Acquiring debts at a young age is perhaps quite common now, with student loans and debt from various credit cards a part of modern lifestyle. However, if it is taking you much longer than planned to pay off the acquired debt, you might be under a bigger burden than expected for your age and income bracket.

Testing whether you have too much debt

Financial experts all over the world do have some common guidelines for the savings frequency at various age brackets. You should be able to save a minimum of 10-15 % of your salaried income annually right from the very beginning of your earning. Some even suggest a 20% savings for retirement to be ideal in case of minimum debt scenario. Apart from this, you should also be able to put aside an emergency fund, which roughly calculates to about 4-6 months of expenses you would normally inculcate as comfortable living.

If you are in a debt margin where the basic savings potential is well beyond your means, you are indeed under too much debt burden for your age bracket.

Calculating your over debt percentage

Before you can address the issue, you have to know the margin of the debt that you want to reduce before you can start saving ideally. To figure out your ideal debt margin, start by calculating your ideal savings margin and subtract this amount from the annual salary you make. The resulting amount is your ideal on hand margin. Compare your current on hand salary with this margin to understand where you stand with your current debt. Your over debt margin would be the amount that you are under your ideal on hand salary due to the current debts you owe.

The conclusion

If your debt is holding you back from consistently saving for the future, you are definitely under too much debt burden. However, the situation is much more problematic the closer you get to your retirement age. You have to be just as much aggressive to reverse the situation if you have a lesser time limit for getting out of debt ad starting to save. A lesser time limit will also mean you have to save a higher amount to meet the ideal retirement fund within the available time limit. However, your strategy at this time an also include investing in a side business to give yourself an edge on the savings strategy.