by Cody Hodge

Created on: June 06, 2009

How much debt is too much debt? How much debt can you handle, and how much debt do you have to carry in order to live a comfortable life? While we never really want to carry debt, we know that we can't go through life without it. Even if we cannot afford all the debt that we carry, it doesn't necessarily make it bad debt. If you are spending money on the things that you need, then that cannot be considered a bad debt because you need to spend money sometimes.

I would say a bad debt is spending money you don't have on something you don't need. For example, if you buy a 2,000 TV and you can't even afford to buy food for dinner, you probably are spending money on a bad debt. Chances are you won't be able to pay off that debt, and I don't think you would be approved for credit to buy that TV unless you had a co-signer. Either that, or maybe you just had some good credit at the store that you made the purchase at.

Regardless of how you get the money to make the purchase, if you are buying something on credit, it should be something that you need. Even if you are late every single month on your rent payment, you still need a house to live in, and so you should go out and spend whatever you need to make sure that you are living in a place that is going to be suitable for you. There is no need to live in a shack when you can at least make payments on a decent apartment.

We all need a car, and so that is also considered good debt. You could take the bus, or carpool, but that is either inconvenient or a burden to those who have to drive you. There is no need to make other people drive you around when you are perfectly capable of driving on your own. A car doesn't even cost that much to begin with, and if you can pony up 2,000 for a TV, you can pony up that kind of cash for a car to drive to work. That is something you need, and the TV you do not.

Anything else besides food and clothes that you purchase on credit you better be able to afford. Otherwise you are just adding debt that will be a burden to your credit record, and to your bank account. If you can't afford it, and you don't need it, then don't buy it. Why spend money on things you can't afford? That is just wasteful, and you should be more worried about finding a new job, or something else along those lines.

So too much debt can be considered as any debt that you don't need. If you don't need it, get rid of it, or make sure that you can make the payments. Better yet, make the purchase as a cash transaction, and you don't even need to worry about carrying around a debt that you don't need to have. Save the interest on the payments, and rid yourself of one financial hassle for the time being.

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