Take Back Control: Use Your Credit Wisely

In today’s post I’ll share how to handle debt. I’ll tackle two overall themes: (1) understanding different types of debt and (2) how to get rid of unwanted debt.

Understanding Debt

Bad Debt vs. Good Debt

While I generally believe that we should try to avoid any debt in our lives, I also believe that some debts are worse than others. Generally, good debt refers to those debts that incur a low interest rate, can help to create income (e.g. student loans), or are used to purchase appreciating assets (e.g. mortgages). Bad debts would be the opposite: debts that incur a high interest rate, don’t create income, and are used to purchase depreciating assets. The point of those definitions is to help you evaluate your choice before getting into more debt and to help you prioritize your debts when paying them off.

Please Avoid High-Interest Consumer Debt

One of the worst, and most common types of debt we get into is high-interest consumer debt. An example would be using a credit card to pay for a vacation and paying off the balance over several years. If you can simply avoid this type of debt in your life, you’ll be light years ahead of your peers and you’ll be able to do a great deal more with your money.

Use Credit Wisely

At a minimum, you should shoot to avoid carrying a balance on any revolving credit (e.g. credit cards) from month to month. Doing so will cause you to incur interest charges. You’ll end up paying more for the things you buy. A great deal more.

Benefits of Less Debt

Now that we have a clearer picture of the types of debts to avoid, let’s discuss how you can go about getting rid of that debt. But first let me discuss the benefits of paying down your unwanted debt.

Avoiding the Hassle – If you didn’t have all those debt payments to worry about each month, you’d free up your mind and time to do other things. Less stressful things.

No More Interest Charges or Late Fees – Paying interest charges and the occasional late fee stinks. It’s costing you much much more to finance this stuff than had you just paid for it all upfront. If you paid off this debt, the interest payments and potential late fees would go with it.

Debt Payments Could Be “Savings Payments” – If you got rid of your monthly debt payments, you could begin saving that same amount in your retirement account or short-term savings account.

Read more. Check out 10 Reasons Why You’d be Happier if You Were Debt Free.

How to Pay Off Debt

If after all of this debt talk you find yourself wanting to get rid of your debts, you’re in good company. Over the past couple of years I’ve been able to get rid of a lot of unwanted debt. I blogged about my journey. Here are some of the more memorable posts:

I share those with you not to brag, but to give you some motivation to pay down your own debt.

Paying off debt is challenging. It doesn’t happen over night. And it usually doesn’t just happen for those that really really want to do it. It takes a plan, and consistent hard work. Here’s my best advice for paying down debt:

“Know your debts, prioritize the debts, establish a payment plan, automate the payments, create accountability, and reward yourself.”

For more specifics on this, see these blog posts:

That should give you plenty of motivation and strategy for getting rid of your unwanted debt. Best of luck to you in your efforts.

Photo by .faramarz

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Last Edited: July 26, 2017 @ 5:07 pmThe content of ptmoney.com is for general information purposes only and does not constitute professional advice. Visitors to ptmoney.com should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.
About Philip Taylor

Philip Taylor, aka “PT”, is a CPA, financial writer, podcaster, FinCon Founder, husband, and father of three. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or Google+. Listen to the new podcast, Masters of Money!


  1. High-interest consumer debt should indeed be avoided at all costs.

    I remember the movie “The International” where the banker stated that it is debt which enables the bank to control the third world countries.

    To a certain extent, this holds true on the individual level. Sometimes debt can get a hold of your life in such a way that you may find it hard to move forward simply because of the baggage that debt brings down on you. Paying off one’s debt is really challenging.