In using credit, a few simple guidelines will give you a definite edge. These rules are not cast in stone, but staying close to them will increase your ability to prosper from credit rather than being eaten alive by it.

1.) Credit should never be used for purchasing perishables such as gas, food, airline tickets or meals out unless you are certain you will pay it off with your first statement, to avoid interest charges. A good idea is to deduct the money from your checking account at the time of purchase, as though you had already spent the money, because you have! Then, when the statement comes due you should already have the cash in your account to pay it. There are few things worse than having to pay for something you do not still have, so avoid using credit for perishables.

2.) Credit should be used sparingly for depreciables such as cars, boats, furniture, etc. Always make the largest down payment possible and finance the balance for the shortest period of time that you can to reduce excessive interest and a long-term drain on finances. Realize that you are banking on future income - income that is never guaranteed, because no one can predict the future.

3.) Credit should be used as often as possible for the purchase of appreciables that increase in value, provided the investment is a wise one. Real estate, discounted mortgages, silver or gold coin are examples. This is called "constructive debt". For example, borrow $2000 for one year at 12% interest and use the money to invest in a tax-deferred IRA. If you are in the 28% tax bracket you immediately save a few hundred dollars on taxes - $560 to be exact. Invest your IRA in a no-load mutual fund that earns about 15% and you make an additional 3% for the term of your loan. Your interest from your fund pays the interest on your loan, with cash to spare. The $560 tax savings gets you an IRA worth $2000 for just $1440. Each additional year you hold the IRA you make the 15% interest, tax-deferred. This creates wealth, particularly if you do it every year.