Debt Reduction – Taking a Closer Look at Your Debt to Income Ratio
One of the many reason why so many Americans file for bankruptcy is because of high debt. This country overall has one of the highest debt to income ratios.
So how can we as whole get better with debt reduction? Having a high DTI can be a deterrent for many creditors and finance companies
First take your monthly income; this should include all wages, child support, alimony, annuities, or any other monies that come in to the household monthly. If you happen to have income that varies, you will need to add up the most recent 6 months of wages and get an average of your standard income.
You want to first calculate what your monthly income is; this could be a variety of things ranging from your monthly wages to alimony and child support.
Example:
Debt is the next part of the equation. Debt does not include your utility bills but it will encompass outstanding balances on credit cards, loans, mortgage, child support, car payments, etc. If a debt will be paid off within three months, then do not include it.
Lastly, take the monthly expenses and divide it by the income and you will be coming up with your DTI.
For example:
Monthly Income = $4500
Your Monthly Income = $4000
Fixed Monthly Expenses = $2,300
DTI = 49%
This debt to income ratio is very poor and shows that expenses are so high that it would be very difficult to gain any additional credit or financing.
The first step of debt reduction is always taking a look at where you currently stand, and that is through obtaining your debt to income ratio.
Learn more about Smart Debt Repair. Stop by Lisa Max’s site where you can find out all about debt consolidation scams and various debt repair tips.
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