How much debt is too much
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Presentation that talks about balancing your debt to income ratio and budgeting.
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How much debt is too much
- 1. Welcome, HUF! August 2010 Presented By:
- 6. Most lenders, especially mortgage and auto lenders, use your debt to income ratio to determine the loan amount you qualify for For example, a mortgage lender will use your debt to income ratio to figure out how much mortgage you can afford after all your other monthly debts are paid
- 8. Calculating your Debt to income ratio...
- 10. Calculating your Debt to Income ratio... (cont)
- 21. Your Spending Plan Worksheet
- 27. You will then be debt free! Imagine how great that would feel!
Notes de l'éditeur
- For example, let’s assume you make $3,000 a month. Let’s also assume you spend $300 on credit card payments and $450 on an auto loan. Your ratio calculation would be $750 / $3,000 = 0.25. Multiply that by 100 for a debt-income-ratio of 25%. In this example, you spend a quarter of your income on bad debt When it comes to debt, whether good or bad, the lower the debt you have, the better. A bad debt ratio beyond 10% is too high and often is a sign that you are overloaded with debt. In this scenario, you would have too much bad debt.
- Example In our example, Sam's debt to income ratio is 38.5%. This isn't a bad ratio, but it could become worse if Sam increases his monthly debt payments without increasing his income.