Naturally, lenders and credit card companies are more than happy to make available as much money as they think their borrowers will repay. The lenders and credit card companies take risks, but those are calculated risks. They look at default rates, current interest rates and carefully check credit history when they make loans available, borrowers can benefit by following many aspects of their strategy.

5 Factors to consider with when calculating your correct amount of debt.

Factor 1 - Prior to taking out a new loan or line of credit, deal with the odds that you will have to default on the debt repayments, do not factor in to your decision the possibility of deliberately defaulting or filing bankruptcy, you will find the consequences are rarely worth it and that should be reserved as a very last option.

Factor 2 - You can factor in expected increases in earnings & income as banks and other business do in their estimates, however you should be very sure you're clearly going to receive how much you have estimated. A promised raise or hoped for income from a stock sale is far from guaranteed increases in income and wages.

Factor 3 - Look at the current interest rates and make a prediction about where they are headed, businesses also do this, it can possibly be a very difficult thing to be confident about, but general trends are not random. You can look at futures, bonds and other indicators. If 7% bond option prices are going down, the majority professionals are betting interest rates will rise to above that in the future, these represent the bets of professionals about the future direction of inflation and interest rates.

Factor 4 - Look at your own credit history the same way a bank would, try to see it from their perspective. Would you loan yourself say $20,000 at 6% for 36 months? Avoid rationalizing late payments or defaults, you may have had a legitimate reason, or you may not yet have developed the inner and financial resources to repay all your accounts on time.

Factor 5 - Consider your total wage and expenses realistically, you may badly want a new car or other item, but can you afford an extra $600 per month without sacrificing essentials while still meeting your current obligations?

Be totally honest with yourself when considering, what is the most appropriate level of debt you can manage.

No one can decide for you whether it is worth assuming an ongoing $250 per month credit card expenditures at 11.5% in order to have an item you've been longing for is a good decision, you may value having the item today more than you value the extra money it will cost you over what you save in interest by saving for the item initially and then purchasing, but you should at least think about it. Impulse purchasing is one of the most common ways credit card users get themselves in over their heads, financially speaking. Deal with the possibility that if you wait and saved for, say, 6 months to a year you will have both the item and something else you can buy with the money you would have paid in interest.

Evading this fact, if it is a fact in your circumstances, that you can not truly afford the payments is the surest way to get into a financial dilemma, the kind of financial dilemma that can take months or years to get out of. Think long term, be realistic, and you will be able to decide what is the best level of debt for you.