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Too Much of a Bad Thing

Setting a plan for getting debt under control includes knowing how much of your monthly income or take home pay is needed to pay it down.

  • Tally up your monthly bad debt costs and for now, exclude the good debt. For example, suppose you earn $45,000 per year. A tally of your bad debt, such as car loans, credit cards, and personal loans, amounts to $15,000 of debt. Your bad debt is 33% of your total income.

  • The formula looks like this:



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