The Nest

I personally would consider 40k in cc debt alone a lot. I think other types of debt, such as cars, student loans, mortgages, are all relative to what you make and if you're living above your means. Some debt is necessary for most people at some point in their lives.

I really couldn't give you a number of what is "ok" debt and A LOT of debt. I guess for the most part, the smaller the number the better. I guess I have a different perspective now that I married DH and he brings about 12k of cc debt into the marriage. Before I would have probably been outraged and/or a little judgy if I heard of someone with that much cc debt, but now it's a part of our life and I just live with it as we pay it off asap.

There isn't really a set number that is considered high. It depends more on your debt-to-income ratio. Here is a website that is helpful in that calculation.

http://www.usnews.com/usnews/biztech/tools/modebtratio.htm

" They live like normal people, but don't seem to mind going out and spending money."
This is probably why the have $40k in CC debt.

For us, anything on the credit cards that we couldn't pay off in a month would be a lot. The most we had on CC's was about $10k, and it took us a long time to pay them off when our incomes were lower than they are currently.

I think debt is relative. If we weren't able to save money, we're living beyond our means, regardless of whether we have $1000 or $50,000 in debt. For us, thinking that we didn't have "a lot" of debt is what mentally enabled us to continue spending money we didn't have.
 

Ditto pp - debt is a reality for most of us, and student loan/mortgage debt generally isn't bad.

 But 40K in unsecured debt is a sh!tload.

Definately too relative to pinpoint a number.

ditto everyone else.

Students loans and mortgages are a reality for most people. Unsecured loans and credit cards are (in my view) terrible. But, it's all relative to what you make. $40,000 is not much less than what me and H make annually (we're still in school), so it would be insane for us.

I personally think any credit card debt (being any amount you can't pay off when the bill comes) is a lot of debt.  Flame away, but that's how I was raised - don't spend more than you can afford.

That being said, I personally have $100k+ in student loan debt and a $163k mortgage.  While I wish I didn't owe so much, because I have no credit card debt (and I can save some each month) I think I'm in good shape.

I think you both have ALOT of debt. 

I think any CC debt is "A LOT" of debt. $40K is an INSANE amount of debt, but I even think $5K is pretty high. But I guess I try not to judge unless I know how they got into cc debt. If you got into debt for a medical emergency or going to school, I am not going to look down on it as much as just simply overspending and having a case of the "i wantsies".

I would feel extremely uncomfortable with either of the situations you mentioned.  DH & I bring home the same amout as you and your H, but our mortgage is $225K less than yours, we have no CC or SL debt and our only car payment is $300/mo.

 The fact that you are not saving ANYTHING means that you have considerable debt. Do you have an e-fund? When do you plan to start retirement savings??  I would worry less about your friends situation and focus your attention on your own future by finding a way to cut expenses/increase income and begin saving for your future.

while i think 40k is an obscene amount of CC debt, i also wouldn't be comfortable with the mortgage you have on your income.  our income is comparable to yours, and i'd never have a mortgage that large.  i also wouldn't be comfortable not being able to save anything.

Quite honestly, both situations make me feel squeamish... and thankful for our (relatively) small amount of SL's. But 40k in CC would give me regular panic attacks.

I think any CC debt is a lot of debt.  Because 95% of the time it means you were buying things that weren't necessary.

I consider $40K to be an extremely large amount of cc debt.  I also would not be comfortable with not saving anything, though, and I think that is a sign of living outside your means. 

I totally think it depends on the type of debt, and individual circumstances.  Out here in LA someone could just have a mortgage as debt, but that mortgage could be mind boggling to someone in a LCOL area.  Personally, I am up to my eyeballs in student loan debt, and I think it's a lot, but I was talking to a coworker who has double what I have and he thinks I have it easy.  It's all relative.

It's all relative, but IMHO you both have a lot of debt, especially on your incomes.

lilbit07:

while i think 40k is an obscene amount of CC debt, i also wouldn't be comfortable with the mortgage you have on your income.  our income is comparable to yours, and i'd never have a mortgage that large.  i also wouldn't be comfortable not being able to save anything.

 

Ditto. I can't imagine having a mortgage that high on $100k/yr, PLUS $75k in student loans, no savings, and a leased car.

It varies with income but I think if you have half over your annual income or more in unsecured debt, that would be A LOT of debt.

I wouldn't don't count secured debt. 

Kore!:

lilbit07:

while i think 40k is an obscene amount of CC debt, i also wouldn't be comfortable with the mortgage you have on your income.  our income is comparable to yours, and i'd never have a mortgage that large.  i also wouldn't be comfortable not being able to save anything.

 

Ditto. I can't imagine having a mortgage that high on $100k/yr, PLUS $75k in student loans, no savings, and a leased car.

Ditto. I consider both those situations to be a lot of debt.

I just wanted to say that it definetly is relative. PP have mentioned that the mortgage is high but depending on where you live depends on the mortgage. I live in NJ and it is hard to find a decent house for less than that and I'm not talking about anything huge I'm saying a two bedroom cape. I guess people are comfortable with a certain amount of debt. I know what mh and I are comfortable with and as long as we are still able to save for retirement I'm fine.

I think that its all relative. My husband and I make the same income as the OP, but we have much less debt. However, we have a car loan, and some people believe that we have too much debt since we have the car loan.

Wow, and I thought we had a lot of debt.  We just got married, bring home about $75K between the two of us, don't have a mortgage yet, but are looking to get one around $175K-ish within a year.  Between the two of us we have somewhere between $35 and $40K in student loans, and $8K in cc debt.  We also have one car loan for $9K.

Here we were nervous that we were in a bad situation - but we're at least saving about $500 a month towards the house down payment, PLUS my DH is putting money into the 401K each month (my job doesn't offer that, it's a crap nonprofit).

My suggestion - pay down the cc debt, and start SAVING!!  Try to do both at the same time, even if it's tight!  You can always come up with a specific budget each month that you have to stick to.  DH and I did that the minute we merged our bank accounts so we knew exactly what we were spending and what we needed to cut back on to meet our financial goals.

Probably anything over $5,000. But I don't include a mortgage in that number - to me, that kind of debt is unavoidable, so it doesn't really count.

hit post before I was done...   oops!

 

I would personally consider that a lot of debt, but I personally would prefer to have no unsecured debt at all (read: no cc debt, and no car loans).  I checked out the debt-to-income calculator up in another reply, and I think that should help you decide if you have too much debt or not at this point.

Guess I should have mentioned that we do live in NJ and if you can find a house under $300k for me in this area, I'd move in a second.  I appreciate all the honest answers...I do consider us in a significant amout of debt, but definately not living outside of our means.  If something happened, we'd be able to cover it with investments, and luckily we have parents that are more than willing to help out.  Every area is different, and we live in a very HCOL area.  The savings, well, although I wish that we had it, our parents (and I'm sure that we're going to get flamed for this one, but to each their own) moreso wanted us to purchase a house and then be able to turn to them if we needed anything, than continue living in our condo and having a decent amount of extra money.  We do contribute a decent amount to retirement each month and pay toward our CC debt aggressively, and it will be paid off with a teaching stipend come January.  Although we have very little wiggle room when it comes to extra funds, we are living a pretty normal, non-impulse life.  Again, thanks for all the responses! 

I think it's relative, for sure. I feel like between our mortgage, car payments, and SLs we have a lot- but using that calculator we are well under the 36%. And that is with *no* CC debt.

If we had any CC debt, that would be too much for me. As it is, I can't wait to get rid of the darn car and SLs!! 

Honestly, either of those situations would make me sick to my stomach.  And I live in NJ too, so I understand HCOL. 

kmslwsmrs:

The savings, well, although I wish that we had it, our parents (and I'm sure that we're going to get flamed for this one, but to each their own) moreso wanted us to purchase a house and then be able to turn to them if we needed anything, than continue living in our condo and having a decent amount of extra money.   

I also would not be comfortable with my parents making my financial decisions.  Maybe you meant that they were offering that, and YOU decided you'd rather have it that way .... but the way you wrote it, you're saying that THEY'D rather have you buy the house. 

I don't really count mortgage debt or student loans as they fit comfortably within your budget... honestly, I don't think a $300K mortgage is that crazy, but then I'm in HCOL world as well.   However, I think any CC debt is A LOT. It would make me so uncomfortable to carry a balance.