Bill has a take home pay of $4300 each month. He has the following monthly obligations: Rent $850, Utilities $200, Cable $150, Food $400, Car Payment $275, gas for car $160, Visa $85, Best Buy loan $75, Khol's $52, Master Card $50. What is Bill's Debt Safety Ratio? What is the suggested range for a Debt Safety Ratio? Is Bill within the suggested range?

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Business

Charlize Bridges

1 June, 03:31

Bill has a take home pay of $4300 each month. He has the following monthly obligations: Rent $850, Utilities $200, Cable $150, Food $400, Car Payment $275, gas for car $160, Visa $85, Best Buy loan $75, Khol's $52, Master Card $50. What is Bill's Debt Safety Ratio? What is the suggested range for a Debt Safety Ratio? Is Bill within the suggested range?

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Answers (1)

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Camilla Carney · Answer 1

Bill's Debt safety ratio is 53.41860465116279

Suggested range for a Debt Safety Ratio 25 - 35%

Bill is not within the suggested range

Explanation:

Bill's take-home pay is $4300 each month.

Bill's monthly debts are Rent $850, Utilities $200, Cable $150, Food $400, Car Payment $275, gas for car $160, Visa $85, Best Buy loan $75, Khol's $52, Master Card $50.

Bill's total monthly debts is $2297. Debt safety ratio = (Monthly debt payments / Monthly take-home pay) * 100 Debt safety ratio = (2297/4300) * 100 Debt safety ratio = (0.5341860465116279) * 100 Debt safety ratio = 53.41860465116279

Most advisers recommend that your debt service ratio should not reach 35 percent, and should be around 25 percent ideally.

Since Bill's Debt safety ratio is 53.41860465116279, he is not within the suggested range.