Determine monthly payments you can afford. Calculate your debt-to-income ratio and saving rate.

[@janitoronfire]

I did my December debt update today. I haven’t figured my dti but it is probably pretty good. 👍

[@simplyfundamental]

Yes, been watching. It’s awesome. Saving rate is awesome too.

[@janitoronfire]

❤🎉🎉🎉

[@simplyfundamental]

Thank you 🙏 ❤️🎄🎉

[@janitoronfire]

Net income after 401k contributions???

[@simplyfundamental]

Technically, DTI is on gross income. But, I calculate on Net so I get a true figure on month-to-month affordability. So yes if you’re doing it to figure out how much debt you’re carrying and considering adding another car or mortgage debt. The % you contribute to 401k gets added to your STI after you calculate. So if your STI is 20% outside of 401k, and 10% in retirement plan, then you add the two together to determine true savings percentage. :)

[@janitoronfire]

If I recast my mortgage and my payment drops does that Improve my dti? Never knew it was monthly payments. Always assumed it was total debt.

[@simplyfundamental]

Yes. As debts change or get paid off it would change and improve DTI. If someone’s is high then a goal is to pay debts down. Low DTi opens up more for savings. But it is separate from the 50/30/20 rule. One can still be strapped financially if needs and wants spending is high even if debts are low. You can calculate it on either a yearly ratio or monthly. Ends up being the same percentage. Just have to make sure you’re using what you spend and earn yearly in your calculations versus monthly. 😎