How much debt is too much debt?

As a general rule of thumb, it is recommended that your Total Debt Service Ratio does not exceed 40% of your gross income (before deductions).  For example, if you earn $50,000 gross per year, the total of all debt payments (credit cards, lines of credit, personal loans, student loans, car loans, mortgage, property tax and heat) should not exceed 40% of your gross income.  In this example, that would be $20,000 annually or $1667.00 per month.  If you have a partner and gross household income is $80,000; the total of all "debt" payments plus mortgage, property tax and heat expense, should not exceed $32,000 annually or $2667.00 per month.
These are rough guidelines and if you are slightly above the recommended ratio, it doesn't necessarily mean you have too much debt and will not be able to pay.  To determine whether you have too much debt, it's important to consider the rest of your living expenses.  You can start by reviewing your monthly budget.  If you have not reviewed it recently, it's important to look at what you have been spending in prior months and tweak your budget accordingly so you have something realistic that you can live with and covers all spending categories and provides a reserve for unexpected or non-recurring expenses (ex. gifts, dental, repairs, etc.).
Once you deduct all living expenses including minimum debt payments from your income, see what you have left over.  Then add up the total balances of all unsecured debt (credit cards, lines of credit, personal loans, student loans, etc.).  Then ask yourself, if I commit the sum of money I have left over after all living expenses and minimum payments, roughly how long would it take to pay my existing unsecured debt.  For example, if your total unsecured debt amounts to $30,000 and you have $1000 per month to work with after deducting living expenses and minimum debt payments, you should be able to be debt free in approximately 3 years, depending on interest rates; provided you take on no new debt.  However, if you only have $200 left over instead of $1000, it could take decades to repay.  If you have nothing left over after living expenses and minimum debt repayments; short of receiving an influx of cash, higher income or the ability to significantly cut expenses, you have too much debt and should seek advice.
If you are looking for advice, or a second opinion about your debt, it does not cost anything to talk about your options.  Every financial situation is unique and viable options can differ from person to person.  A conversation free of judgment and cost, is the first step to determine options for debt that make sense for you.  For a free consultation, please call or text (506) 645-1814 or email jaime@tackledebt.ca; or visit www.tackledebt.ca.