How can I downgrade contacts to a defunct category without deleting them?

How can I downgrade contacts to a defunct category without deleting them?

Hey everyone~

I was just wondering if there is a way to downgrade contacts to another category once they are no longer pertinent so that 
I retain their information but do not have them cluttering my list of active contacts.

So far, I have just been copying the person's name and contact info onto an outside spreadsheet and then deleting the person from the CRM.

It seems there must be a better way to manage this process.

Can anyone help me?