A plan to address your debt problem

If you're ready address your debt situation, here's a plan for you:

Get intimate with your debt. It's not enough to know how much you borrowed and the monthly payment - which is all many people know about their debts.

You should know everything relevant, such as your balances on every account, the interest rates you're paying, whether that interest is deductible, when and how those rates can change and whether you'll face any kind of penalties for paying off an account early. Call your lender and ask questions if you're not sure. Write it all down.

Prioritize your debt :

Divide your debts into deductible and nondeductible lots. Credit cards, car loans and personal loans are nondeductible debt, so you get no tax break on the interest. Mortgages, home-equity loans and some student loans are usually deductible.

Once you know which is which, rank the debts in each lot, from highest interest rate to lowest. If you've got a balance on a credit card with a teaser rate that will expire, use the higher rate that will take its place.

There's no guarantee you'll be able to find an equal or lower rate when the teaser disappears, and the last thing you need to do right now is open more accounts.

Eradicate your debt :

You can start with your highest-rate, nondeductible debt -- or the non-deductible debt with the smallest balance, if you need the sense of satisfaction from wiping out a bill as soon as possible.

Either way, be sure to pay the minimums on your other debts, and put as much money as possible toward your first debt-eradication target. Once that account is paid off, take the same amount of money and apply it to your next target, usually the next highest rate debt.

Keep doing this until all your nondeductible debt is gone. Then you can begin working on your deductible debt, or boost your investing, or both.