The 20-10 Rule

me bagNever borrow more than 20% of your yearly net income

■ If you earn $400 a month after taxes, then your net income in one year is:
12 x $400 = $4,800
■ Calculate 20% of your annual net income to find your safe debt load:
$4,800 x 20% = $960
■ This means, you should never have more than $960 of debt outstanding.

Note: Housing debt (i.e., mortgage payments) should not be counted as part of the 20%, but
other debt should be included, such as car loans, student loans and credit cards.

Monthly payments shouldn’t exceed 10% of your monthly net income

■ If your take-home pay is $400 a month
$400 x 10% = $40
■ Your total monthly debt payments should not total more than $40 per month.

Note: Housing payments (i.e., mortgage payments) should not be counted as part of the 10%,
but other debt should be included, such as car loans, student loans and credit cards.

On a side note according to the Bureau of Labor Statistics for the month of April 165,000 jobs were created. More will be created should we embrace environmentally friendly policies and assists entrepreneurs in creating new businesses. 165,000 jobs may not seem like a lot but its something for that man or woman who has been out of work for months. LETS KEEP TRUCKING ON AMERICA !!!

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