Don’t ignore these warning signals that you’re carrying too much debt.

3 minute read

If you’re like most people, you take advantage of the convenience and benefits of credit cards and loans. Credit cards can help you make major purchases earlier than if you had to save for months. And it’s a rare person who doesn’t need a loan to buy a car or home.

Maybe you have student loan debt or other personal loans, too. While carrying a lot of debt may seem like the only way to go sometimes, if you get in over your head, all those credit card and loan payments gobble up a huge chunk of your paycheck.

The good news is that when debt becomes more of a burden than a convenience, you can hit the brakes on acquiring more debt while you whittle down credit card and loan balances.

How much debt is too much?

The ideal debt-to-income (DTI) ratio is 36% or lower, and any ratio above 43% is considered too high, according to Citizens Bank. For example, if your monthly gross income is $10,000, and your monthly payments on credit cards, mortgage and other loans total $3,000, your DTI would be only 30%.

If the monthly payments add up to $5,000, however, your DTI would be 50%, well above the recommended debt-to-income ratio. If your DTI is too high, don’t beat yourself up. You’ve got plenty of company, according to a recent report on consumer debt from major credit bureau Experian.

Here’s Experian’s breakdown of the 2021 average consumer debt balance by debt type.

  • Mortgage: $220,380
  • Home equity line of credit (HELOC): $39,556
  • Student loan: $39,487
  • Auto loan and lease: $20,987
  • Credit card: $5,221
  • Personal loan: $17,064

If your DTI is above 43%, that’s a strong sign you’re barreling down the track to debt trouble. But there are other signs, too. Here are more clues you’re in debt over your head or close to it.

Find out: Calculate Your Debt-to-Income (DTI) Ratio

1. You’re afraid to check credit card balances

If you avoid checking credit card balances because you know they’re high, that’s a sure sign you have too much debt. But that doesn’t mean you have to carry all that debt forever.

To get a handle on paying down balances so you don’t fear knowing the amounts owed, come up with a debt payment plan. Meet with a credit counselor at a free or nominal-free nonprofit credit counseling agency for advice on how to pay off debt. The counselor can help you create a debt payoff plan to get back on track to a lower DTI.

Find out: Setting Up a Debt Repayment Plan That Works

2. You need credit cards just to get by

When you have a lot of debt, making all those monthly payments keeps you broke most of the time. Then you have to charge everyday expenses like groceries, gas, utilities on the credit card with a balance that’s already a worrisome burden.

If your credit card debt keeps rising each month, take a close look at your monthly budget to find ways to lower monthly expenses. Maybe you could move to an apartment with lower rent or downsize to a smaller home with a smaller mortgage payment and lower maintenance costs.

Can you dine out less by preparing more meals at home? Make a meal plan shopping list before you hit a discount grocery such as Aldi to save even more. Create a budget so you know where all your money is going and expenses you can cut to free up money to pay off debt.

Find out: How to Pay Off Credit Card Debt Faster

3. Bill collectors are calling

When bill collectors hound you with phone calls and letters, you’re probably in debt over your head. Don’t ignore those calls, even if you don’t think you can pay the debts. Grit your teeth and call them back to work out a payment plan or debt settlement amount.

Find out: The Ultimate Guide to Debt Settlement

4. You miss payment due dates

If you’re paying late on credit cards or loans each month, you’re probably carrying more debt than you can afford. You’re also adding to your debt with late payment fees and maybe even hurting your credit score.

Do most of your payment due dates fall in one part of the month? If so, contact credit card issuers to change payment due dates and spread them out for timely payments.

Find out: Payment History and Your Credit Score

5. Your mental health suffers

Do you lie awake at night worrying about how you’ll pay off all your credit cards? Maybe you’re ashamed of your debt, hide it from others or you feel there’s no way out. If so, you’re not alone.

People with debt are three times as likely to experience depression, anxiety and stress over financial worries, according to a 2020 study by AIMS Public Health. If your debt burden is affecting your mental health, it’s time to talk to someone.

Meeting with a nonprofit credit counselor is a good start. That way, you can set debt payoff goals and see light at the end of the tunnel. You may also want to meet with a license mental health therapist to explore why you overspend. That way, once you get out of debt, you can stay on track financially.

Find out: How to Cope with Financial Stress

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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