How Much Debt is too Much?

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The UK government has around two trillion pounds worth of debt –an almost unimaginable figure. However, is this too much debt? Furthermore, at what level should you start worrying about your finances?

When does debt become too much?

Obviously, if you have two trillion pounds worth of debt, at a personal level, it may be time to consider debt help. However, as amassing that sum is unlikely, you should usually think about getting support if the amount you’re paying towards your debts exceeds 40% of your monthly income.

Therefore, if your after-tax monthly income is around £2,000, you should consider a debt solution if £800 of that goes towards credit card, personal loans, or other debt repayments. This is a very clear-cut way of determining whether you need debt support. However, if you don’t have a calculator handy, there are lots of other ways to determine this. For example:

  • You’re frequently worried about money – or your debts;
  • You have sleepless nights – or disturbed sleep – on a regular basis;
  • Your debts are becoming unmanageable;
  • Paying off your debt seems unrealistic;
  • You are living paycheck-to-paycheck – with hardly any spare funds at the end of the month.

Should the government get debt help?

If the United Kingdom was a person, surprisingly, we would not advise it to get debt support. Although the country now has a debt of around 100% of what it earns annually, the borrowing costs are low – which means the country’s debt is manageable.

Furthermore, given current political circumstances, it was inevitable that government debt would reach this high point. However, if looking for a silver lining, this figure is nothing compared to the amount of money our country owned at the end of the Napoleonic conflict and both World Wars.

More than 40% of my income goes towards repaying debts – help!

If you’re finding finances a struggle then, fortunately, you’re in the right place. We’ve helped 15,000+ people in the UK start their journey towards financial freedom and can support you as well. Whether managing the unmanageable or juggling phone calls from creditors, we’re around to offer much needed support.

To determine if we could assist you, click the button below. We might recommend an IVA – a debt solution which writes off large parts of what you owe and leaves you making affordable monthly payments.

Further reading

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