Investment Tip

The Kinds of Debt to Avoid

It may well be that in this day and age acquiring some debt from time to time is nearly unavoidable, but it is wise to limit debt because it is such a drag on your finances. One way to think about this issue is to consider what uses of debt DO NOT make good common sense.

• Avoid going into debt for consumer products that will either be used up immediately or will begin to depreciate immediately.
• Taking out loans or using credit cards for things like appliances, electronic items, vacations, clothing, nights out on the town, Starbucks coffee, drinks for the boys after work, or gifts for friends and family makes no sense whatever.
• Save up and pay cash for such things. No where is it written that you are entitled to have everything you want this instant; and there's some excitement in the anticipation of saving for something you'd really like to have.
• Happiness doesn't come from having a lot of stuff anyway.

Credit cards in particular are a trap because in one sense it doesn't seem as if you're spending YOUR money when you use them, but you are, believe me. Keep in mind that every time you use a credit card or take a loan, you're spending money you don't have yet; and you really don't want to go very far down THAT road!