How Much Debt is Too Much?

by Dual Income No Kids on September 29, 2008 · 0 comments

Hi All,

With the rotten news coming out of Washington and Wall Street about the national debt, you might be wondering about how you can determine whether or not your debt is at appropriate levels.

Well, the quick rule of thumb is, don’t have your debt payments amount to more than 20% of your income, excluding housing. So, for example if you take home $3,000 per month then your credit cards and student loans shouldn’t amount to more than 20%, or $600 dollars per month.

Otherwise, here are some warning signs that indicate you might have too much debt.

1) You’re Juggling Payments. For example if you are stalling one company to pay another one, that’s probably a good indication that your obligations are getting away from you.

2) You Can’t Even Save Small Amounts. If you’re having a hard time socking away $25 or $50 dollar amounts, and you can’t seem to build up an emergency fund, then you might want to examine your debt situation.

3) Creditors Start To Say No. If you’ve been denied a loan or have been denied a product that requires a credit check, then its a pretty good indication that you may have too much debt.

So, if any these seem to apply to your situation, you might want some help on dumping your financial obligations (Clicky to learn how).



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