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Category:  Money

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How Much Debt is Too Much Debt?

 

By Nikki Willhite

www.allthingsfrugal.com

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 your 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. There does come a point when we can no longer pay our bills if we have too much debt, and we are in trouble.

There are signs that indicate when we are getting into trouble

*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.

*A large amount of our money is going to pay our credit bills, leaving us little for anything else.

*We are juggling bills- paying some late- bouncing checks.

Finally, 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".

I encourage everyone to subscribe to ezines with money saving ideas like The Pennypincher and Tightwad Tidbits. Learn money saving skills. Every little bit helps and works together for our good. Let's do our best.  That's all we can ask of ourselves.



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Category:  Money

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