Warning signs are everyway, a book, an article, brochure or even yourself that keep telling you that you have debt with you. But what can you do to check whether you are in debt trouble or just under control?

Today I found a system that many people use to check the level of debt trouble. It is called Debt Load

Here is how it works:

First you must sum up all your debt payments, say $500. Then you calculate out your net income. It will be easy if you run a budget and keep track all your money. If you haven’t do it, then you must build up one now and use it to get your net income. For more information of budget, you can read my post Budget To Financial Freedom here.

Now you know what is your total monthly debt payments and also your net income. So what you have to do is dividing the $500 (Your debt payment) with your net income, says $1500. The results will be 33.3%. Now you have the hard number but what does it mean?

According to some experts, this number should not never over 20%. If it over 20%, then you must ask for helps and see how you can reduce the ratio.

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