Debt can be a touchy subject. You may have noticed that there are more billboards, radio commercials and online advertisements for “debt solutions” than ever before.  It’s no secret that consumer debt is extremely high and has been growing consistently over the past several years.  The fact is that it’s easier than ever to borrow money and easier than ever to spend it quickly!  This is a dangerous combination that can – and often does – result in many people getting in over their heads in debt.

Do you have debt?  How do you know if you have too much debt?  There’s a difference between the two, however there’s not always a lot separating them. 

There are various types of debt that you can get from many different places.  The most common debt includes that from credit cards, lines of credit and personal loans, which are typically used as a convenient way to finance our day-to-day purchases.  Then there is debt that we leverage to purchase things we normally don’t have the cash on hand to purchase, such as cars and houses.  When used effectively and in conjunction with a strong budget, these forms of debt can be harmless and can even be quite beneficial to your personal finances.  However, when mismanaged or when used without regard for your budget, it can result in too much debt.

Too much debt is where you have more debt than you can hope to repay given your income.  Too much debt does not happen overnight.  It is typically accumulated over a number of months and years.  When you have too much debt, it feels like you have a financial “leaky bucket” meaning no matter how much money you seem to throw at it each month, your debt just continues to grow.