How Much Is a Lot of Debt?

How much debt is a lot of debt depends on a few things. The type of debt and the interest rate charged on it matter. A total of $30,000 in credit card debt might be considered staggeringly high, while a mortgage much higher than that would not be seen as extremely high because it would be secured by the house.

Debt to Income Ratios

Your income is a factor in how much debt is a lot of debt. For example, if you earn $2,500 per month, having monthly debt payments of $1,000 is pretty steep. That $1,000 is 40 percent of your income. But if you earn $5,000 per month, $1,000 of monthly debt is only 20 percent of your income. Generally, lenders like to make loans to people who have a debt-to-income ratio of less than 36 percent, according to "US News & World Report" and MSN. The Federal Reserve considers debt that is 40 percent of your income or more to be a sign of financial distress, according to SmartMoney and MSN.

Student Loan Debt

Student loan debt is a bit different from other types of debt. You can deduct the interest you pay without itemizing, for one thing, and if you have a federal loan you have a number of repayment options and forbearance or deference in some cases. But it's possible to have too much student loan debt. Usually, student loan debt that totals more than your anticipated salary for the first year out of school is considered too much, according to

Credit Card Debt

Dan Kadlec of "Time" magazine argues that any credit card debt is too much debt. Unlike student loan debt and mortgages, credit cards have impressively high interest rates. Those interest rates can change with little warning, increasing the amount you pay over time. If you do have credit card debt, Kadlec recommends keeping the debt below 30 percent of your total credit limit. If your balance is higher than 30 percent of your limit, you risk hurting your credit score. Plus, you are that much closer to going over the limit.


Owning your own home has a number of advantages, but taking out a mortgage that is more than you can afford does more harm than good. The standard recommendation is that you spend no more than 28 percent of your monthly income on housing each month, according to "Time." That amount should include the cost of the mortgage, property taxes and insurance. Keeping your housing debt to less than 30 percent of your income allows you room to save money and pay down other debts.


About the Author

Based in Pennsylvania, Emily Weller has been writing professionally since 2007, when she began writing theater reviews Off-Off Broadway productions. Since then, she has written for TheNest, ModernMom and Rhode Island Home and Design magazine, among others. Weller attended CUNY/Brooklyn college and Temple University.