What is the Ideal Debt to Income Ratio?

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What is the Ideal Debt to Income Ratio?

There are many different metrics you can use to determine how well you’re doing financially. One of the most effective for determining credit worthiness (and most commonly used by lending agencies) is the debt to income ratio or DTI ratio.

In a perfect world, the ideal debt to income ratio would be 0% (absolutely no debt).

However, for most of us, that’s not realistic as there are large expenses that we couldn’t fund in a reasonable amount of time without the use of credit. These include mortgages, small business loans, etc.

Just because we have access to credit and need it (arguably) for large purchases, you shouldn’t abuse it. Checking a few key metrics like your net worth and debt to income ratio can give you a quick snapshot of how you’re doing handling credit.

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What Percentage of Income Should Go To Housing?

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What Percentage of Income Should go to Housing?

When renting or buying a house, it’s important to know what percentage of income should go to housing because it’s often your largest monthly expense.

There is no one-size-fits-all rule for every situation, but there are some general rules of thumb to help guide you when making the decision.

However, to truly know what percentage of income should go to housing, you need to examine your current financial picture, what your financial goals are, and what options you have available to you for housing.

Once you have this information, you’ll be able to clearly see what percentage of income you should spend on rent.

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What Percentage of Income Should Go To Rent?

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What Percentage of Income Should go to Rent?

When renting your first apartment or house, it’s important to know what percentage of income should go to rent. Each person’s situation is a little different, so there will be a different answer for everyone.

To start, you’ll need to examine your current financial picture, what your financial goals are, and what options you have available to you for rentals.

Once you have this information, you’ll be able to clearly see what percentage of income you should spend on rent.

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How Much of Your Salary Should You Save?

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How Much of Your Salary Should you Save?

There isn’t a one size fits all answer to the question, “how much of your salary should you save?”. It really depends on your financial goals, how much you currently have, how old you are, and what your appetite for risk is.

If you are in your 40s, don’t have any money saved to date, and have a low risk tolerance, you’re going to need to save much more than someone in their 20s who already has $100,000 and is willing to invest in riskier and higher returning investments like stocks.

Ideally, you should save as much as possible to be in the best position to achieve your financial goals. Learn how below.

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