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All right. So the the second part of this problem today asks you use this worksheet
six point one to calculate jenny marx's
debt safety ratio. So I'm gonna just walk you through how to use this
worksheet so you'll be pretty you'll be clear on what you're doing
i'm also got a reference the example on page 128 in the text
Then I'm just gonna fill that out here so you can see what happens
So I'm gonna go right up here to the name
and this is an example is for Harold and Janice
So I'm just gonna put Janice and Harold up here
and then we'll fill out the information Now I do wanna point out. ...Sorry let me erase this
stuff
that uh...
you wanna only
you wanna limit yourself what is asked here uh... with a little bit of you'll have
to make some
decisions
It asks you for auto and personal loans and asks you for educational loans
overdraft protection personal lines of credit, credit cards and home
equity lines
but it does not ask you for is our mortgage payment
cable bills utility bills
phone bills
that's because
as you recall from the text its states that it excludes
your mortgage payment
and it's also not looking at your regular living bills, It's looking
specifically at your consumer loan payments for your debt.
so we're gonna go through and make sure that we focus on that
so the example in the book
says that harold and janice
have a
car loan through Ford motor company
Ford motor credit
and they pay
three-hundred and sixty dollars for that car
It also says that they have a personal loan through bank of america
and that they pay
A hundred and fifteen dollars a month for that
It looks like they're paying off an education loans to the U.S. department of
education
for seventy five dollars a month
that's a pretty nice student loan payment
um... they have an overdraft protection line through bank of america as well
that costs them thirty dollars per month
and they've got a couple of credit card so they have a Visa through bank of
america
for twenty eight dollars and this is the minimum payment you'll see that at the
top that says monthly or minimum payment
they have a mastercard through fidelity
that looks like that's costing them at thirty one dollars a month
and then they have a
department store credit card through J.C. Penny
which is costing them twenty eight dollars a month also
and finally
they have a bank of america home equity line
that they're paying seventy two dollars a month for.
altogether you can see they have seven-hundred and thirty nine dollars a
month in their
consumer loan payments
uh... and now we want to go ahead and enter in their salary so harold
makes $1855 again this is take
home pay
and jeanice
makes $2250
take-home pay
Alright! So when we
put all of that in this worksheet does the calculations for us and you can see
that thier
total monthly payments divided by their total their monthly take-home pay
gives them a debt/service ratio of eighteen percent
now they are under that targeted rate of twenty percent which is the maximum
Now as we recall, the text says that most experts are now saying fifteen
to even ten percent
so if just herald janice would like to see what they need to do an order to get
to fifteen percent we just come right here to this new target, we type in fifteen in the
form of .15
any it'll do some calculations and tell us that if they want to get to fifteen
percent they need to find a way to get their payments down to
$615.75
so whether that's paying something off
or make some extra payments whatever they need to do the need to get
to $615.75
now, if they absolutely can't do that and thier other option is to make more money
so if their current payment is $739
they would need to find a way to increase their take-home pay to
$4926.67
that's the latest work she works
so you go ahead and get started with jenny and see if you can get her stuff
figured out