Never spend your money before you have it.

Thomas Jefferson

Debt is a really, really bad thing. It robs you of your future in order to buy stuff now. And the stuff you buy with borrowed money is purchased at a very inflated price, because you have to pay interest on it.

Want an example? Lets say you borrow $25,000 for a new car. The loan is for six years at 10% interest. Your payment is only $463.15 per month. Pretty good, huh?

Well, not really. In the first year, you will pay $2,356 in interest alone. By the time the six years is up, you will have paid a total of $8,347 in interest, raising the total cost of your car from $25,000 to $33,347.

Whats worse, after the first year, youll still owe about $21,800, but because most cars quickly depreciate in value, itll probably be worth less than what you owe on it.

Debt can rapidly become a downward spiral. If you trade the car in after a few years but still owe more than the trade-in value, the dealer will add the balance to your new loan, and youll be in even worse shape. And because the dealer may make more profit on financing than on the cars themselves, he is likely to focus just on the monthly payment, so it looks like a good deal on the surface.

As bad as this example is, credit card debt is worse much worse. Interest rates on credit cards can be as high as 18% or more, and its very easy and tempting to add more debt just by using your card.

Debt traps are all around, just waiting for you to step into them. Once youre in, it can be very painful to work your way out, and it could take years maybe decades. In the meantime, the growing monthly payments can make it difficult for you to get by from week to week.

So how do you avoid the debt trap? Self-discipline and a little self-sacrifice. Save for big purchases. Buy a less-expensive car preferably used. Use a debit card instead of a credit card; if you must use a credit card, pay it off each month. If youre planning to buy a house, make it a modest house, and save as large a down payment as you possibly can.

This is important. Stay out of the debt trap. Believe me: the less debt you have, the happier youll be.

Excerpted from The Graduates Book of Practical Wisdom: 99 Lessons They Cant Teach in School by C. Andrew Millard, published by Morgan James Publishing, available in bookstores and online. &opy; 2008 by C. Andrew Millard; all rights reserved. For more information visit www.wisegraduate.com.