Not all debt is bad. In spite of our being encouraged to clear all debt so that we don’t owe anything to anyone, there are some types of debt that are good and can add positively to our quality of life.

The two key steps are to invest only in good debt, and to keep good debt from turning into bad debt.

Mortgages are considered good debt, and it’s the biggest debt most families take on. It’s not likely that anyone can save enough to buy a house for cash. Mortgages allow families to buy their own home to live in and enjoy and to (theoretically) build up equity. Turn a good debt into a better debt — pay it off more quickly by making extra payments. Even $100 a month extra can shave years off the end of your mortgage.

Where mortgage debt becomes bad is if you take on more than you can handle. Late payments lead, at the very least, to increased fees and penalties. Taken to the extreme, late payments can result in bankruptcy and ruined credit.

Other examples of good debt (that which will appreciate or gain value down the road) are education loans for college (greater earning power), business loans (greater business-building power) and home-equity loans for needed improvements (increase the value of the home).

Bad debt is debt you incur for anything that won’t gain in value or that has only a momentary value, is disposable or is incurred for things you don’t really need.

Vehicles are considered bad debt because vehicles never gain in value. You lose value the minute you drive off the dealer’s lot. However, vehicles are necessities. Make the largest down payment you can to keep your payments small, and then pay extra on the loan to pay it off quickly.

Nearly anything you put on a credit card makes it a bad debt. Don’t charge things of low value unless you’re going to pay off the balance at the end of the month. Meals out, groceries, oil changes, vacations and clothing are bad bets to charge because they’ll never gain in value and are disposable.

The rule of thumb is: If it doesn’t gain in value, try to pay cash.

David Uffington regrets that he cannot personally answer reader questions, but will incorporate them into his column whenever possible. Write to him in care of King Features Weekly Service, P.O. Box 536475, Orlando, FL 32853-6475, or send email to columnreply@gmail.com.

(c) 2012 King Features Synd., Inc.