Calculating Your Debt

Living without debt seems like a fairly easy in design, all you have to do is spend less money than you earn. But in today's world, the practice of debt management is much easier said than done. Between car payments, home mortgages, credit cards, and all the other expenses we face, it's next to impossible to be completely debt free. The question you should ask yourself is how bad is your debt? You'e bound to have some debt, but there comes a point where it begins to take over your life. All of your money starts going to making payments on bills and the debt weighs heavily on you. Add the following amounts to calculate your debt to income ratio:

Control your debt and stop worrying about not having money to pay bills.

Monthly Income

• Monthly Net Pay
• Annual bonuses and overtime, divided by 12
• Other Annual income divided by 12

Monthly Debt

• Monthly mortgage payment
• Monthly car Payment
• Monthly credit payments (such as furniture, TVs, appliances)
• Monthly credit card payments
• Monthly loan payments

Now divide your total monthly debt payments by your total monthly income to get your debt to income ratio. If your debt to income ratio is under 30%, you're probably in very good financial shape and shouldn't need any help with your debt. If your ratio is higher than 35%, you still might be OK financially, but you may have more debt than you should for your income. And if your ratio reaches 40% or higher, your debt has already gotten out of hand and the situation requires immediate attention. This formula for debt to income ratio is not fool proof by any means, but it is a good way to get an idea of where you stand financially. Calculating your debt is the best way to control your debt. By all means, if you think your debt is becoming too much to handle, contact us at Debt Gift. We can help you quickly eliminate your debt or the debt of a family member. Apply now and get debt management counseling today!