Spending down debt: The best way to pay depends on your goals

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This is part of our series on strategies you can adopt to free yourself from burdensome debt.

There is no doubt that the hardest part about getting out of debt is finding the extra cash to do it with. Most of our posts here on WalletPop deal with different shades of that perplexing question -- how to generate extra income, spend less money, find the cheapest credit cards -- all towards the goal of reducing your punishing levels of debt.

But there is another, not quite so hard question about getting out of debt that we've only scratched the surface of so far on WalletPop. That is, once you've unlocked that extra cash and are in a position to start actually getting out of debt, what is the best way to pay it off?

Simple answer: That depends on your goals. In this series we list common reasons people want to reduce their debt load and the best strategy for that goal.

The two main techniques for spending down debt, our blogger Lita Epstein has come up with are the 'Snowball Effect' and the 'Round Robin.' The snowball effect is best for people who are getting eaten alive by high interest charges on their credit card balances. The plan there is to simply pay off your high interest credit cards first.

Things get more interesting with the round robin plan. That technique is best for people who are anticipating needing a large loan in the near future and want to improve their credit score in a hurry. The round robin technique advises you to pay off a chunk of each credit card in consecutive months until the balance on multiple cards (assuming you have them) is a small percentage of your total credit limit. That's a great way to raise your credit score, Epstein advises.

From those two basic methods, we've come up with some other situations that call for different debt-elimination techniques.

- You want to repair relations with the friends and family members you've borrowed money from.

- You are afraid of losing your home.

- You are close to retirement and don't want to leave your job with a heavy debt burden.

- You just got a big windfall and have a one-time chance to get out of debt.

Any of these fit your situation? Read on through the posts in this package. Do you have any additional questions for our credit and debt expert? Write to Lita Epstein and she'll do her best to help you come up with a solution.

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