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What Kind of Debt Am I In?

You have probably heard of the phrase at least one time in your life “it takes money to make money.” Many entrepreneurs, business owners, and people in general understand this rule and utilize it. They utilize it throughout college by taking out a student loan. They go into debt when they are buying their first home and finally have a mortgage to pay off. They use it when they are searching for a job and although it’s not quite as much money as they would like, they know they will end up moving up in the career a lot faster and have more opportunities than a traditional job.

The real question still remains though. How much it too much debt for a person or for a company? Keep reading as the IBS collection compliance experts answer this for you.


This number will always vary depending on their goals and what their status is in the job market. With that said, there are things that can be determined to help figure it out.


One of the things that you need to look at is how much money you have coming in versus how much money you have going out. It’s kind of like losing weight. How much are you consuming and how much are you exercising? You won’t ever fit into your dream pair of jeans if you are always consuming more calories than you are exercising.


This means it’s a good idea to start to educate yourself. Start looking at your debt-to-income ratio. You can look at your credit card and see what obligations you are having on a regular basis. You should look at what is mandatory. For example, you have monthly student loans that you should be paying that cannot budget. You have a car payment due that you need to keep up with. It’s a good idea to try and make your debt amount less than 15% of all of your financial responsibilities. This will ensure they stay management and you are able to pay them off without sweating too much at the end of each month.


The next thing that you want to look at is the different types of debt that you have. The first type is good debt. How much good debt are you in? They mean purchases for your business, your college education, a home, those types of things that ultimately are an investment in yourself or in your career so that you can end up making more money as a result.


There is also bad debt that you can be in and you want to be able to identify that too. These are loans that have higher interest Of course, you may need a car, but does your car need to be that fancy? Do you need to be paying that much on your loan every month? These types of debts will keep pushing you down so that you are further in debt.


We recommend printing off all of your debt statements and starting to look at them. Look at how much you are paying every month compared to what you are making. Look at it and see where you can be making adjustments. Perhaps what you should be paying off as soon as possible because that is bad debt that you don’t want to be in. This will truly make a difference in your future.