by Jeanie Pitner

Created on: August 14, 2007

How do you know how much debt is too much debt for you to handle? Myself personally, I don't like debt at all, but that is just me. But my general rule of thumb is that you never want to have more monthly debt then monthly income with some income leftover.

When discussing how much is too much debt, it is important to remember all the types of debt and payments that you owe and when they are due. Try to think of everything, it is easy to forget about things that come up once a year, and if they are included in your budget you will be sure to have the money in your account waiting for when they come due. Different types of debt may include, insurance payments, car licensing fees, doctor bills, tuition, property taxes if you are a home owner, just to name a few.

The goal is to have money left over in your account after you pay your bills. When you have money in your account left over after you pay your bills, don't think of it as just free money for you to do as you wish because chances are, you will probably have an expense that you have not planned for coming in the near future.

Debt can be very stressful, so you never want to take on more debt than you feel comfortable with. For some people the debt threshold is reached every month and they can not handle any additional debt than monthly debt, this is debt that does not contain any short or long term debt. This means, they do not carry credit card debt, and have no loans, all they owe is their monthly living expenses.

For another type of individual who chooses to be a homeowner instead of renting, their debt will include mortgage debt that will be paid to a mortgage lender every month instead of a landlord. A mortgage is a type of loan that is considered long term debt.

Some people feel comfortable to carry debt in the form of credit cards. However, it is a good idea to never carry a balance on your credit cards unless absolutely necessary. A credit card is like taking a loan that has a very high interest rate. A credit card is what is known revolving credit. That means that the credit card holder is given a limit on a revolving credit account in which they are to make monthly payments to the organization which issued the card. Now days, almost anyone can have too many credit cards in their possession, so it is a good idea to limit yourself to the amount you carry in your wallet. That way you will be less likely to fall into the temptation of buying things that you really don't need.

Exactly how much is too much debt is very personal, and everyone is different. For some, any debt is too much debt and for others they can handle a little bit of debt. It really depends on you, your income and on how much debt you feel comfortable with.

If you are stressed out and have more debt then monthly income, with no income left over, along with continuous monthly overdraft fees and late payment penalty fees than chances are you have too much debt.

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