# Find out How Much Debt Is Too Much

Most people have some kind of debt. It might be a mortgage, an auto loan, a student loan, or even a credit card balance. Having debt isn’t a bad thing as long as you are taking steps to pay it off. It’s having too much debt that can cause an unhealthy financial life. If you think you might have too much debt take some time to add up your debt and decide what that number means for you.

### Do You Have Too Much Debt

As an example, let’s say you want to gauge your debt overload (bad debt only). Simply add up the amount you spend each month on bad debt, e.g. credit cards and loans, and divide it by your total monthly income. Multiply that number by 100 to come up with a percentage. The result is your debt-to-income ratio.

For example, assume you make \$3,000 a month and you spend \$300 on credit card payments and \$450 on an auto loan. Your ratio calculation would be \$750 / \$3,000 = 0.25. Multiply that by 100 for a debt-income-ratio of 25%. In this example, you spend a quarter of your income on bad debt.

When it comes to debt, whether good or bad, the lower the debt you have, the better. A bad debt ratio beyond 10% is too high and often is a sign that you are overloaded with debt. In this scenario, you would have too much bad debt.