WARNING: Do You Have Too Much Debt?

WARNING: Do You Have Too Much Debt?

(IntegrityPress.org) – Borrowing money is a necessity for most people at some stage in their lives. A healthy approach to debt can allow for upward mobility without the need to save endlessly. However, maintaining good credit requires a careful approach. One aspect includes knowing when debt has become too much.

A helpful indicator here is the debt-to-income (DTI) ratio, which measures how much money you pay on your debts versus how much you earn each month. So, if your gross income (the amount of money you have before taxes) is $8,000, and your monthly spending on loan servicing is $4,000, your debt-to-income ratio is 50%. According to Citizens Bank, experts consider a debt-to-income ratio healthy if it’s 36% or lower.

There are also some typical indicators that your borrowing may be excessive. These include:

  • Relying on credit cards to regularly fund necessary spending such as for food or rent
  • Receiving calls or letters from debt collectors because you’ve been consistently failing to pay your bills on time
  • Becoming preoccupied with money worries, causing you an inability to enjoy life as usual

If any of these strike a chord, you may need to reassess your spending and saving habits to start reducing your debts.

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