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   So What is Bad Debt?

So what is bad debt? Having debt... for absolute, total crap that you could not resell on eBay or even in a yard sale for a penny or would have to pay to get hauled away... here is some advice about what "bad" debt really is!

* "Bad Debt Comes from Paying Only the Minimum Required:

Card companies are steadily reducing their minimum required payments. Now most only require a 2% minimum payment down from the 5% required 5 years ago.

Lower minimum payments mean only one thing: you will pay even more interest for a longer period of time. If you are a "minimum payment maven", you will never pay off your debt.

* "Bad Debt Comes from Charging Bare Necessities:

Here is a good rule of thumb: "If you can eat it, drink it, or wear it, you should not charge it unless you pay it off in full each and every month!"

Necessities are: housing, utilities, clothes, etc.
Consider this chilling case. You charged a cashmere sweater because it was $100 reduced from $500 -but- you do not pay that sweater off because you are a "minimum payment" maven. Over time, that sweater costs you $1,000 (had it cost that you would not buy it!).

* "Bad Debt Comes from Charging Consumables:

Here is a good rule of thumb: "If you will be consuming it, in less than a month, you should not charge it unless you pay it off in full each and every month!"

Consumables are: food, drink, gas, phone, etc.
Consider this common case. You use credit and not cash to buy gas. Using credit you are automatically paying more. That charge contributes to your financed balance costing you more. That $20 tank of gas now costs you $30 or more. If you had paid in cash, you would have gotten a tank for free.

* "Bad Debt Comes from Charging Experiences:

Here is a good rule of thumb: "If there is nothing left after you enjoyed it, you should not charge it unless you pay it off in full each and every month!"

Experiences are: movies, concerts, vacations, etc.
Consider this common case. You charged a vacation but you neglected to get trip cancellation insurance you still have to pay for what you never experienced. Even if you went on that vacation, once it is over all that is left are photos that no one but you, your family, and your friends will enjoy.

* "Bad Debt Comes from Charging Un-remarketables:

Here is a good rule of thumb: "If you can never resell it once done with it, you should not charge it unless you pay it off in full each and every month!"

Unremarketables are: Knick-Knacks and other such CRAP!
Do your homework. To know what will resell and what will not, go on eBay and look it up. What you should ask yourself is... "if I had to move, would I want to pay to take this stuff to my next home?" If you would not pay to move it, then you should not pay to buy it!

* "Bad Debt Comes from Repeating Bad Money Thoughts:

Read the statements below... if you are saying any of these to yourself... stop now... because bad debt always springs from bad thoughts!

"I have to use my credit cards for small items I used to get with cash."
"I am uncomfortable talking about money or looking at my debt."
"I cannot even open my bills (unless it has red letters on it)."
"I pay late charges... because I will never pay the debt off anyway."
"It is very difficult for me to save any money or to pay off my debts."
"I just cannot manage my money: I wish someone else would do it."