Calculating your debt-to-income ratio is a great way to get an understanding of your financial health. The formula for calculating this ratio is simple:
Divide your total monthly debts (including mortgage, credit cards, student loans and other loan payments) by your gross monthly income.
For example, if you have $2,000 in total monthly debt payments and a gross monthly income of $6,000, your debt-to-income ratio is 33%. This means that one-third of your total income goes towards paying off debts every month.
Understanding your debt-to-income ratio can help you make smart financial decisions as it provides insight into how much money you have available each month after paying off your debts. Lenders use this ratio to determine your ability to get approved for loans or lines of credit.
Take control and calculate your debt-to-income ratio today! 💰💳✨