When Debt Becomes Too Much: Keeping Check of Your Finances

When was the last time you spent on a whim and used your credit card on something that you felt you deserved, given a variety of reasons? When was the last instance you borrowed money?

Well, it seems many have also become less frugal in recent years, fueled most especially by the holiday season. In the U.S., in particular, personal spending accounted for most of the sales during the last quarter of 2011. The savings rate has also dropped from 3.5 to as much as 5.3 percent.

We know just how you wish you could afford your dream home, especially if you’re just starting a family. This is the reason why most couples stretch their budgets so they can get a loan and pay off the mortgage, but take into consideration your needs, requirements, how much you can actually shell out, among other factors.

According to an article on healthland.time.com, you should go for the mortgage payment requirement that does not exceed 28 percent of your take-home pay. 

Next, credit cards. Ah, these plastic babies shouldn’t put such a toll on your finances, given the advantage of availing installment payment plans and cash-back rewards, among others. But the sheer convenience of having them in your wallet whenever you don’t have cash on hand can be such a tempting experience. 

Consider this. Every time you leave a balance unpaid from your credit card bill, this actually qualifies as excessive debt. Healthland.time.com advises that you keep available at least 30 percent of your credit limit, just so you can keep your money in check.