Does debt seem like that reoccurring nightmare that will never go away? For many Americans that is too often the case. As of March 2012, the average credit card debt per household was $6,772. This is actually down almost $500 from 2010, which is a nice improvement. Many Americans have an issue getting out of debt because every time they pay a credit card down they think that gives them more room to spend money. I explained in an earlier post how to pay off debt. This post is about how to avoid the black hole of debt.
What is the black hole of debt? It is when you keep paying money towards your credit card, but the balance never changes. In other words, you are throwing money into a black hole. The best way to avoid the black hole is instead of treating credit cards like free money, treat them like real money. What do I mean by this? First off, if I am going to pay cash for something then I am going to be much more hesitant to buy it and make sure it is something I need. The next thing is I am not going to put something on a credit card that I don’t have the cash available to pay for it. I often only put things on credit cards to get points and cash back. At the end of the month, I make sure my credit card balance doesn’t exceed the cash I have set aside to pay it off each month.
I know there are emergencies in life that require the use of a credit card and there is not always enough cash to pay it off. In this case, I make sure not to charge anything else to that credit card until it is paid off. I experienced the black hole of debt about 5 years ago and it was one of the most stressful times of my life. I don’t want to see anyone get stuck in this situation. Make sure to use your credit cards responsibly and try to avoid carrying large balances.
Have you ever been in the black hole of debt? Were you able to get out of it? How did it make you feel?
“Remember that credit is money” ~ Benjamin Franklin
Matt's Financial Blog 
That would be an extremely frustrating situation. With the high interest rates on credit cards, it is not surprising that people end up in such a situation. Most often it is caused by credit card mismanagement. I haven’t personally been in a debt black hole though. If I ever have a credit card balance that I can’t pay off, I either transfer it to my bank line of credit or to a 0% balance transfer offer.
Thanks for the comment. You treat credit cards how they are supposed to be used. My debt issues issues had everything to do with mismanagement. It took me a while to understand how to effectively use credit cards, now they are a great tool.