Question

Given the expenses and income below, what is the back ratio? Monthly expenses: Mortgage (including all housing costs) = $1,982 Student loan = $258 Minimum credit card payments = $184 Home equity loan = $237 Monthly income: Salary = $4,115 Bonus = $700 Side business = $1,000 Dividends/interest = $95

Answer 1

The back ratio is 0.59.

The back ratio is the ratio of monthly debt payments to monthly income. To calculate the back ratio, we add up the monthly expenses and divide by the monthly income:

Back ratio = (1982 + 258 + 184 + 237) / (4115 + 700 + 1000 + 95) = 0.59

Therefore, the back ratio is 0.59.