Here's How to Tell If You Have Too Much Debt


How do you know if you have too much debt? Whether or not you have too much debt is not always easily determined. However, there are certain signs that indicate that you are indeed experiencing some major financial trouble. It is important to be able to recognize these signs and to watch out for them in order to avoid the severest forms of financial trouble: bankruptcy and foreclosure.

Assess your financial situation

Recognizing that you have too much debt begins with the ability to focus on how much money is coming in (salary, rental income, etc.) as well as how much money is going out (mortgage, car loans, bills, donations, tuition, etc.). If you are paying out more money than you are bringing home, then you definitely have too much debt.

Look at each one of the following circumstances and determine whether or not they apply to you. If they do, then you are seeing some warning signs that the amount of debt that you carry each month is simply too much for your income bracket.

  • The inability to make all of your bill payments on time in a particular month or during more than one month
  • Paying additional bank charges due to insufficient funds in your account
  • The need to borrow money from friends, family, or coworkers in order to pay off one or more of your monthly bills
  • The need to take out a payday loan in order to pay a monthly debt
  • Paying only the minimum amount due each month on one or more bills
  • Never paying a credit card off in full
  • Receiving more than one late fee in a month or receiving late fees for one account each month
  • A reduction in funds in your savings or the total depletion of any emergency fund or savings

Additional Signs That You Have Too Much Debt

In addition to the inability to pay your bills on time, the need to borrow money, and extra charges and fees, you may also notice a few less tangible signs that you do have more debt than you can handle.

People who have more debt than they can reasonably handle often come to the realization that they have too much debt simply by worrying about the fact that they have too many bills. Initially, they might not even realize that the real problem is that they spend too much money, leading to too much debt. If you find yourself dwelling on the fact that the bills seem to stack up rather quickly each month and worrying over how you are going to pay them all, chances are you have too much debt.

If you've come to the conclusion that you have too much debt, there are a few things you can do to reduce it. First, create a spending plan. We have a great tool (link below) that can help you do that. Second, look at ways to increase income and, even more important, reduce spending. This could mean taking a part-time job or side gig to pay off a loan, or making some changes in your daily life such as cutting out restaurant meals, packing lunches for work, or deciding to spend only on life's necessities and putting the money you're saving toward debt. Third, consider debt consolidation if you've got several high-interest debts eating away at your budget. A lower-interest home equity loan or personal loan can save you thousands in interest over time.


The first step to getting your debt under control is to make a spending plan. Start by downloading our free Money Management Planner. It includes worksheets and tips to help you understand where your money is going and how you should spend it moving forward.

Download your free copy of the  Money Management Planner


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About Author

Hanscom Federal Credit Union
Hanscom Federal Credit Union

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