You Can Take on More Debt If Your Debt Payments-To-Disposable

question 125

Multiple Choice

You can take on more debt if your debt payments-to-disposable income ratio is in the range of

• A)less than 14 percent
• B)15-18 percent
• C)19-28 percent
• D)29+ percent

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Definitions:

Debt-to-Income Ratio

A financial metric that compares an individual's total monthly debt payments to their gross monthly income.

Annual Salary

The total amount of money an employee earns in one year before taxes and deductions.

Cash Flow

Cash Flow represents the total amount of money being transferred in and out of a business, indicating its liquidity, financial health, and ability to cover expenses.

Non-Monthly Expenses

Costs that occur on an irregular basis, not tied to monthly payment schedules, such as annual insurance premiums or bi-annual vehicle maintenance.