Hello, since most people here are pretty thrify, i thought it would be pretty interesting if everyone posted their DTI ratios. For those of you who dont know, its just total monthly debt service/gross monthly income.
Under 30% = excelent 30-36% = Good 36 - 40% = borderline 40% ++ =ouch!
Mine is 47% so obviously i am a letter over-leveraged!
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Zan86 said:Hello, since most people here are pretty thrify, i thought it would be pretty interesting if everyone posted their DTI ratios. For those of you who dont know, its just total monthly debt service/gross monthly income.
What about the typical FWFer who is making money off banks, is the DTI negative then?
I wouldn't agree with your rating systems, 29% DTI is excellent or even good? Maybe 10%, 20%, 30% and 40% would be better groupings with your classifications.
In terms of consumption debt (money that was used to buy stuff/services that are being paid back in installments or lumpsum at some point in the future), Non-RE debt monthly payment is probably 1.5% of gross, higher than I expected - was hoping for some ridiculously small amount like .5% or something. I could reduce this to zero, but the rates are really really low.
Wow, only 23.3% of gross, and I thought I was up shits creek. Adding in a portion of rent, I get 38.5% gross.
Of course I'm not going to be able to buy anything near as cheap in the areas I want to live in, so rent puts me way ahead of the mortgage and tax crowds.
Either way, its time for a part time job.
Edit: I didn't include credit cards pif. You guys counting that?
I would include credit cards if you pay a fixed amount per month or have excess debt. Obviously capacity is KEY!! But the reason we shouldnt include other expenses cause those can easily change, as in downgrade internet/cable, buy cheaper food, dont go out as much etc.... and they are not DEBT! Debt is the keyword in the ratio.
Technically (to a lender) I'd have to add minimum credit card payments, but this is really just shuffling money around. The payments don't come from income in the first place so I don't see how they could be a factor in debt/income.
Zan86 said:I would include credit cards if you pay a fixed amount per month or have excess debt. Obviously capacity is KEY!! But the reason we shouldnt include other expenses cause those can easily change, as in downgrade internet/cable, buy cheaper food, dont go out as much etc.... and they are not DEBT! Debt is the keyword in the ratio.
So do 2 calculations:
One with the bare minimum, and one which is more inline with realistic spending. I know I spend about $130 on gas per month, but it was $120 last month. I need to spend this amount. Cable/internet, sure I could spend $40, but I spend $90 right now.
Knowing your cash flow is pretty darned important.
I know right now that I am spending 40.44% of my income on expenses - some less required than others. Means 59.56% of my income can go to investments. Which means that my expense % will probably go down next month.
I do the dividend/bond style of investing, so I even care about my investment income too. For the first time in my life, I know I will not starve. In fact I probably could even have a cell phone and a couple days at a cheap hotel if I was homeless.
Little rant: Why are people NOT scared of being homeless out on the street? I am VERY afraid of this.
LeveragedSpeculator said:2.24% of net. If you include rent (as a homeowner would count their mortgage), it jumps to 22.5% of net.Back end DTI ratios always include ALL your monthly obligations (rent/mortgage, etc...) and are ALWAYS based on GROSS income.
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