Don't know if you are carrying excessive debt? Here are a few ways to find out for sure

Not all debt is created equal and not when it comes to paying it off. Excessive debt is a subjective terms depending on your financial situation.

Here are some ratios that might help you determine if you are carrying excessive debt:

a.       Total debt ratio (Total liabilities / Total Assets) – Should try to keep it under 40%

b.       Emergency funds – About six months is ideal

c.       Debt-to-income ratio (Annual consumer credit payments / Annual after-tax income) – Should try to keep it under 15%

d.       PITI ratio (Annual mortgage Principal, Mortgage Interest, Property Taxes, and Property Insurance / Annual gross income) – Should try to keep it under 28%

As with all financial advice, you should consider above strategies a useful checklist to get educated; however, consider how these might fit your personal situation before taking action. A discussion with your financial planner might also be useful here.