How Much Debt

The typical American household will carry the following debt obligations:

• home mortgage
• second mortgage or home equity loan
• auto loan(s)
• student loans(s)
• 4-5 credit cards
• retail financing loan
• other

Basically, the more income you make, the more debt you can assume. The ratio of your debt-to-income is a percentage of debt that you can safely assume at your current income level.

The "debt-to-income ratio"

is calculated by dividing your fixed monthly debt expenses by your gross monthly income.

As a basic rule, you should live within the following percentages:

— monthly housing debt expenses including taxes, insurance: 25-28%
— other credit obligations (credit cards, auto loans, etc.): 10-15%

— your total debt obligations should be around: 36-40%

Calculating Your Debt-to-Income Ratio:
Input the following data to calculate your debt ratio:

Fixed monthly expenses include:

• monthly housing debt/rent expenses including taxes, insurance.
• monthly installment loan payments
• monthly revolving credit line payments
• real estate loan payment on non-income producing property
• alimony and child support
• any tax or legal assessments.

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Monthly Mortgage or Rent (include escrow payment):
Monthly Auto, Student or Other Installment Loan Payments:
Minimum Monthly Credit Card Payments:
Minimum Credit Line Payments (home equity):
Monthly Real Estate Non-Income Loan Payments:
Monthly Alimony and Child Support Payments:
Monthly Tax and Legal Assessments:
Monthly Other Payments:
Monthy Gross Salary or Pay:
Annual Bonus:
Monthly Alimony / Child Support:
Other Monthly Income:
Monthly Debt Payments:
Monthly Gross Income:
Debt-to-Income Ratio (should be around 36%):	%
Ratio Barometer: 36% or less: debt level within acceptable range for most people. 37%-42%: debt level a little high, need to take corrective action to bring debt level down. You may consider paying off or consolidating some of your debt. 43%-50%: danger level, need to take immediate action before you lose control of your financial situation. 50% or more: excessive debt loan, may need to seek credit counseling services.
* Calculations are based upon the assumptions you entered. Please note that rounding errors can make a small difference in calculations. The circumstances surrounding your credit and loan qualifications may result in different calculations.