Are you in over your head?

Calculate your debt-to-income ratio

By U.S. News Staff

March 29, 2012 RSS Feed Print
  • Comment (3)

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The amount you owe is relevant only when measured against your income. The more you make, the more debt you can afford to take on. Fill in the blanks to get a rough idea of your debt-to-income ratio—and whether it is already higher than is considered manageable on your income.

 

Monthly mortgage or rent:
Minimum monthly credit card payments:
Monthly car loan payments:
Other loan obligations:
A. MONTHLY DEBT PAYMENTS:
Annual gross salary:
Bonuses and overtime:
Other income:
Alimony received:
B. TOTAL (before tax, divided by 12):
A ÷ B =

divider

Your debt-to-income ratio

36% or less: This is a healthy debt load to carry for most people.

37%-42%: Not bad, but start paring debt now before you get in real trouble.

43%-49%: Financial difficulties are probably imminent unless you take immediate action.

50% or more: Get professional help to aggressively reduce debt.

Source: Gerri Detweiler, author of The Ultimate Credit Handbook

Tags:
debt,
personal finance,
money,
income

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As you can see my spouse and I earn less than a $100,000.00 annually. He works full-time as a corrections officer and is in the national guard. I am a disabled veteran and only have a fixed income. I feel as if our debt-to-income ratio is too high. We're both understanding more about credit now after being discharged from bankruptcy recently. Every effort is made to pay our debts on time, we need to refinance our mortgage but are leery because of recent discharge from bankruptcy. Any suggestions?

greta wilson of AL 8:53PM July 30, 2012

this does work.i only have a income of 22000.00 a year , and only have debt of 227.00 a month.my debt to income is only 14%,but i am not near as good off as someone who has a income of 3000.00 thousand a year, and a debt to income of 50%. they so much more money to live on!!!!!

jerry e of KY 5:16PM June 13, 2012

Thank you for this! Now I have a better understanding.

Sylvia Casterton of MI 4:53AM April 27, 2012

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