There are a lot of different kinds of debt, but the most types common are: credit card debt, student loans, automobile loans, and living costs (mortgages). America is not exactly unfamiliar with the concept of borrowing money. In fact, the total U.S. consumer debt is currently around $3.4 trillion.
Have you ever wondered how much debt you have to have for it to be considered a problem? Because income levels vary drastically across the country, there isn't a magic number where you should start to worry. However, it is a good rule of thumb to never exceed 10% of your income in monthly credit card debt payments. So for example, if one's household income is $3,000 per month, the credit card debt bill should not exceed $300. ConsolidatedCredit explains that this doesn't mean one has to only have a $300 balance between each of the credit cards. In fact, the "minimum monthly payments on one's credit cards are calculated as a percentage of the total amount one owes." So, for a $15,000 bill with a 2% payment scheduled on their balance, the minimum required payment would equal $300.
Where is the debt danger zone? For an income of $3,000 and a 2% required monthly payment, anything above $15,000 in debt is definitely risking financial distress.
All numbers aside, it is definitely time to reconsider when credit card debt is leaving no room in the financial budget. Barely staying afloat with the minimum monthly payment is a huge red flag, and it is never a good idea to max out a card or be late on making payments.
The Simple Dollar explains that debt is too much when: