Debt is the money you owe, an obligation. Unsecured debts are debts such as credit cards, personal loans, lines of credit, department store cards, and medical bills that are not secured by collateral. Mortgages and car loans are considered secured because the lender has collateral (your car or house) that can be repossessed if the debt is not paid.

Debt is neither good nor bad, it’s merely a financial tool. Like any tool, when it’s used properly debt can be powerful, but when it’s abused, it can be destructive. Some debt starts out seemingly harmless enough, but pretty soon it can wreak havoc on your emotions, relationships, or general effectiveness on the job. It is easy to get a credit card and spend, spend, spend. But “buy now pay later” turns out to be a myth because “later” may never get here. It’s a hard pill to swallow, but “no debt is the best policy.”