what is a lot of debt

[Josephhgoins]

I have always looked at my debt as fairly small, but am starting to rethink tis.

What is "over your head". Not counting the mortgage, is that a total debt of 3 months pay, 6 months? a year?

Anyone know what a guideline is for excessive? I am working to get it to zero, but ain't killing myself over it.

I did owe about 5 or 6 months pay in debt, now thanks to a pay cut its more like 10 months. My goal is to get total debt to no more than 5 months by the end of the year.

What is yours and are you comfortable with it? No need to share the amounts just the months.

Thanks,

[nuisance26]

~I don't know if there is a general guideline but I think an excessive amount of debt would be more than your yearly income, but that's just a guess.
We've only ever had a mortgage and a car loan(paid off now). I manage our money and I'm not comfortable with any debt at all.~

[JoJoBean8]

I think being over your head is all relative to a person's life. To my family any debt is over our head but we don't have a large of money coming in monthly. Plus we have a child and I stay at home with her. So we are trying to get our debt gone so that it is not a worry and we can pour all that money into savings. Our goal is to be debt free and have a FFEF and a nice savings for a home by 30 so that we can start saving for retirement at a young age.

[mombottoo]

A lot of debt to me is when your payments exceed your income and you are consistantly getting shutoffs and/or eviction notices for lack of payment. It's also when you can't buy groceries or other things you want or need because of outgoing payments.

I guess whether a person considers themselves to have too much debt depends on the person and situation.

[Greebo]

These days?

Zero.

We're unwilling to accept any consumer debt anymore. It's just too risky in the event of a loss of income.

[Ceashels]

I was raised to think that zero is the only debt that is good and I don't think that has changed for me.

But I would think that any amount that can't be paid off by in a reasonable amount of time without taking away from the NEEDs of a person/family would be the limit of my comfort zone.

So by going to our trusted family mechanic if i needed to pay in 2 or 3 installments when I got paid and was acceptable to him. I can deal with it.

To go out and buy a new dining room suite and can't pay it off within a month without having to put utilities or rent on hold AND have to pay interest on it for 2-3 months is not in my comfort zone.

I'm very interested to see what others think of this question. It is a very good one.

[MomToTwoBoys]

I don't know if there is a general guideline but I think an excessive amount of debt would be more than your yearly income, but that's just a guess.

This is how I look at it too. Excessive for us is about a year's worth of income and we only bring in about $40k a year.

[never2late]

For me, it was when the minimum payments didn't allow me to have any money left for other things that came up. And when I totaled it all up, I was sick to my stomach and lay awake at night worrying about it. Before that, I always thought "It's the American way, everyone's in debt." Thank the Lord I've found a way to get out from all of it. NEVER again!!

[monkeywrangler71]

I am comfortable with zero consumer debt and 18 months income in mortgage debt. I would do a car loan if I was desperate, no more than 3 months income.

[sabrelvssammy]

i too used to think that debt was no big deal...(and i had alot of it)...i figured as long as i had the money to pay it down/off-- might as well carry it...everyone else does...

well i don't want to be 'everyone else' anymore...(and if you ask dh-- i am so far from being that (..ahem...normal...) i think was what he was referring too)...

i agree with greebo...ZERO....but for me the exception being a mortgage...PROVIDED that you are not spending more than 25-30% of your income on that payment...(used to be when i was lending we had the ratio's of 28/32...meaning 28% of your income for mtg & 32% for mtg & ALL other fixed expenses...) don't even know what the guidelines are anymore coz i've been out of the business for so long... at the time it seemed to be a good guide...and of course, you have to be able to buy the house 'right' (meaning a good price, not over-inflated or in a dying neighborhood, etc...)....

so my vote is for no-debt other than a house pmt...try to save up for those 'luxuries' and for those emergency's and for everything else in between... (funny coming from someone that for the 1st time in her adult life will be debt free of everything but a mtg pmt come feb 1st)...(and in reality because of the way my business is structured...i don't even have that...i am actually a renter myself)...weehee... i think i will move out in the middle of the night when the urge up and strikes me...haha...

[Greebo]

Being able to "make payments" is definitely NOT being able to afford it. Even being able to pay cash then and there isn't necessarily the same thing as being able to afford it.

[NcsstyBrdsIngnty]

When I bought my home I saw that HUD/FHA has a debt guideline that I thought might fit your question. Combined mortgage/property tax/insurance/HOA, and installment debt like student loans, credit cards, car loans, etc - all of those monthly payments combined shouldn't be more than 41% of your gross monthly income.

Now, personally I think that should be 41% of your take home pay or that taxes should be included in that 41%, but maybe I am misunderstanding something.

I was also told by my future FIL that your mortgage debt should never be more than 2 or 2.5 years of the income you make when purchasing the home. So if a family brings home 50k/yr the maximum price they should look at is 125k. He actually said of "the bread winner's income" but I think that might be a little too conservative for people that don't have any other debt and have life insurance. I didn't follow that when purchasing our home, we did 3.5 times the bread winner's income, or 1.8 times both incomes (bad girl!).

These are just some guidelines other people have told me about. I hate paying interest, and I particularly hate paying interest on personal debt - so I'm inclined to agree that zero personal debt is the max you should have.

I have 58.93 months of debt. Ouch!!!! That is all my mortgage, and if I had to pay it all myself on one income, otherwise it is around 29 months of both of our take home pay. I have no personal debt.

[pollypurebred39]

Oh sabrelvssammy, us too! We totally bought into that and then whamo! unemployeed over 2 years ago and now underemployeed. Swimming in that debt we never worried about because we had the money to pay it. Most of it is medical debt, but if we had wanted too (when my husband was gainfully employeed) we could have juggled investments and such and paid it outright. We just felt it was better to leave our investments be and make those credit card payments, they were very low to 0% interest then. STUPID, STUPID, STUPID!!! We are paying for it now.

I frankly am so freaked out by it all I just want to get all our debt paid off including the mortgage. (we are working on it) I don't want to carry any debt, any more, ever again. It makes me hugely uncomfortable to know that I owe money and the rug can get pulled out from under me due to circumstances beyond my control.

[Lady_V]

My definition of debt is owing -- period. A debt is more than financial sometimes... I hate owing anyone anything... money, favors etc...

My personal financial debt is my car (boo - hiss)... and to me, it's excessive because I owe... at all.

[frugalwarrior2]

Oweing more than your liquid assets. Would be the technical definition. If you lost your job tomorrow and were broke would be a more realistic truth.