For most young adults, personal debt doesn’t pile up all at once—it quietly grows when small monthly payments feel manageable but add up over time.
The easiest way to make sure you don’t accumulate too much debt isn’t about cutting out every fun expense. It’s about tracking a few simple numbers that tell you, early on, when debt is becoming a problem.
Read on to learn more about these numbers and tips for the easiest ways to stay debt-free.
(1) Debt-to-income ratio
The most important habit is knowing your total monthly debt payment and comparing it to your income. Add up what you pay each month for loans and credit, like rent/mortgage, car payments, student loans, minimum credit card payments, personal loans, and even child support/alimony. Then divide that number by your gross monthly income. This gives you your debt-to-income ratio. As a rule of thumb, keeping this number under 20–25% makes debt manageable. If you’re pushing past 30%, you’re likely sacrificing savings and flexibility without realizing it.
> Debt-to-income calculator
(2) Credit card utilization rate
Another easy calculation is your credit card utilization rate, which shows how much of your available credit you’re using. Take your total credit card balances and divide them by your total credit limits. Staying below 30% utilization helps protect your credit score and signals that you’re not relying on credit to survive. If you’re consistently above that level, it’s a warning sign that spending may be outpacing income.*
> Credit utilization calculator
(3) Debt growth rate
Finally, calculate your debt growth rate. Each month, check whether your total debt balance is going down, staying flat, or rising. If balances increase despite making payments, interest and new spending are working against you. Catching this early gives you time to adjust before debt becomes overwhelming.
Track your debt to maintain financial stability
You don’t need complex spreadsheets or financial apps to stay out of trouble. By tracking just a few simple calculations—debt-to-income, credit utilization, and total balance trends—you can spot problems early and keep personal debt from quietly taking over your financial life.
Stay ahead of the game with this information brief on methods for managing and reducing personal debt and tips for keeping your debt under control.
It Pays to Know!
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*You may temporarily exceed a 30% credit utilization rate if you intentionally use your credit card to maximize cash-back rewards. To prevent this strategy from negatively affecting your credit score, consider requesting a higher credit limit or paying down your balance before the statement closes to keep your reported utilization low.
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