Debt to Income Calculation - Formula

iVillage Member
Registered: 08-24-2007
Debt to Income Calculation - Formula
17
Thu, 04-29-2010 - 2:38pm

I had my monthly Wealth Watcher’s meeting today and the topic was debt.

Kate


empty purse

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iVillage Member
Registered: 11-14-2008
Thu, 04-29-2010 - 3:59pm

That seems pretty straight forward. I wish my mom would see this. I also wish it would have a few more categories, because the leap between the last two categories(35-50, and over 50) is a pretty big leap in what it says in the description part.

I have always wondered what BK lawyers do to decide whether or not someone should file or what bankers look at to make those loan decisions. I know it is more than just a calc like this but maybe this is part of it.

See this is a calc that takes out the distinction between good debt and bad debt. Because at the end of the day, you can pay all your bills or can't. It doesn't matter if you have good debt or bad debt. Example: I have a car loan and BF has a student loan and we fall into the 26% category. I know we have to reduce our debt but someone that has less information may be thinking ok well I have this great education and I will have a car at the end so I'm golden. They never count on the unexpected like losing a job or someone getting sick and they should. Now, that is not as to say we couldn't sell the car and get something cheaper or reduce the payments on the student loan but you don't go into those situations planning on those types of bail outs.

Sorry, rambling. Good calc and an indicator if you are totally clueless in my opinion.







iVillage Member
Registered: 03-27-2003
Thu, 04-29-2010 - 4:20pm

Interesting.

iVillage Member
Registered: 03-30-2010
Thu, 04-29-2010 - 4:29pm
I included our truck loan ($13500) HELOC ($17000) and our TSP loan ($10000, owed to ourselves)
Community Leader
Registered: 07-26-1999
Thu, 04-29-2010 - 4:44pm
Kate, is the net income in the formula your yearly income?
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iVillage Member
Registered: 08-02-1998
Thu, 04-29-2010 - 4:44pm
ok according to the calculator I'm in worse trouble than I thought. If I add in my 1st and 2nd mortgage it puts me at about 200%, but I could also be calculating wrong, it's the simple things that trip me up. :-)


Community Leader
Registered: 07-26-1999
Thu, 04-29-2010 - 4:54pm
Ya, I'm coming up with 167% if I take our debt total, including the mortgage last month's net income ($145,597) divide that by last month's net income x 12 (i'm assuming that's what you do, so $7257*12) multiple that by 100 = 167%.
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iVillage Member
Registered: 12-10-2009
Thu, 04-29-2010 - 9:51pm
Yeah mine is kind of screwy also considering the student loan. I think in a way that is not suppose to be included because it is where you live and people would then have to include there rent or something. But regardless with out the mortgage I still have too much debt. But I am glad to see that because then people can not justify good debt.

Liz


Student loan paid in full 2/2010


Car loan remaining balance

Liz

student loan paid off 2010

Bathroom remodel loan paid off 2013

Pending Car loan to be paid by the end of 2014!!!!!

 

iVillage Member
Registered: 10-01-2009
Thu, 04-29-2010 - 10:56pm

Tracy those are gorgeous pictures of you and the kids in the flowers....


Sorry for the off topic


Duke

iVillage Member
Registered: 03-31-2010
Fri, 04-30-2010 - 7:12am

I, too, am confused (not hard to do.)

Robyn CL- Debt Support Group


iVillage Member
Registered: 11-18-2003
Fri, 04-30-2010 - 8:56am

I think it should be on a monthly basis(it would all work out in the end) EX. monthly car payment + monthly mortgage/ monthly net income x 100 = %


 


Terri

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