Debt can be scary. It’s not uncommon to have some form of debt in life, be it student loans, medical bills, personal loans, or credit card debt. Figuring out your debt-to-income ratio can help you see how the amount of debt you owe compares to the amount of money you have coming in. You don’t have to be a math expert or financial advisor to figure this out thanks to online calculators that crunch the numbers for you. All you have to do is fill in the blanks regarding your debt and income.
Online calculators like these are tools that can help you look at some aspects of your finances. If you have questions or want personalized financial advice, consult a professional.
Watch this video to see how to calculate your debt-to-income ratio.
Debt-to-income ratio
Finance company NerdWallet has a free online calculator to help you determine if you have too much debt.
This debt calculator doesn’t consider what it deems “good” debt, like student loans or a mortgage, into account. It only looks at what it deems “bad” debt, like high-interest credit card debt or some personal loans, to come up with a debt load.
The higher the percentage, the bigger the problem. Ratios over 36% can be harder to pay off, according to NerdWallet. Depending on the number, the site will give some popular suggestions on how to approach reducing your debt.
Debt repayment
When it comes to paying down debt, there’s no one-size-fits-all solution. Fortunately, you can take many different approaches to help you tackle it in the way that works best for your life and your wallet.
Not sure where to start? Consider the popular debt avalanche or snowball method. There are online calculators for both these methods and more that can break things down and help you find a good plan of action. Plus, it does all the math for you!
Sometimes the best approach might be an unconventional one, like deciding if you or your spouse should work.
A “should my spouse work?” calculator looks at the financial impact of adding or removing an income and how that compares against expenses like childcare and transportation.
All of these calculators are to be used as a guide, so adjust the suggested numbers as needed.
This article originally appeared on USA TODAY: How to calculate debt-to-income ratio: Easy tutorial video
