Almost everyone nowadays is in debt. It takes on many different forms — mortgages, car payments, student loans, medical bills, and others such as that. I think the most popular form of debt is something which we are all familiar with — the credit card. This form of debt and those that are similar to what they offer — high balances, which require only very minimal payments — are the ones you should definitely avoid. Look at it this way, If you just stick to the minimum payments, you are only feeding the interest rate, and you will probably not be lowering the principal amount that you borrowed to begin with. This is why some people seem to be in consumer debt for their whole lives, and some of them are even forced into bankruptcy because of this.

However, don’t get me wrong. Debts are not always bad. Oftentimes, they present us with the opportunity to make purchases that we need, even though we don’t have the money on hand yet. Take for example housing. I am pretty sure that only a handful of people can buy a house with the money they have on hand. Most of us have to take out a mortgage to be able to put a roof over our heads. This is probably the best example of a good debt since at the end of it all, once you have paid off your debt, you will end up with an asset that is yours. You can also consider your student loan as a good debt since that went into investing in yourself and you will most probably not have gotten to where you are right now had you not been properly educated.

There are even ways to make your consumer credit work for you to make money. Bottom line, credit, while though it is readily available to you, can be a double edged blade. It should be used carefully.