Beware of Using Other People’s Money–Credit Cards

In general, a bad use of debt is debt that does not improve our financial situation. Most often when debt is used it is done so to invest in such things as; career development (revenue generating) and buy a house or business (providing cash flow and/or increasing in value upon selling). Although there is no guarantee more money will be generated from the investment purchase then what was spent purchasing it with borrowed money, a calculated risk was made to increase our financial position.

Another form of bad debt is any debt that can not be repaid. Failing to repay student loans or make house payments are examples of how a good use of debt can turn bad.

Credit and store credit cards are the most commonly used tools that generates bad debt. Typically these cards are used to purchase things that do not add financial value and if they do the item loses value almost immediately.

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