Usually when we hear the word debt, we think it is bad. But, in reality, some debt is good, while some debt is bad. This abundance tip is about understanding debt and helping you shift to good debt.

Usually when we hear the word debt, we think it is bad. But that’s not true. Some debt is good; some debt is bad. Some debt can work for you, such as debt on a home loan that assists you in your taxes and helps you buy a home that appreciates in value. This abundance tip is about understanding debt and helping you shift to good debt.

The first place to consider debt in your financial life is with your credit cards. Credit cards are designed to help you build credit – or to prove to lending institutions that you are trustworthy to pay your bills, on time. The best way to use your credit card is to use it as a debit card and then pay off the bill entirely at the end of the month. We recommend that you never use your credit card for ephemeral things, such as food and movies, unless you are paying off your credit card entirely when you get the bill.

The second place to consider your debt is using credit cards to pay for seasonal items or intermediate items, such as back to school clothes. If you have a larger than expected bill, but can pay it off over a couple to few months, then using your credit card is a convenience and wouldn’t fall into the category of bad debt. If these season bills pile up and don’t get paid off so that you end up with a large credit card bill that isn’t getting paid down, then you need to work hard to reduce this debt.

The third place to consider your debt is in the productive assets, such as car, house, or business loan. These debts can are practical and even necessary. They work for you because you are able to deduct some of the expenses and interest on your taxes. They also work for you as you are able to borrow money for something that is out of reach, while you pay it off over time.

Lastly, when considering your debt, consider how to balance your debt. To live in today’s society, it’s difficult not to have any debt, but for whatever debt you have, keep it in balance with the rest of your life and your income so that it’s not stretching you too thin.

Next Month: Actions for beginning abundance: giving