✔ What led to your debt?

The reason you took on debt can help you determine whether it’s helpful or harmful.

“Any debt that is taken on because people don’t have any kind of choice means they are starting out in a place of disadvantage,” says Ida Rademacher, a vice president of nonprofit think tank Aspen Institute. “That can create a spiral that can prevent people from being resilient.”

Conversely, Rademacher says, “the more helpful forms of debt can help people to become more resilient.” Student loans, for example, may enable a career that offers a high salary, making you more financially sound.

Think about whether you incurred the debt: TO ACHIEVE A LONGTERM GOAL: Student loans and auto loans can fit in this category. These debts can help you move ahead in life, so long as you don’t take on too much. OUT OF CONVENIENCE:

These are debts you incur to make other aspects of your life easier, such as when you have a big onetime expense and don’t want to deplete your savings. They can be benign if they’re helping you manage your overall financial picture. DUE TO AN EMERGENCY:

Desperation debt can be dangerous. A need for cash in a hurry can leave you with limited options and result in high interest costs.

BOTTOM LINE: Debt taken to reach a goal or out of convenience can be useful if you have a plan for paying it off . To avoid desperation debt, build an emergency fund. A 2016 report from public policy think tank Urban Institute found that savings as small as $250 help consumers avoid missed bills and even eviction.