As in too much debt can get you into trouble – but most of the debt in the end there are too many
Debt is very common? In fact, most Americans have at least some kind of debt, whether it is personal loan debt, credit card debt, mortgage debt, or a combination of different types of debt.
Super owe some money is not necessarily a bad thing. After all, if you borrow to fund education or business or buy a home, these activities should eventually lead to increase your net worth.
However, although it may make sense to assume some debt, you definitely do not want too much, because you can find yourself in a financial disaster. This brings up an important question:? ? Just how much debt is too much
Too much debt
Although it is OK to borrow some money from you if you owe money to the ability to achieve the financial goals you with too much interference debt. If your debt payments are so remarkable that you can not invest for retirement, except for emergency situations, or do other things with your money, then you have too much debt.
If you can not pay your bills short, this is a clear sign that you are in over your head, and you need to deal with the debt the problem is. However, it may have too much debt, even if you can make your payment, if these payments take up too much of your income percentage.
Most experts recommend to get your consumer debt, such as credit cards, auto loans, and below 20% of your take-home pay per month, other loan payments. When you increase in mortgage debt, which NUMBER can fly higher – but you still should not take up too much debt in take-home pay
Mortgage lenders usually look at your debt to income ratio, which is total monthly debt (including housing costs) relative to your total monthly income. If the ratio of debt to income is more than 43%, do you think is too much prolonged, may not get a mortgage.
Finally, when your credit score is calculated from the major credit reporting agencies, your credit utilization rate is a factor. If more than 30% of available credit you use, your credit score will be lower because of it.
But remember, all of which are more than the largest seconds. Many financial advisers would think that any high-interest debt – like CRED it credit card debt – is a bad idea, because you are wasting money to pay for the assets do not increase the value of interest
On a good debt What
Although credit card debt. ? Debt devaluation of assets – such as car loans – not great, there are some types of debt are considered good debt mortgage, for example, is considered good debt because they help you. Make your investment in the future. You build equity in your home, so borrowing is justified.
Because the mortgage can help you does not mean you should borrow too much money in the long run. It makes no sense to borrow a house, you really can not afford, as this will allow you risk foreclosure or leave your house, and the poor sink all your money into your H ome.
In general, you should keep housing costs to your income does not exceed 30%. If your mortgage payments, combined with property taxes and insurance, more than this amount, you should buy a cheaper house.
Keep your debt low is always the best
Always costs money to borrow money, and more monthly income to pay the interest, the less you do other things. Whenever possible, you should let your borrowing to a minimum, and keep your debt balances low. If you insist on only assume “good debt” and you keep reasonably good amount of debt, you will if you have a large credit card bill to counter a better financial position than that.