1) You should avoid having a lot of outstanding loans, especially loans that you have secured with your home. If you can't pay those loans, you risk losing your home.
2) Most financial advisors say you should not be spending more than 10 percent of your net household income (after-tax income) servicing your debts, not including your mortgage, car loan, and your home equity loan. So, if your take-home pay is $2,000 a month, you should not be paying any more than $200/month on your credit card and other consumer debts.
3) No matter how much debt you have, you should be able to repay it within 12 to 18 months. If you can't, you owe too much. For example, if the combined outstanding balance on your two credit cards is $5,000 with an interest rate of 18 percent and you are paying $150 per month on that debt, it will take you more than three years and 11 months to repay it. In this case, you would need to increase your monthly payments substantially to pay the debt off within 12 to 18 months.
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