One of the secrets of managing your debt load is knowing when to borrow and when to pay cash up front for purchases. As we’ve discussed before, some debt is good. When you’re making payments on an asset that will appreciate or retain its value, that debt is healthy. The problems set in when you start making high-interest payments on items that will quickly depreciate in value. Credit card debt falls into the bad debt category.

We’ve been taught to charge the things we want as well as the things we need. How many department stores offer us credit cards when we check out? Even smaller specialty retailers have credit cards now, and they’re eager to sign people up.

But almost anything you’d pay for with those credit cards should be bought with cash instead. Think about it: the clothing, appliances, and household items found in departments stores will decrease in value almost immediately. Then you’re stuck with interest-laden debt for items that haven’t retained their worth.

A better strategy is to put aside a portion of your income each month for incidental expenses. These are the miscellaneous purchases that don’t count as entertainment expenses, but don’t fall under your static monthly bills either. Always pay for incidentals in cash so that you don’t add to your debt. And before you sign up for department store credit cards, check out the terms and conditions; they might surprise you, and not in a good way. Store cards tend to have higher interest rates than regular credit cards.

A good rule of thumb is this: if something can be viewed as an investment, it’s okay to borrow money to make the purchase. Investments include things that will keep their value or even go up in value over time. A college education, for example, is something that will go up in value by opening doors to higher-paying jobs. A home increases in value as the house and surrounding land get developed.

Large appliances, furniture and housewares, though necessary and very useful, start to depreciate in value after their first use. For this reason, you should avoid borrowing money to pay for them. It’s not good to pay more and more for an item (payments plus interest) while the value of that item keeps going down.

On the other hand, big home improvement projects and other purchases that will add to the value of your home could warrant a loan. Just look for low interest rates and don’t borrow more than you need. Ideally, you’ll be able to repay such loans within five years.