11 Signs You Have Too Much Debt (2024)

Debt is such a normal part of our society that most people think they will be in debt forever. You know what? They probably will be! Eight out of 10 Americans have debt! That is insane!! If you are wondering if you are looking for signs you have too much debt, then you have too much debt. But since people think there is such a thing as “good” debt and “bad” debt, debt will always be a problem. Having too much debt can lead to stress, marital problems, loss of productivity at work, and not being able to pursue your dreams. These 11 signs you have too much debt will hopefully be the motivator to start paying off your debt fast. We did several of these things before we paid off $45,000 in 17 months! If we can change our ways, so can you.

11 signs you have too much debt

If any of these describe your situation, then you have too much debt.

1. Minimum payments are more than 30% of your income

Your minimum monthly payments should not exceed more than 30% of your income. This includes your mortgage which shouldn’t be more than 25% of your take home pay. There is some leeway in that number by a few percentage points. In order to get a mortgage, your debt (including the mortgage) shouldn’t be more than 36%. That is still high and yes the bank will give you a mortgage for more than you can afford.

When we bought our first house, the bank approved us for $175,000! We were 21 years old and not married. This was only based on my husband’s income which at the time, was only around $50,000. We decided on our own that we couldn’t afford that much of a mortgage, so we took out $150,000, which was still too much at the time. This was in 2005 and when the 2008 housing bubble burst, we could see why.

We still needed a roommate at first and that was after taking out 20k less than the bank would have given us!

2. You can’t pay all your payments

I’m sure you knew that when you don’t make enough to make all the payments, you have too much debt. This is not a surprise to you. However, if you need a sign you have too much debt, here is your sign.

If you are missing payments and paying late fees, you have too much debt.

Take the FREE 7 day how to budget step by step course:

3. You can’t save for retirement

When you have too much debt, it steals from your future to pay for your past. You should ideally be saving 15% of you income for retirement. But if you can’t afford to save even 3%-6% because of debt, then you have too much debt.

4. You take out more loans to pay other loans

If you are constantly taking out payday loans, balance transfer, and other loans just to consolidate other loans, then you have too much debt. If you take out a loan, the goal should be to pay it off as quickly as possible, not to keep rolling it into new loans.

5. You are on a first name basis with the clerks at the payday loan place

If the loan vendor knows you by name, you have too much debt. If you go into a place to take a loan so often that they know you by name and already have your paperwork ready, you have too much debt.

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6. You determine if you can “afford” the loan based on the minimum payment amount

There is more to taking out a loan than just the minimum payment. Other things to consider are the interest rate, the length of the loan, and how quickly you can pay it off. Not too mention that you should also consider if you really NEED the item. Is it really a want that you think is a need. You need a car, you don’t need a brand new luxury vehicle. You want an SUV, you don’t need a brand new Denali with leather seats. (yes, that was me:))!

When I was pregnant with our first child I “needed” a new SUV. I “needed” a big safe SUV. My husband still argues with me about this but we seriously didn’t need it. We wanted it. He is 6’3″ and a big guy so he wanted a big SUV. That doesn’t mean we needed a brand new Denali at $56,000. Yes we paid a big cash down payment and got 0% interest but we didn’t truly NEED it.

For help deciding what is a need or a want, check out the Ultimate Budget Workbook. I have all the debt pay off sheets you need to help you pay it off fast! Plus a need vs wants worksheet.

7. You live paycheck to paycheck

If you aren’t able to save money and are living paycheck to paycheck, you have too much debt. Even if you “only” have a car loan, student loans, a mortgage, or whatever, if you can’t save money, it’s too much debt. Your ultimate goal should be to save for the future not pay for the past forever!

8. You have less than $1000 in savings

This is basically the same as living paycheck to paycheck. You need to be able to save money in case of an emergency. A credit card should not be your “emergency” savings. If you have too much debt, you shouldn’t be adding to it for an emergency. A small $1000 emergency fund will help protect you while you pay off debt. Then once you are debt free, save 3-6 months of expenses. However, if you know you have an expense coming up, save whatever that amount is even if it’s more than $1000.

For help saving $1000 fast, check outHow To Save Your First $1000!

9. You finance something that costs less than $500

If you are constantly financing something that you really should be paying cash for, you have too much debt. I saw a Facebook post the other day where a store was offering financing for items that cost less than $100! Seriously, if you can’t pay cash for something that is $100 then you don’t need it.

If you are financing, including putting it on a credit card, something that costs $100, $200, or even $500, you have too much debt. You should be able to pay cash for things you want, and use your emergency fund for things you need.

See how they paid off debt fast:

How We Paid Off $25,000 in Student Loans in 10 Months!

How One Couple Paid off $70,000 in 12 Months!

10. You quit answering your phone because of bill collectors

If you avoid answering the phone because the bill collectors won’t quit calling, you have too much debt. If you get stressed every time the phone rings then that is a sign you have too much debt.

11. Your amount owed grows every month

If your balance is growing every month every with making minimum payments, you have too much debt. You need to find a way to lower interest rates and start paying the debt as fast as you can. The longer you draw out making payments, the more money it will cost you in the long run.

What next?

If these signs you have too much debt, describe your situations, it is time to evaluate your situation. If you are stressing about money or avoiding it with drugs or alcohol, then that is a sign you have too much debt. This is the first step in admitting you have a problem. There is hope and it’s never too late to start.

Get start with paying off debt by doing your budget and evaluating what you can cut back on. During the 7 day budget course, you will learn ways to cut spending and start paying off your debt. Be sure to check out the Ultimate Budget Makeover Workbook to help you with the 7 day course. It has all the printables, tips, tricks, and advice that we used to pay off $45,000 in only 17 months!