Let's take a simple example. You have a mainstream credit card with a balance of $1,000 that charges you 14 percent, and you pay the minimum of $25 per month. It will take you about 55 months - that's more than 4.5 years - to pay off that $1,000 debt, and you will pay $364 in interest charges. Don't miss a payment: You could pay substantial late fees and may see your interest rate rise dramatically. If lesson No. 1 is to avoid balances, then lesson No. 2 is to understand the terms and conditions of your card.

MANAGING YOUR DEBT

The first step in managing debt is to determine how much debt you can really afford. There's a commonly used guideline called the 28/36 rule: No more than 28 percent of your pretax household income should go to servicing home debt.

This includes principal and interest costs, your mortgage payment, plus property taxes and insurance. And no more than 36 percent of your pretax household income should go to all debt: your home debt plus credit card debt and auto loans. Consider yourself in great shape if your total debt burden is less than 30 percent of your pretax income; you're in OK shape if it falls between 30 percent and 36 percent. Between 36 percent and 40 percent is borderline. And if your debt burden is more than 40 percent of your pretax income, your financial situation may be precarious.

If you're "borderline" or "precarious," your first priority should be to reduce your level of debt. Pay off credit cards first, starting with those bearing the highest rates. Consider consolidating credit card debt using your HELOC if you have one. If you don't, consider opening a HELOC if you own a home. Be extra careful about missing payments. If you simply have no choice in the matter, call the credit card company and work out a plan. And, obviously, don't take on any new debt.

There are, of course, other kinds of debt. Auto loans, for example, are essential for many people, and while they're not deductible, they usually feature relatively low rates for people with good credit histories. Student loan interest rates are also relatively low, and pursuing higher education can be a great investment in your future. In addition, some student loan interest is tax-deductible depending on your income level.

Debt is a part of life, and few of us can live without it. So rather than shun debt altogether, the key is to learn how to use it most effectively.