Calculate Debt

You can calculate your debt to income ratio by dividing your total monthly bills (showing on your credit report) by your total monthly gross income.

Here's an easy example, if you have $2500 in total monthly bills and your monthly gross income is $5,000 you debt to income ratio(dir) is 50%. I got this by using this equation, $2500 divided by $5,000 = 50%. Which means you may not qualify for certain mortgage loans.

Example 2

If your total monthly bills are $3,500 and your monthly gross income is $9000, this means your DIR is 39%. In this case you should be in good shape when it comes to your DIR.

Disposable income is also important to lenders in there decision making process. Disposable income is the amount of money you have left over after the bills are paid. Again the bills we are speaking of are the ones that show on your credit report.

You can calculate this by subtracting your monthly bills from your monthly net income. Net income is the amount of money your bring home after taxes.
Here is an example:

You have a monthly net of $3,500 after taxes and your monthly bills of $1,800. This means your disposable income is $1,700 and different banks have different guidelines so check with your lender to find out there min. requirements.

Knowing this information can be crucial for not just finding a job at www.vlitzo.com, but finding the right job. If you know how to calculate your Dir and disposable income, then it gives you a good idea on the least amount of annual salary you can accept from a new employer. In other words if your bills are $2,500 per month and you want your DIR to be under 40%, you should be looking for a monthly gross of at least $6,500. Which is right around 78k per year. This annual salary will put you at 38% DIR.

In a perfect world it would be nice to have 78k per year, but this doesn't mean you have to in order to have a great DIR percentage. Try to pay off the smallest bills that have $20 to $40 monthly payments then work on the bigger bills. This will decrease your monthly bills allowing you to accept a lower yearly salary from your new employer.

Here's another example:

Your monthly bills are now $1700 and you want your DIR under 50%. This means the least amount of monthly gross salary you can accept is $3,500. This comes to about $42,000 per year! So different strokes for different folks.

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