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Most of the news stories are centered on the negatives of debt, but in reality, there are plenty of positive aspects of personal debt. After all, very few of us could actually afford to purchase a home or attend college without some sort of assistance through credit. The key is to make debt work for you, not against you.

Before taking out any personal debt, it’s important to understand the terms. Obviously you’ll have to pay back the entire amount plus interest, but beyond that, terms can vary widely. Depending on the type of debt, there are different things to understand.

Home mortgages
With your home mortgage, you should understand what the interest rate is, and whether it’s fixed or variable. If your home loan rate is variable, find out how and when the changes occur. A standard mortgage term is 30 years, but there can be some variability in that. Finally, you should also understand what portion of your monthly payment is for principal, what portion is for interest, and what portion is for your escrow account. If you pay more than the minimum payment, you can choose whether the extra goes toward principal, extending your payments, or to escrow. In this case, you should follow up with your lender to confirm they’ve applied the payment properly.

Credit cards
Understand the terms of your credit cards, and be responsible with using them. While it’s very tempting (and easy) to use a credit card to purchase something you can’t quite afford right now, remember that with high-interest on credit cards, and the fact that interest compounds, you are likely to be paying much more than the purchase price for the item.  Paying your card off in full every month should be a goal you strive toward, and until then, you should limit your reliability on credit.

In addition, use caution with some of the offers you receive in the mail. Many credit card providers will mail you checks that you can use easily. In most cases, use of these checks is considered a cash advance, which is often at a higher interest rate than the already high rate charged on purchases. If you do receive these checks, shred them immediately so you won’t be tempted to use them.

Car loans
When you apply for a car loan, you’ll be offered different loan terms. Though increasing the loan term usually decreases the monthly payments, try to take out the shortest car loan possible. Often long-term car loans (6 years, for instance) result in you owing more money than the car is worth at some point in your loan.