Consumer debt has gotten a bad rap, as many Americans have dug themselves into deep holes of debt that are almost impossible to overcome. But the truth is, there are wise ways to use debt and there are foolish ways to use debt, says NPR correspondent Chris Farrell in his book "The New Frugality."

According to Farrell, wise debt is productive and foolish debt is consumptive. While that seems like common sense, "it's a concept people forget over and over again," he says. "Before the recession, good debt and bad debt got mingled."

So before swiping your credit card or signing on the dotted line, how do you determine whether you're getting yourself into wise or foolish debt? These tips will help you decide.