If these red flags are flapping, it’s time to get rid of debt before it haunts you for most of 2022.

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American households carry an average of $8,006 in credit card debt, according to a recent report from personal finance site WalletHub. But that’s just a fraction of the debt amount most Americans carry.

The average total debt balance for U.S. households is around $92,000, according to the most recent Experian Consumer Credit Review. So, if you’ve racked up a lot of debt during the pandemic, you’re not alone. But how much debt is too much?

Here are seven signs that you have more debt than you can afford.

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1. You have trouble paying bills on time

Payment history is one of the biggest factors (35%) in calculating your credit score, so paying late can seriously damage your credit. The ideal debt-to-income (DTI) ratio for all expenses – including mortgage or rent, loans and credit cards – should be lower than 36 percent according to personal finance site Bankrate.

For example, if your monthly debt payments are 3,000, and your monthly income is $6,000, your DTI would be 50 percent. If you knock the debt down to $2,000, your DTI would be 33 percent, which is within the ideal debt-to-income ratio.

Find out: Take These 4 Steps to Catch Up On Bills When You’ve Fallen Behind 

2. You haven’t saved for big year-end bills

When December rolls around, the month can bring bills for thousands of dollars in property taxes for many homeowners. Ideally, you should divide the estimated bill by 12 and set aside that amount every month for the large bill. When you have too much debt, it’s easy to forget about big year-end obligations.

Find out: Ready for Homeownership? 8 Steps to Prepare Your Finances

3. Your credit score dropped

Even if you make all payments on time, your credit score can go down if you have too much debt. That’s because your credit card utilization rate – the amount of revolving debt to your available credit – accounts for 30 percent of your credit score.

Experts recommend keeping your credit utilization ratio below 30 percent to maintain a higher credit score or raise your current score.

Find out: 8 Reasons Your Credit Score Dropped and What to Do

4. Bill collectors are calling

Nothing screams “you’ve got too much debt” like being hounded by bill collectors. Even if your debt is out of control, don’t get discouraged. Become proactive instead by meeting with a credit counselor at a nonprofit free (or nominal fee) credit counseling agency. The counselor can help you create a budget and a realistic debt payoff plan.

Find out: What Is Credit Counseling and How Does It Work?

5. You can’t save for financial milestones

Want to buy a house but can’t scrape together even $1,000 to start saving for a down payment? All those credit card bills and loan payments may be holding you back. The less debt you have, the more you can save to buy a house, start a family or achieve other financial goals.

Find out: How to Save for a Home While Paying Down Debt

6. You need credit cards to get by

When much of your paycheck goes to pay credit card bills, you can get stuck in a relentless cycle. That’s what happens when you pay on your credit card and then charge even more for groceries, gas and other expenses because all your money went to credit card bills or loans.

Find out: 3 Ways to Re-Think Your Credit Cards After COVID-19

7. You can’t save for emergencies

If you have a lot of credit card debt, maybe you’ve had to charge car repairs, medical bills or other unexpected expenses on credit cards. When you have an emergency fund, you can avoid adding more credit card debt. That way, you can work on paying off the debt you already have.

Find out: 8 Signs You Need to Fatten Your Emergency Savings

What can I do if I have too much debt?

If your debt is getting in the way of saving for financial goals and paying off at least a portion of the full amount to free up money, you likely have too much debt.

Not sure of your debt-to-income ratio? It’s easy to find out using an online debt-to-income calculator. If you’re above 36 percent, you’ve got some work to do on reducing debt. Don’t beat yourself up over it, though. Just start taking steps to chip (or hammer) away at certain debts until most of your money isn’t going towards paying debt.

Once you get rid of credit card debt and pay off car and student loans, you’ll be amazed at how much extra money you have each month. Then take some of that extra cash and put it into savings accounts for big purchases, retirement and emergency savings.

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About the Author

Deb Hipp

Deb Hipp

Deb Hipp is a full-time freelance writer based in Kansas City, Mo. Deb went from being unable to get approved for a credit card or loan 20 years ago to having excellent credit today and becoming a homeowner. Deb learned her lessons about money the hard way. Now she wants to share them to help you pay down debt, fix your credit and quit being broke all the time. Deb's personal finance and credit articles have been published at Credit Karma and The Huffington Post.

Published by Debt.com, LLC