Postaday Topic #206: How much debt is too much?

Topic #206:

How much debt is too much?

The average American has $16k in debt, down from $35k in 2008. The ability to borrow money is important in all economies, but borrowing more than you can pay causes all kinds of problems (as the various debt crises around the world expose). How much debt is ok? How much debt is too much? How do you decide for yourself when its warranted to go into debt to achieve something? What’s a story you can share about borrowing something, perhaps money or time, from someone else?

Well–this is a tough one for me. I am assuming in the debt quoted above they are excluding mortgage debt. We have had multiple financial setbacks here. The housing market in my town dropped like a stone, so our home value dropped by about 40%.

There have been multiple layoffs, the need to pay for COBRA medical insurance multiple times, and now several MAJOR medical emergencies. Thank GOD we at least did have medical insurance. Thank GOD we have jobs right now. Of course, because of all these things we have higher than average debt.

How do you decide when it is warranted to go into debt? Obviously, if there is an emergency, or you are trying to maintain medical insurance, it is warranted. Obvious to us, anyway. Obviously for little luxuries, not necessary to go into debt.

College education? Partially ok to go into debt….partially better to use the strategy we used for our son, and the one I used with one of my clients and several of the students I tutor.

I won’t go into it here–you can check my other blog for that. Comment back if you want more information.

As far as our nation’s debt … at this point I think we need to start paying down our debt before lending other countries money. But really, I don’t believe I am fully informed about this issue. All I have to go on is what the media has described. Let’s just say I cannot rely on just that in order to form my opinion.

About Kate Kresse

I love to write, I love to talk, I love to uplift people when I can. I am a woman in love with life. I am a wife, mom, tutor, writer, and I am a perennial optimist. (OK not every single minute but you get the point! :-)
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2 Responses to Postaday Topic #206: How much debt is too much?

  1. hectorhugo says:

    When someone in governement quotes a figure, such as the reduced amount of debt the “average” individual has, I can’t help but think how they come to that figure. Time after time, when you look at what is included in the calculation you often see a “baking” of the numbers to make any one particular political party seem better than its predecessor. However, a particular worry for a country’s debt is how the government can manipulate the people through taxes, compulsary insurance and even schooling, to get more people in-debted to the system. I may be a little cynical ( 😉 ), but particularly in the UK, obtaining a University degree is now seen as “a must” as it will magically make everything better for your future. However, no-one seems to be asking whether a degree is really required for the jobs/careers the individual wants to pursue. Again, maybe a little cynical, but coming out of University with ~ £35k worth of debt to a job market where graduates don’t seem to be at any real advantage seems that the debt these youngesters are lumbered with is akin to a mortgage debt their parents have.

    • Kate Kresse says:

      college kids are coming out of school with a ton of debt here too. I work with the students I tutor and their families before they hit college to try to minimize their college expenses…some listen, some don’t ….debt is a killer and energy sapper.

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