Section 02 Loans & Expenses Unit 04 Cars - Practical Money Skills
Section 02 Loans & Expenses Unit 04 Cars - Practical Money Skills
Section 02 Loans & Expenses Unit 04 Cars - Practical Money Skills
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Never borrow more than 20% of your yearly net income<br />
If you earn $3,000 a month after taxes, then your net income in<br />
one year is.<br />
12 x $3,000 = $36,000<br />
Calculate 20% of your annual net income to find your safe debt<br />
load.<br />
$36,000 x 20% = $7,200<br />
So, you should never have more than $7,200 of debt outstanding.<br />
Note: Housing debt (e.g., mortgage payments) should not be counted<br />
as part of the 20%.<br />
Monthly payments shouldn’t exceed 10% of your monthly net income.<br />
If your take-home pay is $3,000 a month<br />
$3,000 x 10% = $300<br />
Your total monthly debt payments shouldn’t total more than $300<br />
per month.<br />
overhead A<br />
Overhead A<br />
How much can you afford? (the 20–10<br />
guideline)<br />
<strong>02</strong>.<strong>04</strong>.<strong>02</strong><br />
90 section <strong>02</strong>. loans & expenses<br />
choices & decisions
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