6. Borrow wisely
Credit can be a good thing. Loans allow people to buy cars, houses, boats and even help cushion the blow in emergencies."It's fine when it's used properly," says Bucci. "What you have to know is that you're taking from tomorrow's money today."
On the other hand, people don't always make buying decisions rationally and can easily rack up thousands upon thousands of dollars in debt.
"If you have a $10,000 credit card bill on an 18 percent interest rate credit card and you make the minimum payment of 2 percent -- though some companies have higher minimums -- it will take 40 years to pay off that bill," says Dave Jones, president of the Association of Independent Consumer Credit Counseling Agencies. "And that's if you never make another purchase on that card."
To keep a perspective on borrowing, match a loan to the life of the product. "If this is a purchase that is going to take you a long time to pay off, then you use long-term credit to pay it off -- not short-term credit," says Bucci.
"Use long-term credit for big purchases and short-term credit for purchases that you're going to pay off in a reasonable amount of time," he says. Extreme examples would be buying a car with a credit card or taking out a home equity loan to replace a sofa.
"You look at the couch that you're going to buy, and think this couch is going to be trash in five years. You don't want to be paying for a couch you no longer have 15 years down the line," Bucci says. "The payments shouldn't outlive the purchase."