How much is too much? Debt, that is.
From a financial institution’s point of view, if your housing costs, debt servicing and taxes exceed 42% of your gross earnings, you have too much debt.
An example of too much debt
If you take the cost of your monthly housing ($2,000), credit cards ($600), vehicle loan ($500), heat ($150), taxes (if you own property) ($250), and divide by your gross monthly household income of $8,000 and then multiply that by 100, you will find out your ratio number.
$2,000 + $600 + $500 + $150 + $250 = $3,500
($3,500/$8,000) x 100 = 43.75%
In this example, the number exceeds 42% and therefore this household is likely carrying too much debt.
From a Trustee’s perspective, if you are asking yourself if you have too much debt, you likely are. Let’s review some warning signs that you may be facing financial trouble:
Too much Debt
1. You have no idea how much money is in the bank.
2. You are using one credit card to make the minimum payment on another.
3. Making only minimum payments on bills and credit cards.
4. Avoiding opening your statements from credit card companies and avoiding answering the phone.
5. Applying for payday loans to make ends meet.
6. Having to purchase necessities like groceries with credit.
7. Choosing to pay some bills and not others in order to stay within your means.
8. Having services terminated or disconnected due to non-payment.
9. You’re so used to carrying credit balances that “one more time” happens all too often.
10. Experiencing anxiety and stress as a result of financial concerns.
11. Getting declined for a consolidation loan or a mortgage.
If you are experiencing any of these warnings signs, or you are struggling each month to figure out what you are going to do, meeting with a Licensed Insolvency Trustee at D. Thode & Associates Inc. will ease your mind.
We Can Help
Did you know that a Licensed Insolvency Trustee is required to let you know what all the options are? At D. Thode & Associates Inc. we offer a free consultation to assess your financial circumstances and provide you with all of your options, allowing you to find the right solution for yourself and your family.