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How Much Debt is Too Much Debt? by Nikki Willhite We live in an age of Credit Cards and Plastic Money. The temptation to run up bills is high. So how much debt is TOO much debt? How much debt is too much debt? Depends who you ask. Some would say "any". Others would give you a percentage of your income - which is probably why expenses always rise to meet income. There are some things undeniably worth going into debt for. They are investments such as your home, or for education. Everything after that is debatable. The financial institutions have their formulas for how large a mortgage payment we can make, based on our income to debt ratio. However, they don't know all particulars of our financial situation, and there would not be so many repossessed houses if you could trust their figures. Only you know the extra expenses that take up your income, such as charitable contributions. Your home payment is usually your biggest expenses.  If your mortgage is too high, then you are going to get into trouble. Here are some signs that we have more debt than we can handle: - We start making only the minimum payment on our charge cards. - We transfer balances from one card to another. - We max out our credit cards. - We start bouncing checks. - We start juggling bills. - A large amount of our money is going to pay our credit bills, leaving us little for anything else. When these things happen, money becomes a source of anxiety, often ruining our health, good natures, and relationships. There are many reasons people lose control of their finances. Sometimes it is through no fault of their own. Other times it is through behaviors that have to be unlearned. Whatever the reason, it is painful and difficult to get things under control again. Here is a great quote Some debts are fun when you are acquiring them, but none are fun when you set about retiring them Overcoming poor money management and getting out of debt can be a physical and mental challenge worth of an Olympian. Every time we learn a new way to save money it is almost like "found money". Benjamin Franklin was so wise when he said "A penny saved is a penny earned". REMEMBER THIS: A dollar saved is of more value than a dollar earned.  If you earn a dollar, by the time it gets to you (after taxes, etc), you may only see .50 cents.  However if you save a dollar, and spend it wisely, it may be worth $10 or more. About the Author: Nikki Willhite, mother of 3 and an interior design graduate, has been writing and publishing articles on the topic of frugal living for over a decade. Visit her at www.frugalhappyfamilies.com - where you will find hundreds of frugal living tips and articles. Frugal Happy Families- more than just money!  Article first published at www.allthingsfrugal.com

 

 

 

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