Jon earns a gross income of $42,000 per year as a young engineer. his debt payments, including student loan and mortgage payments, are $1,200 per month. how much more can he take on in monthly debt payments and not go over the dangerous 40 percent ratio of debt payment to gross income?

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Marcelo Bright

Business

4 August, 12:13

Jon earns a gross income of $42,000 per year as a young engineer. his debt payments, including student loan and mortgage payments, are $1,200 per month. how much more can he take on in monthly debt payments and not go over the dangerous 40 percent ratio of debt payment to gross income?

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Addison Archer · Answer 1

He can take on $200 more debt per month before crossing the 40% ratio debt payment to gross income. Calculate by finding 40 percent of gross income (42,000 x 0.4 = 16,800/year) and current debt payment (1,200 * 12 = 14,400). Find the difference (16,800-14,400 = 2,400). Divide by 12 to get monthly possible increase (2,400 / 12 = 200).