How Much Debt is Too Much? - Lebron 10 Shoes

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One man's rock bottom is another man's standard of living Jordan Fly Wade 2.So when is debt too much debt On a purely emotional level, many people hit "rock bottom" when the first calls from bill collectors start to come.

Getting hounded by a professional bill collector is tough Euro 2012 Soccer. Some people cope, but others find it embarrassing, humiliating, and shameful.

For some people, it may take an intervention of friends or family members to drive home the point that the debt is getting out of control Lebron 10 Shoes. Others may wait till they are evicted or sued.

So how much is too much debtFirst, it's not a question you should answer emotionally Nike Air LeBron Slide Sandals. Most entrepreneurs have nerves of steel when it comes to debt and financial risk taking, but most of them do not carry a lot of personal debt.

So the amount of debt you can tolerate emotionally is not the governing factor; in fact, it should not even be taken into account.Debt is financial and the only way to evaluate financial things is to look at the big financial picture.Your financial report card is something called your "net worth." You can do a reasonably good snapshot of your own net worth without hiring an accountant or doing a bunch of fancy stuff. Just write down all of the money you owe. If you have credit cards, list all the balances. If you have loans, list all of them. If you have a mortgage, add that. Take all of these debts (the accountants would call these "liabilities") and add them together.Now take everything you own. This includes the contents of any bank or investment accounts you have, your retirement account, stock portfolios, and so on. If you own a house (even if it's mortgaged), add the fair market value of the house. If you have vehicles (cars, boats) add them in. It is fair to add in the value of your furniture, electronics, and clothing, but be very conservative. It may have cost you thousands to build the wardrobe hanging in your closet, but it's doubtful you could convert it to very much cash. Don't count what you spent, count what you could get if you had to sell it today. Add everything together to get what accountants call your "assets."Now subtract liabilities (what you owe) from your assets (what you own), and you have your net worth.I hate to disillusion you, but the number should be positive. And it should be thousands.There are some reasons for a low net worth. For those who are just starting out or those just starting over, your net worth may be low because you have not had chance to amass any assets. You may have just gone through a major medical disaster or other catastrophe. The other reason your net worth may be low is a lot of debt.Now look at your income and your monthly bills. Don't worry about total debt here, just look at what you spend each month versus what you bring in. Take some pencil and paper time here. Does your out-go exceed your income That's a debt-making machine. Until you turn this around, you're going to keep your debt growing which, in turn, will keep your net worth negative.If you can't make minimum payments, if you are adding to your debt each month, or if you are really unsure of your financial states, you are probably in need of some financial help.Certified credit counselors can help and there are lots of excellent books and programs on the market aimed at getting you debt-free. There are even free resources. For instance, your local banker can probably help you come up with a financial plan to manage your debt, including things like debt consolidation.If you're wondering if you have too much debt, you probably do. One of the great financial secrets of the truly wealthy is this: no debt.

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Created on Dec 31st 1969 18:00. Viewed 0 times.

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