How Much Debt Is Too Much?

by Stacy Francis, CFP®, CDFA

I was in back-to-back meetings all day today. This is not unusual – neither is the fact that four consecutive meetings started out with a prospective client informing me that she had come to me because she is in debt and would like to regain the control over her finances.

Debt is truly a widespread problem these days. So with each of them, I started out by breaking down their finances – income, costs, spending, and debt. In every case, their debt-to-income ratio came out higher than the limits most lending institutions use when determining how large a mortgage an individual can carry. According to them, if your debt payments (including mortgage payments) eat up more than 36% of your gross income, you should consider changing your lifestyle. If you do not own a home, of course your debt payments should be much smaller than that. Still, many people are far deeper in debt.

The good news is, by taking an honest look at your finances, drafting a budget, and making changes – some smaller, some bigger – you can turn this around and face a brighter financial future. I see it happen all the time. All you need is determination and a network of people who support you.



Stacy Francis, CFP®, CDFA

Stacy Francis is the Founder, CEO and President of Francis Financial, Inc., a Wealth Management and Financial Planning firm. With over 18 years of experience in the financial industry, she is a CERTIFIED FINANCIAL PLANNER™ (CFP®), a Certified Divorce Financial Analyst™ (CDFA™), and a Certified Estate Planning Specialist (CES™). She is the Co-Director of the Association of Divorce Financial Planners’ (ADFP) Greater New York Metro Chapter and a member of the Women Presidents’ Organization (WPO) and an honoree member of the Private Risk Management Association (PRMA). A nationally recognized financial expert, Stacy has appeared on ABC News, CNBC, CNN, PBS Nightly Business Report, The Today Show, Good Morning America, Fine Living Network, and The O’Reilly Factor. Stacy attended the New York University Center for Finance, Law and Taxation.