Concerned about debt? Watch for the warning signs
Mortgages. Lines of credit. Car loans. Credit cards.
Student loans.
When it comes to debt, there is no shortage of ways to
accrue it. Almost everyone will take on debt at some point in their lives — it’s
what allows us to make major purchases like a home or a car, particularly when
we’re just starting out.
But how much is too much? And how do you know where to
draw the line?
Strictly speaking, the general rule of thumb is that
the total of all your monthly debt payments, combined with the cost of utilities
and taxes on your home, shouldn’t exceed 40 per cent of your monthly income
before taxes. That’s what is commonly referred to as your Total Debt Servicing
Ratio (TDSR).
However, even your TDSR only tells part of the story.
The real warning signs can be found in your day-to-day behaviour.
Here are some telltale signs that you need to think
about reducing your debt load:
·
You
struggle to pay your bills on time
·
You
often resort to living off your line of credit
·
You
routinely spend more than you earn each month
·
You
aren’t able to pay your credit card bills in full
·
You’re
losing sleep over money matters
If you recognize some of these warning signs, it may
be time to take a closer look at your finances. Perhaps you need to rework your
household budget or look at consolidating some debt.