couple minutes to do a simple exercise. In the table below, write down enough belt-tightening measures to yield at least $150 in savings each month (or even more if you're able). Some of these may seem hard, but ask yourself what you could truly live without if you absolutely had to. Next, figure out which of these items you can commit to in helping you shed your budgetary flab. Your financial health depends on it. You may not miss that extra cup of gourmet coffee or trip to the movies nearly as much as you'll love having that extra money in your pocket each month.

I AGREE TO CUT BACK ON FOR A MONTHLY SAVINGS OF
1................ $.....................
2................ $.....................
3................ $.....................
4................ $.....................
5................ $.....................
6................ $.....................
Signed...................TOTAL $...............

Eliminate All Unsecured Debt
In addition to good and bad debt, there is also secured and unsecured debt. Secured debt is debt with collateral behind it, such as your home mortgage or car loan. Unsecured debt is debt with no collateral behind it, for example, personal loans, medical bills, and the charges on your credit card. Once you've cut expenses, the debt you should attack first is unsecured debt. While some unsecured debt is unavoidable - most is unnecessary, the result of unbridled spending. Review your unsecured and secured debts to see if they are good or bad debts. I would consider most unsecured debt bad debt. Remember, good debt is debt that buys an asset, so it is usually secured debt.