Next time you, or someone you love, is tempted to make debt to buy something as a treat, or a reward, or because you deserve something special, remember that debt comes with cost.

Since interest is just another expense, if your “passive” income is enough to pay the interest on your loans, and all your other expenses, for the rest of your life, then you are still financially free.

Sometimes it may be better for you to not make additional payments towards your loan, but to rather save them up elsewhere (where you do earn interest), and then, once you’ve saved enough money, pay the whole loan off in one go.

A good debt is a debt on something, that either grows in value fast enough, or produces enough regular income, or a combination of the two, to pay not only for the interest on the debt, but also enough more to justify your effort and time spent.Good Debt In other words, good debts make you more money than they cost you.

People paying by credit card are willing to pay more than double the price for the same item than consumers paying by cash. However, if you know your credit card is a problem for you, rather use a debit card.

Every time you pay off the smallest loan you have, use the additional money available at the end of each month – that you would have spent on loan payments – to tackle the next smallest loan in the list.

To consolidate your debt does not help the problem. If you want to beat debt, then you need to deal with the real problem: The attitude that debt is OK.

If you pay premiums or contributions to a savings plan on which you only earn interest of say 9%, but on the other hand you have to pay 19% interest on your bank overdraft account, and you continue with this practice over a period of time, you will eventually save yourself bankrupt!