How Much Debt Is Too Much?

Almost everyone is in some kind of debt. A lot of these people need to borrow money because they can't pay cash on big purchases. It doesn't matter how much debt everyone else has. What matters is how much you have, and whether or not you can pay it off.

So, how much debt is too much?
There's no specific number but if you're not able to pay off your credit cards, you have too much debt. If you`re missing payments, you have too much debt. If you can't save money for long-term goals, you have too much debt.

Debt ratio is used by a lot of financial professionals. It sees if you have too much debt. They like to see a ratio of assets to debt no smaller than 2:1. You should have twice as much liquid assets as you have debt.

you are right but your assets might grow especially if you are a business person and have a good business.this month the debt could be to much but from the next month it could be ok.Anyway you should look really carefully at what you have and will have after you take a loan.

Well you won't really know if you are in debt before you do sunk in it already. See in the business world all people are thinking positively but not all busines plans and business works as it is imagined, so when things gets rough if you don't have a sound plan and no other option to get up. Then you are in serious debt.

I guess the real answer depends on how you view debt. You have probably heard the saying, if you owe the bank a thousand dollars, you have a problem but if you owe the bank a million dollars, the bank has a problem. It all seems to be a matter of perspective.

For example, 90 days same as cash is a ruse used by retailers to get you to buy their merchandise. Let's say you have the money to pay for the item and that money is sitting in an interest bearing money market account. Also, the interest accrues daily.

You buy the item and take the 90 days same as cash option. As long as you don't pass the 90 day mark, you can't be charged interest, penalties or fees since they said 90 days is the same as paying cash. However, you are now in debt. Is that good, bad, too much or what?

On the 90th day, you pay the purchase price and are no longer in debt but you are somewhat richer because that purchase amount earned interest for 90 days. You keep the interest since you it is money earned. Being in debt has just made you money plus you have the item you wanted. Win-win, right?

It appears the posed question can be answered a number of ways.

For me, debt shouldn't be more than 30% of your total income. Anything higher than I is considered risky for me. You need around antoher 40 to 50% for your daily living expenses, monthly bills and entertainment, 10% for long terms savings and another 10% for emergency use. 

How does that sounds? Prudent, right?

I think that you are probably correct about the figures. I also think that we all have different debt thresholds and that's how we all end up in different situations.

My lesson is learned. Any debt is too much debt. Excluding house, car and unexpected medical.................I'm done. A bankruptcy might be the best thing that ever happened to me. Time will tell.

Nicely put.  There is good debt though- Your mortgages- good debt- Owning a home- but having to pay for it.

Other debt- should be in a ratio. Only take out what you know you can pay.  I'm not big on any debt- other than mortgage and car loans.