In recent years, many people have incurred dangerous levels of debt. In part, this is due to aggressive marketing on the part of creditors. You may have worked hard to build and maintain your credit. But especially if you have good credit, you may not be able to trust the creditor to tell you it’s time to quit incurring debt.

And too many people believe that “as long as I can make the payment, I can afford the purchase.”

But there are some easy tools you can use to check up on your situation. First is your debt-to-income ratio.

As a rule of thumb, your rent or mortgage payment should be no more than 25% of your income. This should include taxes and insurance. If both you and your spouse work include both incomes only if both are permanent and stable. In recent years, some mortgage lenders and real estate salespeople have suggested that this percentage could be raised to 35%, but that can be a recipe for disaster in today’s uncertain economy.

Credit card debt and auto financing can safely equal 10% of your annual income. While you *can* count bonuses and overtime as part of your income, it makes more sense to only count your base income and set aside additional income as “special” funds to take vacations, make home improvements, pay down debt or finance emergency savings funds.

While debt levels higher than these may be “normal” in today’s society, they are not safe. Most Americans are within two paychecks of serious financial trouble, especially as total debt levels approach 50% or more of income.

And no matter what society considers normal, or experts consider “safe”, if you don’t feel comfortable at your current level of debt, begin immediately to take proactive steps to reduce debt.

There are online debt planning calculators you can use to devise a payoff plan to reduce or eliminate debt. Most people choose to pay off high interest credit card and auto loans first; while others focus on building emergency savings or home equity.

You can also sign up for debt management plans, where a professional credit counselor will help you by devising a payment plan and working with creditors to reduce interest rates and penalties. You make one payment to the plan, and the plan administrator allocates it to creditors. As these services become more prevalent, quality varies widely. Before signing up for credit counseling research the company’s reputation.

You can get the credit monster under control and come out even better than “normal”.

Debt is a part of life. You can’t deny it. Student loans and home mortgage loans are considered to be good debts since they are taken out for constructive purposes. On the other hand, credit cards and other high-interest consumer loans are regarded bad debts since they are not used for any positive purposes. There are credit solutions that can help you alleviate your loan burden and make your life simpler. These solutions include both short-term and long-term solutions. You must use both of them to stay debt free forever.

Budgeting: A long-term credit solution

When you’ve really made a commitment to become debt free and not fall into debt once more, then budgeting can work as a wonderful solution for you. You should always remember that you need to spend less than you earn when it’s a matter of becoming debt free. Most of us can’t finance home buying or college education without acquiring a loan. However, you can prevent piling up of bad debt when your finances are restructured.

It is not so easy but not impossible as well. You should try to find out where you can cut down your spending. Try to raise your income if possible. Don’t buy anything simply because you feel the temptation to buy it. In the end, all these would help you save money and clear up your dues. Try to create an emergency fund that you can use to pay off your bills.

Consolidating your debts: A short-term credit solution

When you have been able to save some money by lowering your expenses, you can use this money for consolidating your bills. You can combine all your bills into one monthly payment that is easy for you to manage and get rid of your bills within 3-5 years. All your unsecured debts can be tamed in this way. The principal advantage here is the reduction of interest rates. Consolidation would be more effective if you can add some extra to your monthly payments and stop acquiring new debt.

The right credit solution can help you tremendously but you should be disciplined in your spending habits.