Carrying too much debt is a common problem. How do you know if you are getting in over your head? These indicators will give you a clue.

The warning signs of having too much debt are pretty straightforward.

It isn’t always easy to notice when you are approaching that point but you’ll definitely know when you are there!

The Best Indicator

A great indication of approaching trouble can be found by simply calculating your debt to income ratio periodically. It is recommended that you look at this indicator at least monthly. At the very least, check it out before any major purchase.

This ratio is simple to compute by taking your total debt payments and dividing it by your gross monthly income. That will give a decimal number. Multiply that by 100 to get a percentage.

Debt to Income Ratio = Monthly Debt Payments/Gross Monthly Income * 100

Your target percent is going to be under 40%, preferably less than 35%. That will give you a financial picture of your current position.

Knowing the warning signs of too much debt can stop you from getting to the danger point.

The Main Red Flags:

1. You spend increasing amounts of income to pay on debt. If your debt spending increases, you need to look at the total picture.
2. You aren’t sure of how much debt you actually have. If you don’t know how much you owe, that is a BIG red flag that you’re in too deep.
3. You make only minimum payments on the cards. In the best scenario, this could take up to 30 years to pay off a relatively small balance costing you more interest in the long term.
4. You start losing sleep and it affects your physical health. Worry can do strange things to your physical health. If it gets this far, do something to correct it.
5. You deplete your savings to pay down debts. Debt should never affect your savings. Period.
6. Your emergency fund disappears.
7. You are at or very near the limit on all your cards.
8. You use credit to buy things that could otherwise be paid in cash like groceries or gasoline. Or you take cash advances to pay other debts.
9. You try to use your card and are declined or you are denied credit.
10. You start receiving calls from credit collectors, resulting in #4 above.

There are other warnings that will alert you to a potential problem. The best thing to do is to avoid a problem before it occurs.

• Keep track of your credit accounts whether they are credit cards, loans or whatever.
• Know what your payments are and when they are due.

Credit is a luxury as well as a responsibility. Manage your credit and it will be a beneficial part of your financial position.

If you feel like you meet almost all of these 10 items, you are in need of immediate debt relief, please read about your debt relief options. Debt settlement, credit counseling and debt consolidation are all options you should look into.