How Much Is Too Much Debt—And What To Do About It

Taking on debt over the course of our lives is normal, and can even be financially healthy to help us build credit, accomplish our goals, and find stability. Home loans, car loans, and student loans are just a few examples of debt that help us achieve our dreams. However, the problem comes when your debt stacks up and becomes overwhelming. If you feel that you are in over your head with debt, then this blog is for you! Below, we discuss how to determine how much debt you’re in, the warning signs of overwhelming debt, and the steps you can take to gain control of your finances. 

Crunching the Numbers: Your Debt-to-Income Ratio

Break out your calculator; it’s time for some math! While this part won’t necessarily be fun, it’s essential in figuring out where you stand regarding your debt and what you’ll need to do next.

Begin by adding up all your monthly debt obligations. Your total should include things like student loans, credit card debt, mortgage payments, medical debt, and auto loans. Once you have this amount, divide it by your monthly gross income, then multiply that number by 100. This will give you a percentage known as your debt-to-income ratio (DTI). If this number is less than 36%, your debt is considered manageable compared to your earnings. Anything between 36% and 42% indicates that you should set up a strategy to pay off your debt. Lastly, anything above 43% indicates that you need to take more extreme action to reduce your debt load, such as debt settlement or bankruptcy. 

If you’ve done the math and your DTI is higher than you’d like, don’t be too alarmed. Think of these numbers as a guideline rather than a strict law. Your debt situation is unique to you, and how you tackle it will also be unique. Your DTI can be a good indicator that you have too much debt, but there are others.

Debt Red Flags

While your DTI is a very obvious red flag, there are other situations or behaviors that, while subtle, also imply your debt is becoming an issue.

You’re Dodging Calls From Collectors

When the phone rings and your creditor is on the line to discuss overdue payments, it’s never a good sign. Debt collectors are a surefire way to know that your debts have become both delinquent and unaffordable.

If you find yourself dreading the sound of your ringtone it’s time to make a change. Avoiding calls from debt collectors could result in legal actions taken against you, leading to wage garnishments, liens, or worse.

You Don’t Know What You Owe

Purposefully ignoring your debt is like ignoring a snake that’s in your living room: if you do nothing, you’re bound to get bitten. 

You’re Going Into More Debt to Pay Off Your Current Debt

Are you finding yourself paying bills with loans from friends or family, credit cards, or cash advances? If so, you may end up in a perpetual cycle of debt unless you take action.

You’re Spending More Than You’re Earning

If your expenses and payments are tallying up to be more than your income, it’s a major red flag that your debt isn’t sustainable. 

You’ve Depleted Your Savings

While having little to no savings doesn’t necessarily mean you have more debt than you can manage, if you’ve drained your savings accounts to pay off your debt, that’s when you know there’s an issue.

You Rely On Credit to Make It Through the Month

Are you buying groceries, paying for gas, or paying bills with a credit card and not paying off your balance completely every month? If the answer is “yes,” it’s not just a sign that you have too much debt – it’s a sign that you may not have enough money to sustain your lifestyle. You’ll need to figure out how to budget better or increase your income in addition to paying off debt.

You’re Losing Sleep 

Tossing and turning once in a while is normal, but if you’re so fixated on your bills that you’re unable to sleep, it’s a sign your debt is out of control.

What Can I Do Right Now?

Rework Your Budget

Begin by finding extra funds or ways to cut down your spending. There are many small actions you can take that can add up to big savings, such as bringing lunch to work instead of buying, bundling your insurance policies, cutting cable, or working out at home!

Categorize Your Debt

You’ll then want to turn your attention to your debts and make a list of all of them. While this might be difficult, having everything out in front of you is the first step on your journey to debt freedom.

Find Ways of Earning Extra Income

If it’s challenging to find room in your budget, consider taking on a side job or hustle, if time permits. Gigs like driving for Uber or Lyft, pet sitting, freelancing, or even working part-time at a local business can all help you put more money towards tackling your debt.

Long-Term Solutions

If short-term methods aren’t helping you reduce your debt, it may be time to consider more long-term debt solutions. Below, we briefly discuss 4 of the most common debt solutions. 

Credit Counseling

Everyone can use a bit of guidance from time to time, and when you’re struggling with debt, credit counseling can give you a roadmap to debt freedom. Credit counseling is typically provided by financial education organizations and entails you and a professional counselor discussing your financial situation. This includes things like who you owe, how much you owe, the details of those accounts, your assets, credit score and income, and your current budget. 

Debt Consolidation

Debt consolidation is exactly what it sounds like: you consolidate your debt into one monthly payment using a personal loan. In theory, this one payment will be more manageable and have a lower interest rate than your current payments, which may let you pay off debt faster.

Debt Settlement 

During the debt settlement process, you or a representative working on your behalf negotiate with your creditors to settle your debt for less than what you owe. As a result, debt settlement lowers your overall debt amount, helps you avoid bankruptcy, and find relief from both collectors and creditors. 


Bankruptcy helps those who can’t pay their debts achieve a fresh start by either creating a debt repayment plan or strategically liquidating assets, depending on the type of bankruptcy you file for. However, this method is not to be taken lightly and should be considered a last resort. There are requirements you need to meet in order to qualify, and not all types of debt can be eliminated. Bankruptcy can also make it difficult to get approved for credit in the future and require you to forfeit some of your assets. 

Is Too Much Debt Weighing You Down?

Sometimes, overwhelming debt accumulates bit by bit, building up over time until it feels like you’re drowning in it. Other times, it comes abruptly like a tidal wave, brought on by a health crisis, a natural disaster, or unemployment. However you find yourself in debt, what matters now is that you’re taking steps towards financial freedom. 

If you’re struggling with $10,000 or more of debt, ACCS can help you pay it off faster and for less than owed. Request a Custom Debt Relief Plan today to learn more!

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