You should start off by looking at your debt to income ratio. Here is a simple formula to help you calculate yours:

Let’s say that your net monthly income (that’s after taxes) is $2500. Your monthly debt payments are $600. Divide $600 by $2500, and you’ve done it.

600 ÷ 2500 = .24 (24%)

So, what’s your debt to income ratio?

• Look at last month’s bills. Add up all the fixed monthly expenses (rent, mortgage, car payments, insurance, gas/electric, etc.)
• Check your credit card bills and add up the minimum payments required on each.
• Figure out your monthly take-home pay (net salary).
• Divide the monthly fixed expenses by monthly income.

Now, how much debt is too much? The majority of debt settlement and credit counseling companies generally agree that debt expenses should be no more than 25% of your income. A ratio of 10% or less is ideal. Actually, no debt is the best but who are we kidding….

If you are carrying a debt load of more that 25% it’s time to take action. You may even want to get some type of debt help by looking into a debt settlement or credit counseling program. If you own real property, you may want to look into some type of debt consolidation loan.

To learn more about your options and managing you debt, log onto www.debtreliefoptions.com.

Jon Noble
Staff writer
Debt Relief Options
asktheexperts@debtreliefoptions.com

This entry was posted on Tuesday, January 3rd, 2006 at 3:29 pm by Jon Noble and is filed under Debt Relief, Debt Elimination, Debt Solution, General Debt, Debt Help, Debt Advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.