Good Debt / Bad Debt: The Second Inappropriate Use of Credit

Last week, I introduced the discussion of good debt versus bad debt by explaining the worst use of credit out there: using credit to dig yourself out of debt when you do not have a budget that proves the loan will solve your financial problems.

Today, we talk about the second inappropriate use of credit: retail therapy. In the good debt/bad debt debate, this one is a no-brainer.

Good Debt / Bad Debt, Inappropriate Use of Credit #2: Retail Therapy

If you use your credit cards to buy things because you are bored or depressed, you are creating bad debt. Retail therapy makes you feel worse in the long run, particularly if you are maxing out your credit cards to finance the shopping spree. Not only is this expensive, it also hurts your credit card score. Find less expensive and more effective means of coping.

Here is a list of things you can do that will actually make you feel better and preserve your credit score. And you will notice that none of them cost a single penny:

* Invite your friends over to play card games.

* Snuggle in for movie night with a carton of ice cream.

* Write a letter to someone you love.

* Invite an old friend for a bike ride, run, or picnic in the park.

* Re-read a favorite book.

* Call your best friend with the goal of making her laugh so hard she gasps for breath.

* Take your kids to the park for a play date.

* Take a couple of hours to start that project you have been postponing.

* Wash your car, give your dog a bath, or clean out your closet. These might not seem fun, but I guarantee you will feel much more productive after conquering a chore than you will after a day of abusing your credit cards.

If these suggestions don’t work, at least make a commitment to use cash to finance your retail therapy. Sell some of those old clothes you found when you cleaned out your closet online. Then use the cash you earn from your online sales to pay for your shopping spree.

In fact, there are a ton of ways to find extra cash. Be sure to sign up for our free teleseminar about how to improve your credit score to take advantage of them and learn more about good debt versus bad debt.