GUIDELINES

24% or less: A good place to be, especially for those who are seeking approval for a mortgage. A ratio higher than 27% decreases the likelihood of being approved for a home mortgage.

25%-35%: If you already have a home mortgage, this is not unusually high. However, things could quickly spin out of control quickly due to a medical hardship or some other unforeseen cost. Avoid racking up more debt, and postpone that new vehicle purchase., and put off that new vehicle purchase.

36%-45%: You could be on pace to be in debt for many years. Limit expenses and purchase only necessities. If you don’t immediately take control of your situation and reduce your debt, you could be headed for financial disaster.

46% or more: Aggressive debt reduction is necessary to avoid bankruptcy.

Your income

Your total gross income from your paycheck.

Other income

Any other income that you receive including bonuses, alimony, child support or income from a business.

Federal tax withholding

Total amount withheld for federal taxes. Enter this amount from your pay stub.

State tax withholding

Total amount withheld for state taxes. Enter this amount from your pay stub.

Local tax withholding

Total amount withheld for local taxes. Enter this amount from your pay stub.

Other taxes and withholdings

Total amount withheld for any other taxes or miscellaneous item. Enter this amount from your pay stub.

FICA

Total withheld for FICA (Federal Insurance Contributions Act) is based on the gross income on your paycheck.

Medicare

Total withheld for Medicare based on the gross income on your paycheck.

Insurance and benefits

Total amount withheld for insurance and benefits by your employer. Enter this amount from you pay stub.

Company retirement savings plan

Total amount withheld from your paycheck that is deposited into a company retirement savings plan such as a 401(k) or 403(b).