How to know when a little debt is too much debt

How do you know when a little “acceptable” debt becomes a potentially dangerous situation? For some, the crisis is as clear as being faced with a decision between taking on more debt or letting their families go hungry. For most, the clues are more subtle. As a general rule, no more than 20 percent of your disposable income should go toward debt payments (not including your mortgage). In addition, a “yes” to any of these questions should give a pause for thought.

Is an increasing percentage of your income going to pay off debts?
Is your savings cushion inadequate or nonexistent?
Are you near or at the limit of your lines of credit?
Can you only make the minimum payments on your revolving charge accounts?
Are you extending repayment schedules – paying in 60 or 90 day bills once paid in 30?
Are you chronically late in paying your bills?
Are you paying bills with money earmarked for something else?
Are you borrowing money to pay for items you used to buy with cash?
If you lost your job, would you be in immediate financial difficulty?
Are you unsure about how much you owe?
Are you threatened with repossession of your car or credit cards, or other legal action?

While a single red flag is not a sign of impending doom, it is an indication that you need to make a change.

Better Business Bureau

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Consumer Federation of America

MMI is a member of the Consumer Federation of America (CFA), an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
Department of Housing and Urban Development

MMI is certified by the U.S. Department of Housing and Urban Development (HUD) to provide consumer housing counseling. The mission of HUD is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD provides support services directly and through approved, local agencies like MMI.
Council On Accreditation

MMI is proudly accredited by the Council on Accreditation (COA), an international, independent, nonprofit, human service accrediting organization. COA’s thorough, peer-reviewed accreditation process is designed to ensure that organizations like MMI are providing the highest standard of service and support for clients and employees alike.
National Foundation for Credit Counseling

MMI is a longstanding member of the National Foundation for Credit Counseling® (NFCC®), the nation’s largest nonprofit financial counseling organization. Founded in 1951, the NFCC’s mission is to promote financially responsible behavior and help member organizations like MMI deliver the highest-quality financial education and counseling services.