When Is It Okay to Borrow? Just like you, I get a lot of junk e-mails. My all-time favorite, was one that told me I was eligible to receive benefits for serving in the Vietnam War. Pretty fascinating, considering I'm 26.

But of all the sludge that gets sent my way, the overwhelming majority of it is encouraging me, in true American fashion, to borrow more money. Whether it's through a mortgage or a new credit card offer, it seems that we cannot escape the intoxicating offer to march our financial lives deeper into debt.

To counteract this onslaught here are four ground rules everyone should consider first when deciding to borrow money:

-For that once in a lifetime event.
No financial author can tell you to hold off the honeymoon so you can save up and pay cash for that special event. In times like these it's okay to borrow, even if it's at an obscene rate (perhaps from a credit card). The reason is clear. By definition, a once in a lifetime event happens, well, once. So make it special, even if that means borrowing. Remember you'll only have one honeymoon, right?

-To purchase a sound investment you could otherwise not afford.
This one is tricky because I have to disqualify some investments from this rule. DO NOT borrow money to buy publicly traded securities (a.k.a. buying on margin). This includes, but is not limited to, stocks and commodities. But, it is okay to borrow money to buy investments like homes, college educations, real estate, and perhaps even your own business. Tread very carefully with rule number two, since the amount you are borrowing will most likely be considerable.

-To purchase something you must have for survival.
A car comes to mind here. Sure, we could all live without our cars, but reasonably, to get to work and other necessary places, we need them. And most of us need to borrow to buy them. So long as you need it, but can't afford it, it's okay to borrow. (But remember, you need a car; you don't need a Mercedes.)

-If your investments are paying out a higher interest rate than that of the loans you take out.
The most common use of this rule is with credit cards. Credit cards allow you to borrow money interest-free for about 20 days. Savvy shoppers who charge now and pay later are getting an interest-free loan each month from the credit card companies. Keep in mind this is a strategy only for those with iron discipline, for if you miss that 20-day window, the interest rates get brutally high.

The e-mail onslaughts will not stop, but at least now you have some defense.

by Peter Bielagus.