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Debt is part of life. Whether you want it or not, you’ll probably need to embrace it to buy a house or go to college. Pretty much everything can be bought with debt. Sometimes this is a good idea; while for other purchases, taking out a lot of debt can be extremely harmful to your finances. The two previous examples—a mortgage or student loans—are typically considered to be forms of good debt.

Good debt usually comes with a lower interest rate and is used to pay for something that will increase in value or boost your earning power in some way. Bad debt is just the opposite. You must pay off a high-interest rate loan on something that doesn’t necessarily help you long-term. Credit cards and payday loans are prime examples of bad debt.

debt, finance, money
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So, what constitutes too much debt? A lot of experts say a debt-to-income ratio of 40 percent or higher, not counting mortgages or student loans, becomes dangerous, and maybe impossible to pay back on your own. The amount of debt you can take on comes down to the amount you earn. If your monthly debt payment is creeping toward 40 percent, it’s time to consider ways to conquer it.

Find Avenues to Reduce Debt Faster

Lowering your debt before it reaches an unsustainable point is crucial. There are a few potential avenues you can take to accomplish this:

  • Have you created a budget? This is one of the most important steps to take when you’re trying to reduce your debt load. Too many people think they can keep track of their expenses without creating a dedicated budget. This is a huge mistake if you’re struggling with debt because things can sneak in under the radar. There are also plenty of budgeting apps out there, which can help you see your income and expenses, while also making recommendations for cutting costs.
  • Seek professional help. People can take advantage of a few external resources when trying to pay down their debt. Credit counseling is one example of this. These services are typically offered for free. Many individuals will find they need additional assistance beyond just counseling, though. In such cases, working with a debt relief agency can be the best option. These companies find ways to reduce the amount you owe to your creditors. It’s important you choose the right organization, as some don’t have the consumer’s best interests in mind. You can see from these Freedom Debt Relief reviews they’re one of the most reliable names in this field.
  • Find another source of income. There are a couple of routes to pursue here. The most obvious way to make additional money is to make more money through work. This can come in the form of a raise, promotion, switching jobs, or taking a side job. If this isn’t an option, perhaps you can make money selling your unused items. Online marketplaces such as eBay allow regular people to make decent money selling goods. You can also try more localized options like Craigslist or OfferUp, which won’t require you to ship anything.

You don’t want debt to get to a point where it’s completely taking over your life. Unfortunately, this happens to people and leads to bankruptcy—a path you don’t want to take. Avoid this fate by stopping debt before it becomes a personal crisis.