There is hardly an adult in the United States that doesn't have any debt. The amount of personal debt is increasing. It may be because credit has become so easy to 
obtain. Everywhere you go, you are offered a credit card and a 10% discount. It can be so tempting.

Credit card issuers used to look for good, solid customers who could repay their debts. Today, however, many card issuers are looking for those who will be slow in repayment and charge a large amount. That way, the issuer makes 18-30% interest a year on the account.

Debt can't be just lumped into a category as bad. Not all is good, but not all is bad. When used correctly, debt can be beneficial in building wealth and security. CEO David Bach of Finish Rich, Inc. says that it's what you buy that makes the difference. "When you buy something that goes down in value immediately, that's bad debt," he explains.

The difference is that good debt produces money, while bad debt just costs money. If you go into debt buying a home that will gain equity and increase in value, that's good debt. A mortgage provides you with tax advantages and interest write offs. And you have a place to live while your money is working for you.

Home values over the last thirty years have increased an average of 6.5% a year. When you buy a home, the chances of it appreciating are good. Many advisors highly suggest home ownership as the only way to go.

"The fastest way to wealth in America is buying where you live," says Bach. "The average renter has a median worth of $4,000, and the average homeowner has a median net worth over $150,000."

Many advisors say that debts that are tax-deductible and debts that increase wealth are good debts. Buying a home or refinancing to get rid of excessive debts is a good use of your credit. So is generating debt to buy high-return stocks, bonds and other investments.

Bad debt is when you use credit to purchase disposable items or durable goods using high interest credit cards. If you don't pay the balance in full each month, the debt may become overwhelming.

By using your card instead of cash, you can really lose track of how much you are spending. When the bill comes, you may be surprised. If you don't pay the total balance, the additional interest charges make the item cost more. If you charge something that is on sale and then aren't able to pay the balance off, you didn't get such a great deal. You may pay for the item several times over.

Every month that you only make a partial payment on your credit card results in interest charges. The item you purchased continues to lose value, while the amount you pay continues to increase.

For example, when you purchase clothes, the moment you walk out the door they depreciate by at least 50%.  But if you borrowed to pay for them, you will not only pay their original value, but also the added interest rate.

Unsecured debt, such as credit cards, can affect your credit rating. You shouldn't have more than 20% of your annual income going towards your unsecured debt. It will look bad on your credit report, regardless of you payment history.

According to Michael Hirsch of LowerMyBills your unsecured debt could result in higher interest rates all around. "The recommended debt-to-income ratio is under 15 % to help you qualify for the lowest interest rates possible when extending your credit to buy a home or car," he says.

If something doesn't go up in value, and you don't have the cash to pay for it - then you just can't afford it.

Many people will open store credit cards just to get the 10-20% discount off of the first purchase. That savings is actually not what it seems. The high interest rate can eat up the entire savings, plus more even.

While most of us have to have automobiles, many people buy more car than they can afford. It is easy to shop for the payment you can afford instead of the overall amount. Many people can afford to buy a car, but not the car that they aspire to. The financing on a car is often quite high considering it begins to lose value the minute it leaves the lot.

For many people, a car loan is the first loan taken out. While it used to make sense to borrow for a car with a 6% and invest your cash in an account that yields 10%, the market has changed over the years.