Debt is a necessity for many people. It can be a valuable tool in personal finance. But if not handled properly, debt becomes a major problem. Irresponsible debt and too much debt are major contributors to financial problems.

A common problem trap is seeing debt purely from the standpoint of monthly payments. For example, a couple decides to purchase an item on credit because it will only cost $20 per month. Next month it’s another item for only $10 per month. Little by little, this mushrooms and sets a person up for problems.

If the debt begins to control you, then you are setting yourself up for potential disaster. Below are 10 simple rules for using debt wisely and safely.

1. Save for major purchases. Don’t finance unless absolutely necessary. Set a goal of paying cash for vacations, cars, etc.

2. Use credit cards as a convenience only. Do not finance any long-term debt with credit cards. Pay credit card bills in full each month. Credit cards generally have a very high interest rate. To carry a continuing monthly balance is a horrendous use of credit.

3. Keep debt payments under 1/3 of your gross income. Above that level, you’re exceeding safe limits.

4. Lower the real cost of debt. Try to make all interest tax-deductible. A home equity loan has this advantage.

5. Maintain adequate assets that can easily be turned into cash. Debt has never hurt anyone. A lack of sufficient cash flow to manage the debt has.

6. Have adequate life and disability income insurance. Ignoring this exposes a person to significant financial risk.

7. Make debt predictable. Be cautious using adjustable-rate financing and loans with balloon payments.

8. Accelerating debt payments may not always be best. Maintain adequate savings for emergency needs, fund tax-deferred retirement plans adequately, and pay off non-tax deductible debt before accelerating payments on other debts.

9. Refinance only if it will save money. Consolidation loans do not always save money.

10. PROTECT YOUR CREDIT. Make payments on time. If you have problems meeting payments, talk to the creditors and re-negotiate.

Don Spencer is the church financial benefits consultant for the Kentucky Baptist Convention.