If you’re like many Americans who have seen debt rise over the past year, you might be wondering if your payments are unsustainable and what you can do about it.

If you’re heavily in debt, you’re not alone: ​​the average debt balance, including major items like mortgages, student loans and auto financing, has risen to $101,915 in 2022, according to the most recent data from the credit agency Experian. For credit card debt alone, the average amount is $5,910. For student debt alone, it’s $39,910.

But the amount of debt matters less than your ability to repay it. A low 3% interest rate on a student loan or mortgage would probably be easier to manage than credit card balances with interest rates over 25% eating up every dollar saved. Your income also plays a role in your ability to repay your debts.

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How much debt is too much debt? Here are six signs it’s out of control.

1. You can’t save for an emergency fund

One of the building blocks of personal finance is an emergency cash reserve, known as a emergency fund. Certified Financial Planners generally recommend saving enough to cover three to six months of expenseseven if any savings amount it can help.

Ideally, you could save for an emergency fund before tackling other goals, but some obligations, like pay off high interest debtThey should also be priorities. Low-interest debt, like student loans, may be a lower priority if you can easily afford the minimum payments.

If you can’t add anything to your emergency fund while you pay off your minimum debts, your debt load is probably too high to handle comfortably.

2. You can only afford to repay the minimum of your debts

Making only minimum payments can be a sign that your debt is unsustainable.

One reason is that if minimum payments are all you can afford, you’ll be more vulnerable to unexpected costs that will push you further into debt.

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Also, if you only make the minimum payment each month, not only will it extend the time it will take to pay off the outstanding balancebut it will also increase the total amount of interest you pay on the loan.

Interest can add up quickly. For a credit card with an interest rate above 20% and a balance of a few thousand dollars, the amount you would spend on the balance plus interest would be more than double the initial balance if you only made the minimum payments each month.

3. You have been refused a new loan

If you’re denied for new credit, it could be a sign that you can’t handle the debt you already have.

Loans and credit cards are often refused because the applicant’s credit rating is too low. Low credit scores tell lenders which borrowers are at risk of not repaying their loans or who have a history of not paying minimum payments on time.

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When you’re denied new credit, you limit your short-term financial flexibility, which can lead to more debt.

4. You open new credit card accounts to help pay off old ones

One way to pay off credit card debt faster is to use a balance transfer card that offers 0% interest rate For a limited time, usually 12 to 21 months. Balance transfers are what they sound like: you transfer your outstanding balance from an old card to a new card, and with 0% interest rates, you don’t have to worry about interest payments , at least for a while. .

There are a few downsides, though: balance transfers require credit checks that can hurt your credit score, and they typically carry a 3% to 5% fee, which can add to your debt load. Also, you may be turned down by low-interest balance transfer offers if your credit score is too low.

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And balance transfers only provide temporary relief: you’ll eventually have to pay off that debt.

Ultimately, “if you’re opening low-interest or interest-free credit cards to pay off others, you’re probably in too much debt,” says Noah Damsky, chartered financial analyst at Marina Wealth Advisors in Los Angeles.

5. You often pay your bills late

If you’re consistently behind on your bills because you can’t pay them, that’s a telltale sign that your debt is spiraling out of control.

Likewise, if you’re constantly making withdrawals from retirement savings or using a credit card to cover bills, you’ll likely need to re-evaluate your finances.

6. Your debt-to-income ratio is above 36%

The higher your debt ratio, the more your income will go to debt. By having a significant portion of your income locked in, you have less flexibility to cover unexpected or emergency expenses.

To calculate your debt-to-equity ratio, count all your monthly repayments and divide that total by your monthly income, after taxes.

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Lenders like to see a debt-to-equity ratio below 36% when reviewing loan applications, so it’s a good benchmark to use when reviewing your budget, although “lower is is better,” says Tim Melia, Embolden Financial Planning’s (PCP) Certified Financial Planner.

What to do if you have too much debt

Regardless of your total debt, your ability to repay it will eventually depend on “dicrease in discretionary spending or increase in income,” says Melia. Most people probably have more flexibility to cut back on discretionary spending, unless you can get a raise or start a part-time job.

Either way, the first step is to look at your bills and loan statements and figure out what you’re paying for necessities like housing or food, discretionary expenses, and debt repayment. By creating a list of your expenses, you may be able to identify areas you can reduce or eliminate, Melia says.

Another option is to contact your lenders and credit card providers and request forbearance based on hardship. This could result in forbearance, reduction of interest rates or waiver of fees.

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Beyond that, you can contact non-profit credit counseling organizations to help you get your finances back on track. They can arrange a consolidated “debt management plan” between you and card issuers or lenders, which can result in a single, lower payment for all of your debt.

Similar to a payment plan is debt settlement, which would be done through a for-profit company, although there is advantages and disadvantages to consider before choosing this option.

A last resort could be to file for bankruptcy, but you will want to consult a credit counselor or financial planner before making a decision, as you have long term consequences.

This article It was originally published in English by Mike Winters, for our sister network CNBC.com. To learn more about CNBC, enter here.

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