The current economic state is causing many families to confront their inadequate money habits and trying their best to be debt free. A myriad of signs indicates that this time of serious recession may or may not get better in the coming months.

When it comes to managing personal finances, families find they have difficulty keeping their household expenses in check and increasingly spend more than they earn. According to Economy.com, in the past 15 years income for the median American household grew only 11 percent, compared to debt outstanding, which has jumped by 80 percent.

Many consumers and businesses have been hit with the realization of how close they have lived to the financial edge. They’ve charged for unaffordable stuff. They’ve lived from paycheck to paycheck. The party appears to be over. However, the good news is that you can become debt free with the expert advice and tips provided in this article. Here are some of them.

• 10 Tips to Becoming Debt Free
• How can I Get out of Debt Fast with no Money?
• How can you get Out Of Debt Even On A Low Income?
• At what Age Should you be Debt Free?
• How Much Debt is OK?

10 Tips to Becoming Debt Free

Here are 10 tips and strategies to get you started on a debt-free life:

1. Bump up your debt repayment percentage

Putting at least 15 percent of your paycheck — or income from Social Security or pensions — toward credit card debt and loans will help you pay down those obligations much more quickly because most credit card companies only ask you to pay about 2 percent of the outstanding balance each month.

Read Also: What are Low Priority Debts?

Making small, minimum payments means that your debt balances are collecting interest as each month or each year goes by. Paying off large chunks of your debt within a few months could save you a significant amount of money on interest payments alone.

2. Use savings to pay down larger debts

Don’t be afraid to use a portion of your savings to pay down high-interest-rate debts. Using cash reserves for debt repayment is a smart decision because you will stop accruing interest on those large balances.

Although it may feel comforting to have some extra cash sitting in your bank account, the truth is that those funds aren’t really working for you — not with today’s record-low interest rates. Don’t deplete your savings entirely. If you’re sitting on a pile of cash, do use some of those funds to eliminate your bills.

3. Negotiate for a lower interest rate

Call your creditors to negotiate a lower interest rate. You’ll be surprised how many creditors will be willing to reduce your interest rate based on your payment history and account standing.

If you have maintained a good relationship for a few years, you may be in a much better position to qualify for a lower interest rate. This can help you save some money on interest payments as you pay down that debt over the course of the year.

4. Use your tax refund check to pay down debt

While it’s tempting to splurge on a high-ticket item or go on vacation with that tax refund check, a smarter money move would be to pay down some, or all, of your debt. Consider the value of reducing your monthly payments with a single lump sum debt payoff strategy. You’ll enjoy the benefits of a lighter debt load over the entire year and for years to come, instead of enjoying the short-term satisfaction of a purchase.

5. Sell items for cash

Put together a list of items that you could sell on eBay, Craigslist, or at a garage sale. Drumming up some extra cash by selling items you no longer need or are ready to part with — and using the proceeds to pay down debt — can help you rapidly lighten your debt load.

6. Consider cashing in your life insurance

Cashing in your life insurance may be a viable debt payoff strategy because it will give you a chance to pay down larger amounts of debt quickly. If you feel like you are drowning in debt and don’t have beneficiaries that need to benefit from your life insurance policy — for example a spouse or children — then it might make sense to use those funds to pay off debt.

This strategy doesn’t apply if you own a term life insurance policy. It only works for those with whole life policies that have built up cash value. It’s also important to note that even if you do have beneficiaries, you may be able to tap into part of the cash value of your whole life policy, getting cash for debt reduction and still leaving some life insurance proceeds to your loved ones.

7. Make more money

If you’re very determined to pay off that debt within the year, you should look for ways to increase your income and use that extra money to pay off debt as quickly as possible. Whether it’s taking on a part-time job or negotiating a raise with your boss, think of some ways to start earning more money for at least a few months and make debt elimination a high priority.

8. Do a credit card balance transfer

Most of us typically tear up all those credit card balance transfers that arrive in our mailboxes. But if you want to go on a tear with your debt reduction efforts, a balance transfer can help. By transferring high rate debt to a zero percent deal — one that lasts for 12 months or so — you eliminate all credit-card interest. That frees up cash flow, giving you additional money to knock out those credit card bills. Just read the fine print before signing up to make sure you are really getting that low rate.

9. Use a statute of limitations law to eliminate old debt

Some people pay off old credit card debts — really old ones — even when they’re no longer legally obligated to do so. We all want to repay our bills. But if times are especially tight and you just don’t have the money, you should focus on current debts and consider forgoing repayment of old bills that are 7 to 10 years old, or even older.

Each state has its own set of rules regarding outstanding debts. Some states don’t allow a debt collector to collect a certain type of debt after a certain period of time; others limit the amount of time when a creditor can sue you over an old debt.

Either way, you should find out whether the statute of limitations has passed regarding an old debt you may owe. If it has passed, you can likely forgo repayment without worrying about financial, legal or credit consequences plaguing you.

For more information about dealing with old debts, contact your state Attorney General or the consumer protection agency for help and advice regarding your state’s statute of limitations on credit card debt.

10. File bankruptcy to discharge your credit card debts

Bankruptcy should only be used as a last-ditch option to rid yourself of debt. But under extreme circumstances — as when you have no income or you have completely unmanageable credit card payments or medical bills — a Chapter 7 bankruptcy filing is appropriate to discharge credit card bills in their entirety.

If you feel morally obligated to repay your debts, you can also look into Chapter 13, which reduces some of your credit card bills. Then you repay the remaining debt over a three-to-five-year period.

How can I Get out of Debt Fast with no Money?

Are you wondering how to pay off debt with no money? Maybe you’re in a situation where you or your family have a budget that’s barely holding together and are living pay cheque to pay cheque. The best way to overcome this challenge might seem like paying off your debt fast, but no matter how hard you try, it’s just not realistic.

When you can’t make the payments to pay off your debt, your biggest worry might be that you’re falling so far behind you’ll have a bad credit rating. It’s true that credit bureaus will know if you can’t make your payments or can only make partial ones.

But when you get back onto your feet, your credit rating will recover with you. Your priority right now is paying your housing costs (rent, mortgage, utilities, etc.), buying groceries, and having money for medicine and other essentials like your transportation to work.

When you have no money left to spend, it can feel like the weight of the world is on your shoulders as you fall behind with bills and payments. Again, your priority now is not to pay off your debt, but to make sure your essential costs are covered. However, while it may feel like a tempting way to relieve your burden for the moment, don’t make your debt bigger by borrowing more money.

If you apply for credit knowing full well that you can’t afford to repay it, then there will be consequences and creditors do sometimes pursue people for fraud. If you cannot pay your debt off, then communicate with your creditors so that they can work on a solution with you.

How can you get Out Of Debt Even On A Low Income?

Not all of us make six figures which means paying off debt can be tough. But it’s not impossible. We’ll show you how to get out of debt, even on a low income. You can tackle it right now. Don’t let the emergency get worse. You don’t have to be making big money, or even more, than you are making right now to at least start paying off debt.

Cutting Costs Starting with The Big Stuff

If you are thousands of dollars in debt, making coffee at home and bringing your lunch to work aren’t going to be enough to fix the situation. We’re going to do those things too, but they aren’t enough. You need to concentrate first on significant expenses.

Reduce your interest rate

If you have credit card debt, your interest rate may be above 20%. In that case, you can easily refinance with Credible and get a rate as low as 4%. That would cut your interest payments in half.

It’s shockingly easy so if you’re a hardcore procrastinator than just give yourself 15 minutes to create some breathing room in your monthly budget.

Housing

The rule of thumb is that your housing expenses should be no more than 30% of your income. But not all of us are adhering to this rule. More than a quarter of Americans are paying 50% of their income on housing. If you’re among them, it will be almost impossible to get out of debt and start saving for your future.

Even if you are at 30% or under, if you have debt, this needs to change. You have a couple of options; find a cheaper home, get a roommate, move in with your parents, or move to a place with a lower cost of living.

Moving towns may not be practical for everyone, but if you’re living in an area where housing costs are prohibitive, and you’re in a profession where you’re not ever going to be making enough money there to get under that 30%, it’s something you need to consider.

 We know it feels good to live in New York City or Los Angeles or San Francisco but if you’re going to be forever in debt and never able to retire, it’s not worth it. It also takes money to move so you can choose from our other options; finding a cheaper place, getting a roommate, moving back in with your parents until you’ve saved enough to make a move.

If your debt is not that high or if you’re in debt now but your career and salary will advance within your field, you don’t have to do anything as drastic as pick up and move, but you still need to cut housing expenses so consider those options mentioned above, but you can also consider another.

If you’re in a desirable location, rent your place out to Airbnb. Even if you just crash with a friend for one weekend a month, you could bring in a couple of hundred extra dollars, and that will go a long way to paying off your debt.

How much you can make with Airbnb varies based on a lot of factors, but nearly 50% of users make more than $500 a month.

Transportation

Getting from place to place is likely our second most significant expense. Even if you are lucky enough to live in a city with good public transport, it’s still not free. A monthly Metro Card for the NYC subway is $116.50. That might seem like a bargain if you are paying a car payment and the cost of gas in the burbs, but remember, NYC cost of living is expensive!

Some employers subsidize the cost of a public transportation pass or allow you to use pre-tax money to purchase one. Ask your HR department if they have any such programs available.

Experiment for one week, if you are a two car family, have your partner do the same. Write down every car trip you make. At the end of the week, go over the list. Are there are trips that could be cut out by planning errands more efficiently? Any trips that could be made by bike or by foot?

How many trips could you and your partner combine? Can you carpool to and from work?

If you’re a two-car family who is struggling with debt, cutting down on one car can make a big difference. It might be painful but it your debt is an emergency.

It’s convenient to have two cars but how is it necessary? What would you do if one car was totaled and couldn’t be replaced right away? Do that and sell the other car. Not only will you get rid of a car loan but the cost of insurance too.

Walking or biking to work has benefits beyond just saving money too. More exercise, less pollution, less aggravation. When I worked in an office, I always walked to and from work. Sometimes as much as 45 minutes each way and in all kinds of weather. Such was my mania to avoid giving the MTA one cent I didn’t have to give their crummy service. And to save money of course.

Food

If you keep a budget, and you should, you’ll probably see this category as one of your biggest money hemorrhages. If you aren’t tracking your spending, start now. You’ll likely be surprised and maybe horrified at how much you spend here.

Maybe you don’t like to cook; some people don’t. How have you been eating out a lot? You probably also don’t like cleaning, doing laundry, or running errands. But you still do it because it’s part of being a grown up. Think about it; you could outsource those other things like you’ve been outsourcing feeding yourself.

So why don’t you? That would be a massive waste of money.

Well, how is eating any different? It doesn’t so knock it off! I won’t even tell you that you have to eat healthy, although you should, and you can go affordable.

Buy lots of frozen dinners when they’re on sale, buy lots of Ramen, whatever. But you must start eating at home and taking your lunch to work.

Go to your fridge, freezer, and pantry and see what you can use up before you buy more groceries. If you have a weird assortment of things, you can use a site like My Fridge Food to turn those ingredients into a meal. Think of it as an episode of Chopped!

Once you’ve eaten your kitchen clean, you’ll need to go food shopping, and you’ll need a meal plan. Planning out your meals for the week not only keeps you from buying things you don’t need, but it’s what makes it possible to batch cook.

Before you plan your menu, sign up for Ibotta. Ibotta brings coupons into the 21st Century. It’s an app that gives you cash rebates right from your phone. They have partnered with store all across the country to offer products at discounted prices.

After you buy the products, you selected on the app from participating stores you take a photo of your receipt and send it to the site. They match the items you bought to the rebates they offer, and the cash is deposited into your Ibotta account within 48 hours.

Take a look at the offers on Ibotta and your grocery’s weekly sales flyer. Plan your meals around the items you can get on sale. If you spend an hour or two batch cooking on the weekend, you can have plenty of meals for the week. Eat the first batch and freeze the second.

We’re trying to save money but if you don’t already have one, buy a slow cooker. They make batch cooking easy because once the food goes into the stove, you don’t have to do anything else.

Portion out your batches, so you just have to grab a container in the morning on your way out the door, so you don’t have to buy lunch.

Of course, you are going to go out to dinner sometimes, and that’s okay as long as you have budgeted money for it. Use the app Seated to make reservations. Each time you complete a reservation, you get a $15 credit for Uber, Amazon, or Starbucks.

Understanding The Whole Picture

The first thing is first. You need to sit down and figure out exactly how much you owe on your debts, how much is going out, and how much is coming in. If you don’t have a Personal Captial account, you need set one up. This is the easiest way to see your overall financial picture.

Personal Captial has free financial software and tools to track your personal finances. You can easily manage your entire financial life in one place and reach your financial goals faster.

Their software will help you to develop your long-term financial strategy, calculate your net worth, set a budget, manage investment accounts, and plan for retirement.

It might be a little scary to tally up how much debt you owe, but it’s the first step in eliminating it. Compare how much is going out (all of your monthly bills and expenses) and how much is coming in (all of your income) just using the minimum payments on the debts, not the totals.

Cutting Costs by Focusing on The Small Stuff

This is only for those people in debt. If you’re just looking for more money to invest or save, I don’t like to advise people to watch every cent and never buy little things like coffee on the way to work. But if you are in debt, emergency.

So you’re going to have to watch those little purchases that add up. Go through the expenses in Mint. It’s this little stuff that can add up and that can be eliminated when you have a debt to pay off.

Daily Habits

The daily coffee-buying habit gets a lot of grief, and to me, it’s well deserved. Don’t you people have coffee makers at home?

Even if you’re a coffee snob, buy the best machine, beans, whatever else you require and make it at home. You will still be spending less. But really, Cafe Bustelo makes a tasty cup of coffee and is about $5 a brick. Get over yourself!

Coffee is an easy target for this kind of spending, but it manifests in lots of other ways. Magazines at the check out line, drink when you get gas, a new lipstick. None of these things alone will break you, but chances are, more money than you realize is going to this sort of stuff. Money that should be going into debt.

Shopping

Almost anything you can buy new, you can buy used. And for less, often a lot less. Do you have a rich person’s neighborhood near you? Go to the thrift stores there. Rich people get rid of a lot of stuff, some of it never used, worn, or even opened.

Clothes, appliances, kitchen items, all of this you can find at a thrift store. Sure, you need more time to look through random things to find what you’re looking for and it takes longer than running into Target and grabbing one off the shelf, but you will pay a lot less.

You shouldn’t be doing any clothes shopping, but if there is a wedding or similar event and you don’t have anything to wear and need something nicer than you can find in a typical thrift store, you can check out Poshmark which sort of online thrift store. You’ll find higher quality items, but the prices are still affordable.

A lot of us already do a lot of our shopping online because it’s often cheaper than shopping at brick and mortar stores, but there is a way to save even more when you shop online.

When you join Swagbucks, you can get cash back when you buy online from more than 1,500 retailers including places you probably already shop like Amazon, Target, and Starbucks. You earn points for each dollar you spend and also get exclusive coupons and deals exclusive to their shoppers.

You can redeem your points for gift cards or get cash back through PayPal. We did an in-depth review of Swagbucks. There are other ways to make money on the site too.

Receiving automated refund checks is great, it’s like finding money on the ground. As it turns out, stores owe you money all the time, but they don’t pay if you don’t ask. That’s where Earny comes in. They automate everything. Price drop? Get cash back for the difference. Deliveries arrive later than advertised? Get cash back. Effort required? Zero, just how we like it.

Subscription Services

You might be spending money and not even realize it. That old gym membership, the magazines still being delivered to your last address because you never updated it, the fruit of the month club. It’s a hassle to cancel all those things, but it’s worth it.

You don’t have money to be throwing away even if it’s $8 her and $15 there. But now, you don’t have to do the work to save the money! Create an account with Trim. They will go through all those recurring charges and cancel the ones you no longer use. For free!

They also offer cash back in a few categories too including restaurants, groceries, and movies. You link the card you use to pay for those things, and you get $1 back automatically when you spend at least $5.

The Medium Stuff

There are specific products and services that have so many providers that we probably aren’t getting the best deal we could. It pays to shop around.

Utilities

How many television shows do you watch? It’s probably just a handful sprinkled across just a few channels. But you’re paying for dozens and dozens of channels if you’re paying for cable.

Become a cord cutter.

There are all kinds of internet services you can use to watch the shows you like, Amazon, Hulu, Netflix, and Sling TV and at a fraction of what you’re paying for cable.

If you have auto or home owner’s insurance you should shop around for the best price. There are so many insurance companies competing for your dollar that you probably aren’t currently getting the best deal you could. You can use Policy Genius to shop around.

The same is true for cell phone carriers. If you’re paying too much for your cell phone, check out Ting. You get the same coverage you get with the big carriers with a much smaller price tag. The average Ting bill is just $23/phone/month. Damn.

Interest Rates

If you have student loans, you may be able to get a lower interest rate by refinancing. Earnest is a platform that uses technology to bring low-interest loans to high-potential people. They look at things like your savings patterns, investments, and career trajectory—to give you the lower rate you deserve.

If most or all of your debt is credit card debt, you know how hard it can be to ever make any progress when the interest rates are so high. Getting that interest rate down will save you money and enable you to get out of debt more quickly. There are a couple of options for getting your credit card interest rates lowered.

The best option is a balance transfer credit card. You open a new credit card that has a period of 0% interest; some offer that rate for as long as 24 months. You transfer the balance from your current high-interest cards onto the new card. You have that period to pay only the balance on the card with no interest charges.

You must pay off the entire balance before the 0% APR period ends though. If you don’t, the remainder will be subject to the new interest rate which could be higher than the price you were paying on the previous card.

Not everyone will be approved for a balance transfer card but if you are, indeed buckle down and get that balance paid off.

If you can’t get a balance transfer and get a debt consolidation loan from Credible.

People lend you a lump sum that you can use to pay off your credit cards. A loan like this does have an interest rate (that’s how the lenders make a profit), but it will be far less than the interest rate on your credit card.

If you’re not eligible for any of the above, call up your credit card companies and ask for a reduced interest rate. Be honest, tell them you’re struggling with the payments, but you have a plan to pay off your debts but could use some help in the way of a lower interest rate. Not all of them will agree, but you might get lucky, so it doesn’t hurt to ask.

Fees

There is so much competition between banks that you should never pay any bank fee; a low balance fee, maintenance fees, ATM fees, overdraft fees. Part of the way banks make money is by nickel and diming customers with these little charges.

Bust the banks by switching to an online bank like Chime. Chime has virtually no fees. When you join Chime, you’ll be sent a Visa-branded debit card which is connected to your Chime spending account.

Not only do you avoid annoying bank fees, the Chime card is a cash-back rewards card. Rewards are something traditional bank debit cards don’t offer so all the more reason to switch to Chime.

Make Some Extra Money

It’s easier to cut spending than make more money but making more money usually generates more significant numbers and if you’re in a lot of debt, working only one job unless you have significant family commitments is not an option. You need to have at least one additional income stream until you are out of the woods.

Work Some Overtime

This won’t be an option for everyone but if you’re paid hourly, speak to your boss and see if you can pick up a few extra hours. Or if you’re job has shifted, check if the less desirable shifts pay a bit more per hour. Working nights isn’t fun, but it could make you some extra money without doing any more work. Maybe less if there’s no one watching!

Take A Part-Time Job

Do you have weekends free or a few hours in the evening? This might not be realistic if you have a family, but if you’re single, put your social life on hold for a few months and pick up a part-time retail job. Even if nothing is available now, lots of retailers take on extra workers around the holidays.

Start A Side Hustle

This doesn’t have to be anything complicated. If you want to grow your own business, great, but if you just need some extra cash, you have lots of options. These kinds of side gigs offer a lot of flexibility that a traditional part-time job doesn’t.

Do you like kids? Make babysitting your side hustle by signing up with Sittercity! Parents post jobs on Sittercity for everything from a full-time nanny to the occasional date night sitter. You can apply to the postings, meet the family and get hired. The average pay for a sitter is a little over $12 an hour.

Drive for Uber. The hourly pay after expenses varies from city to city, but you can expect to make around $10 an hour. In larger cities, it will often be much more and in smaller cities, sometimes a little less.

The appeal of Uber is that you can set your schedule and there is no commitment. You can work your regular job and make your $100 in just a few hours on a weekend or some evenings.

Selling your extra stuff, stuff you buy cheap at garage sales or discount stores or selling things you make is a great way to make extra money. You don’t have to go to the trouble of having your garage sale. You can do it all online.

Shopify is a site that makes selling stuff easy. They have ready-made templates, so you don’t have to spend time designing your store. They also have a lot of tools to help you do things like create coupons and promotions, process payments, handle returns, and share your store on sites like eBay, Google Shopping, Facebook, and several price comparison sites like Nextag, Bizrate, and PriceGrabber.

Just spending a few hours a week on your Shopify store can pay off.

Hustle in Your Down Time

When you’re paying off debt $2 here and $3, there can help. Don’t turn your nose up at those little amounts. These are some great ways to make a few extra dollars or save a few extra dollars in your spare time. And you have a lot of it since you’re not going out spending money.

Want to get paid for your opinion? With Survey Junkie you share your view to help brands deliver better products and services. Once you build your profile, they will start matching you to surveys.
When you complete the surveys, you will earn virtual points that can be redeemed for PayPal or e-Giftcards. You can take online reviews anywhere, anytime, and on any device.

Most of the surveys are pretty easy, and you are not required to sign-up for other services so no annoying spam mail. For starters, it’s entirely free, and you earn 25 free points just for creating your account. We did a full review of Survey Junkie.

Mechanical Turk is an Amazon site that pays small amounts of money for completing simple tasks like looking at an image and describing it in fewer than ten words. It takes some time to find jobs worth doing, but you can check it out while you’re sitting around watching Netflix.

Grow Up And Budget

Is what’s coming in more than what is going out? How much is left over at the end of each month? You’ll have at least that amount to start paying off debt. We want to make that number higher and we will, but it’s good to see we at least have some extra money after expenses.

What if there is more going out than coming in? We’re going to fix that. That can happen when you start relying on credit cards and is probably at least part of the reason you’re in debt.

Now we have all of the numbers we need to get started. We know how much we owe, what our expenses are, and what we have coming in. Now we need to keep track of your budget.

For the time being, the only budget in the minimum payments on your debts, the amount you’ve (hopefully) already been paying. If you haven’t been paying even the minimums, budget those amounts in now.

Also budget in some money for non-essentials like going out to dinner or a movie, a few drinks at happy hour.

Yes, your debt is an emergency, and if you were a robot, you would throw every dollar that wasn’t meant as an essential expense at it. But we aren’t robots, and most humans can’t deprive themselves entirely for long stretches without going off the rails.

Getting out of debt is like losing weight in that way.

If you never allow any wiggle room for yourself, you can’t stick to the program. So let some money in your budget for non-essentials. We’re going to start finding extra money and making more money to get rid of that debt as fast as we can.

Don’t Let It Happen Again

Now that you know how much is coming in and going out, make sure you live below your means. If you don’t think you will have the discipline to not overspend on your credit card, Tally can help you out. They’re an automated debt manager (kind of like what robo-advisors do in the investing world).

How does it work? Tally analyzes ways to pay off your credit cards. You’ll get a custom report with recommendations based on your monthly spending habits and credit card details (e.g., APR).

You’ll set goals and track progress. If you decide to pay more each month, Tally shows you how quicker (or slower) it’ll take you and how much you could potentially save.

You know how much is coming in and going out. You’ve reduced some of your expenses, and you have some extra money coming in. Set up your budget in Mint and stick to it. Check it every week to see how much you have left to spend in each category.

At what Age Should you be Debt Free?

It can be difficult to get out of debt quickly. The average person should be debt free by the age of 58, unless you choose to extend your payments. Otherwise, you could potentially be making payments for another two decades before you become debt free.

Now, if you were to use a more disciplined budget and well-planned payments, you could be done by age 39.

This is the best option because it uses Roll Over Payments. It takes some effort, but it literally pays off in the end. By adding just $50 to the minimum payment of the account with the highest interest rate (in this case, the credit card debt) while rolling each payment into the next loan, the monthly cost will never change, but the debts disappear at a rapid rate.

• Credit Card: $5600 ($600 interest) paid off at age 23.3
• Student Loans: $50,560 ($10,560 interest) paid off at age 29.3
• Mortgage: $410,420 ($160,420 Interest) Paid off and debt free at age 41.6
• Total Paid: $467,180 ($172,180 Interest)

Compared to the standard route this is a massive difference. You would save almost $80,000 thanks to the Roll Over Payments. The main bonus, however, is saving 20 years off your time in debt. That’s more time to live your lifestyle debt free.  

How Much Debt is OK?

A good rule-of-thumb to calculate a reasonable debt load is the 28/36 rule. According to this rule, households should spend no more than 28% of their gross income on home-related expenses.

Read Also: Calculating your Debt to Income Ratio

This includes mortgage payments, homeowners insurance, property taxes, and condo/POA fees. And households should spend no more than a maximum of 36% on total debt service, i.e. housing expenses plus other debt, such as car loans and credit cards.

So, if you earn $50,000 per year and follow the 28/36 rule, your housing expenses should not exceed $14,000 annually or about $1,167 per month. Your other personal debt servicing payments should not exceed $4,000 annually or $333 per month.

Further assuming that you can get a 30-year fixed-rate mortgage at an interest rate of 4% and that your monthly mortgage payments are a maximum of $900 (leaving $267, or $1,167 less $900, monthly towards insurance, property taxes, and other housing expenses), the maximum mortgage debt you can take on is about $188,500.

If you are in the fortunate position of having zero credit card debt and no other liabilities and are also thinking about buying a new car to get around town, you can take on a car loan of about $17,500 (assuming an interest rate of 5% on the car loan, repayable over five years).

To summarize, at an income level of $50,000 annually, or $4,167 per month, a reasonable amount of debt would be anything below the maximum threshold of $188,500 in mortgage debt and an additional $17,500 in other personal debt (a car loan, in this instance).