Robyn Repya, Contributing Writer

Understanding credit and the effect it has on your financial potential is a significant part of financial success.

And if your credit is bad, it is also important when organizing your finances to know how to clean it up.

The first step is to determine what behavior is detrimental to your financial success and the think about ways to rectify any possible problems.

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It is important to protect your investments by monitoring the kind of debt you possess, said Adam Duey, a financial planner at the North Star Resource Group in Minneapolis.

While debt is not desired, Duey describes bad debt as any debt -- whether it's school loans or credit cards -- with an interest rate above 10 percent. He said that this is the kind of debt that needs to be paid off the fastest, because the longer it accumulates interest, the harder it will be to pay it off when it's growing at such a large rate.

There is a type of behavior modification that Duey said people with lots of debt need to undergo to fix the problem.

He said that people in debt usually go about their monthly expenses in this order:

1. They pay for necessities, such as groceries and utilities.
2. Then they use their money on their wants, such as entertainment or recreational activities.
3. They use what's left over to pay down their debt.

This never works, said Duey, because people have not acquired the discipline to save the money that they need to.

"The key to financial success isn't making a lot of money, just spend less than you earn," Duey said.

He recommended a different system on money management to help with this problem.

1. Have the money that needs to be saved for debt taken out of your paycheck automatically every month.
2. Pay for the necessities.
3. Use the leftover money on the wants.

For many people, this method will be difficult at first if they're used to having their extra money to use, but he said after about three months the adjustment period is over.

Preparing for the future by organizing your personal finances is an important task. The financial decisions made relatively early in life can affect your financial stability for years to come.

There are a variety of finance professionals; some work mostly with younger people just starting out after college, others specialize in advanced, high-end investing and still others are debt counselors.

More On Personal Finance:

• Getting Organized
• Investment Types

Additional Resources:

• SmartMoney.com
• American Savings Education Council
• TheStreet.com