Is Your Debt Load Too High?

Knee Deep in Debt : Finding your debt burden unsustainable? Now, one best way is to calculate your debt-to-income ratio. This will help you to analyze your debt and income. If you have a debt-to-income ratio not more than 36%, lenders will consider you to be a responsible borrower.

How To Calculate Your Debt to Income Ratio?

Calculating this ratio is very simple. Just follow the steps listed below :-

1. First of all add your total net monthly income.
2. Then, add up your monthly debt obligations. Now, this will include all your bills.
3. Finally, divide your total monthly debt obligations by your total monthly income. This is your total debt-to-income ratio.

Generally, lower the debt-to-income ratio is the better is your creditworthiness. Now, you can also find a lot of debt-to-income ratio calculators on internet.

After you had find your debt-to-income ration, here’s a small note to help you understand what it means.

36% or less - This is actually good. This shows that you control your spending in relation to your income.

37% to 42% - Well, this shows that your debt can be managed by you but still you have to start paying off your debt as soon as possible before it starts accumulating.

43% to 49% - This shows that your debt ratio is high and you should take immediate actions otherwise financial difficulties will start making your life worse.

50% or more - This show you ought to look for professional help. Find a reliable debt relief compant and take immediate steps to make your life debt free.