With the economy all over the place at the moment, it’s harder than ever to stay out of debt. As soon as that sweet pay cheque enters our bank accounts, the money seems to slip between our fingers. Debt payments and living requirements need to be covered by your income, and often, the numbers don’t match. Calculating your debt to income ratio acts like a financial litmus test, so you know if you’re completely out of your depth.
By no means will this calculation be accurately indicative of your fiscal situation, but it will give you a rough idea of where to go next. Having a plan is crucial to managing your finances. Calculating your net worth is another way to ascertain where you stand. You can do this by adding up your assets and then offsetting them against your liabilities. Obviously, if you end up with a positive number then you have more assets than liabilities.
Lenders and Debt to Income Calculation
Lenders often use some form of debt to income calculator to establish whether they will grant you a loan. Beat them to it by using IVA Expert’s online calculator: http://www.iva-expert.co.uk/debt-calculator.asp. It’s as easy as adding up all your debt and subtracting it from your income. To get the best indication of where you’re at, include everything, like mortgage premiums, car payments, credit card payments, student loans, child support, and any other debts you may have.