Financial Literacy - Smart borrowing
debt
10 do's and don'ts for borrowing money

Clothes also count among bad debts, though it could be argued that young people launching a career may need to use a credit card to get a decent interview suit and some clothes for work.

Be careful, though, and avoid putting anything too trendy on credit if you carry a balance.

"Many people are still paying off clothes they've already given to Goodwill," Mihalik warns.

7. Don't fall victim to bad loan products

Good borrowing can improve your financial prospects, such as a stable mortgage that leads to a paid-for home or a low-interest rate car loan for a vehicle that gets you to work. People can make poor decisions when it comes to these loans, but the products themselves can hardly be blamed.

Not so with some other lending instruments. There are a few that are designed to quickly and permanently separate you from your money. Payday loans and car title loans are among the worst offenders, with very few redeeming qualities and many penalties.

Each of these high-interest, short-term loans spells trouble and can cost much more than the original amount borrowed. The best way to avoid borrowing trouble is to stay away from these bad products like you would a rubber check from a known criminal.

8. Don't borrow money without telling your spouse

Imagine your life partner dies suddenly and unexpectedly and then, soon after, bills you never heard of start arriving in the mailbox. It happens more often than you think.

"That happens all the time and you always think: How can the husband not know that the wife is going into debt? Doesn't he look around and wonder how she got all this stuff?" says Cunningham.

"Of course it doesn't have to be the wife. Just as often it's the other way around," she says.

Often couples do reveal financial infidelities before death doth part them and that presents an equally sticky situation.

"I can promise you -- you do not want to be in the (credit counseling) office when it comes out that one member of a couple has debts that the other doesn't know about," Cunningham says.

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Bolson has stronger words for a spouse guilty of financial infidelity.

"That is grounds for divorce," she says. "I think it's as bad as drug addiction or physical abuse -- being married to someone who is irresponsible with the way they handle money."

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