Page 29 - Book3E

Average Monthly Expenses for Four People
IncomeLevel 1 2 3 4 5
6
7 8
$868
$94
$302
$89 $193
$463 $43 $145
$46 $193
$501 $44 $151
$47 $193
$502 $46 $152
$48 $193
$558 $52 $190
$49 $193
$574 $53 $191
$52 $193
$685 $66 $201
$58 $193
Food
Housekeeping supplies
Apparel and services
$433
$42
$144
Personal care and services
$44 Miscellaneous $193
Total $856 $890 $936 $941 $1,042 $1,063 $1,203 $1,546
Debt-to-income Ratio and How It Affects You
Debt-to-income ratio is often heard but not often completely understood. A high debt-to-income ratio is something that almost all people with financial problems have in common. A good goal to strive for is to keep your debt at or less than 20% of your gross income and never let it exceed 36% of your income. Depending on your goals, your debt may need to be lower. A big reason to keep your debt percentage where it needs to be is because this is a major factor in determining whether or not you will qualify for a loan for major purchases like a home or a car.
Too much debt also makes you vulnerable to sudden changes in your income or expenses. If you were to lose your job, for instance, and your debt-to-income ratio was high, it would follow that you would have difficulty covering your expenses with unemployment you receive as the standards for these kinds of funds are usually set by an average debt standard.
Taking Your Finances Beyond Your Home 21