Jessie Jimenez

How the money itself is not the only cost to a purchase.

Opportunity Cost 1

The back-end debt-to-income ratio takes all your monthly debt payments including your housing (and any insurance and taxes that is a part of your mortgage)
<img src="/images/house2.jpg" alt="house">
as well as your consumer debt, for these purposes this will include all your other debt, from student loans...
<img src="/images/graduation.jpg" alt="student loans">
to car payments...
<img src="/images/car2.jpg" alt="car">
to credit cards...
<img src="/images/pullingmoney3.jpg" alt="credit card">
even medical debt.
<img src="/images/meds.jpg" alt="medical">
Then you take this total monthly debt payment and divide it by your total gross monthly income. Financial counseling books tell would-be financial counselors that this number should be below 36%. It is not clear exactly where this number comes from, but it sounds high. More on this next week!
Sources:
<img src="/images/sources1.jpg" alt="sources">
Financial Counseling by Dorothy B. Durband, Ryan H. Law, and Angela K. Mazzolini