How Much is Considered a Lot of Debt?

Debt is a reality of modern life for many people, whether it’s in the form of a mortgage, student loans, credit card debt, or other types of loans.

a Lot of Debt

While having some debt is normal and even necessary to achieve certain goals, too much debt can have serious consequences for your financial well-being.

The amount of debt that is considered a “lot” can vary depending on a variety of factors, including an individual’s income, expenses, and overall financial situation. 

However, there are some general guidelines that can be used to determine if a debt load is high.

Debt-to-Income Ratio

One important factor to consider is the debt-to-income (DTI) ratio. This is a measure of how much debt you have compared to your income.

A DTI ratio of 36% or less is generally considered good, while a DTI ratio of 43% or more is generally considered high. 

To calculate your DTI ratio, add up all your monthly debt payments (including mortgage, car loans, student loans, credit cards, and other debts) and divide it by your gross monthly income. 

For example, if your monthly debt payments are $2,000 and your gross monthly income is $5,000, your DTI ratio would be 40%.

Credit Utilization

Credit utilization is an important factor in determining your credit score. Your credit score is a measure of your creditworthiness and is used by lenders to determine whether to approve you for credit and what interest rate to charge you. 

A high credit utilization ratio can negatively impact your credit score and make it more difficult and expensive to obtain credit in the future.

It’s important to note that individual credit card utilization ratios can impact your overall credit utilization ratio. 

For example, if you have three credit cards with a combined credit limit of $30,000 and you have a balance of $3,000 on one card and no balance on the other two cards, your overall credit utilization ratio would be 10%. 

However, the credit card with the $3,000 balance has a credit utilization ratio of 30%, which is considered the upper limit of a good ratio.

Your credit utilization ratio is calculated based on your credit card balances at the time your credit report is pulled. If you pay off your credit card balances in full each month, your credit utilization ratio may be low even if you have high credit card balances throughout the month.

To keep your credit utilization ratio low, you can make payments more frequently than the monthly due date to reduce your credit card balance. 

You can ask for a credit limit increase, which can increase your total available credit and decrease your credit utilization ratio. 

However, it’s important to use caution when asking for a credit limit increase as it can also lead to increased spending and higher debt levels.

Type of Debt

The type of debt you have is an important factor to consider when evaluating your overall debt load. 

Some types of debt, such as mortgage debt or student loan debt, can be considered “good” debt because they are typically used to invest in assets that may increase in value over time, such as a home or education. These types of debt may have lower interest rates and longer repayment terms, making them more manageable and less risky.

On the other hand, credit card debt and other types of high-interest debt, such as payday loans or personal loans, are often considered “bad” debt because they tend to have high interest rates and short repayment terms. 

This means that if you carry a balance on these types of debt, you could end up paying a significant amount of interest over time, making it more difficult to pay off the debt and potentially damaging your credit score.

Having a lot of high-interest debt can be a negative indicator to lenders and creditors, as it may suggest that you are living beyond your means or struggling to manage your finances. This can make it more difficult to obtain credit in the future or may result in higher interest rates and fees.

All debt should be managed responsibly, regardless of the type. This means making payments on time, paying more than the minimum balance when possible, and avoiding taking on more debt than you can reasonably afford to repay. 

However, when evaluating your overall debt load, it’s important to consider the type of debt you have and how it may impact your financial well-being over the long term.

Total Debt Amount

While there is no specific threshold for what constitutes a “lot” of debt, owing tens of thousands of dollars or more can be a significant amount of debt for many people. 

However, it’s important to consider individual financial circumstances when evaluating whether an amount of debt is manageable.

One important factor to consider is income. Someone with a higher income may be able to manage a larger amount of debt than someone with a lower income, as they have more disposable income to put towards debt repayment each month. 

However, high income alone does not necessarily mean someone can manage a large amount of debt. Other factors, such as expenses and lifestyle choices, also play a role in determining how much debt someone can manage.

Another factor to consider is job stability and emergency savings. Someone with a stable job and a large emergency fund may be better able to manage a larger amount of debt, as they have a cushion in case of unexpected expenses or job loss. 

However, someone with a precarious financial situation may struggle to manage even a smaller amount of debt, as unexpected expenses or loss of income could make it difficult to make debt payments.

It’s also important to consider the interest rates and repayment terms of your debts. Even a relatively small amount of high-interest debt can be difficult to manage if the interest accrues quickly, making it more difficult to make progress on paying down the principal balance.


Try to evaluate your individual financial circumstances when determining whether an amount of debt is manageable. 

While there is no specific threshold for what constitutes a “lot” of debt, it’s best to avoid taking on more debt than you can reasonably afford to repay, and to have a plan in place for paying off existing debts. 

This may involve cutting back on expenses, increasing income, or seeking assistance from a financial professional.