The Personal Finance Geek

Y our debt-to-income ratio (DTI) is a measure of how much debt you have compared to your income. It's calculated by dividing your total monthly debt payments by your gross monthly income. For example, if you have $500 in monthly debt payments and a gross monthly income of $2,000, your DTI would be 25%. A high DTI can make it difficult to qualify for loans and credit cards, and it can also lead to higher interest rates. That's because lenders see a high DTI as a sign that you're more likely to default on your loans. There are a few things you can do to improve your DTI: Pay down your debt. This will lower your monthly debt payments and improve your DTI. Increase your income. This will give you more money to spend on debt repayment and other expenses. Consolidate your debt. This can help you get a lower interest rate and make it easier to manage your payments. If you have a high DTI, it's important to take steps to improve it. This will help you qualify for loans and cred...

Financial literacy is the ability to understand and manage your money. It includes understanding things like budgeting, saving, investing, and credit. If you have low financial literacy, it can lead to problems like debt, missed payments, and even bankruptcy. It can also make it difficult to achieve your financial goals, like buying a home or retiring comfortably. There are many reasons why you should care about improving your financial literacy. Here are just a few: Financial literacy can help you save money. When you understand how to budget and save, you're less likely to spend more money than you earn. This can help you build up an emergency fund, save for retirement, or reach other financial goals. Financial literacy can help you avoid debt. When you understand how credit works, you're less likely to take on too much debt. This can save you money on interest payments and help you improve your credit score. Financial literacy can help you make better financial decisions. Wh...

Jenny doesn't have much to her name. She just graduated from college with a film degree, into an economy where the film industry isn't doing well, so she can't find work doing what she loves to do. She lives in an apartment with a roommate, her best friend Jill, from film school. Jill is in the same predicament, but we'll only look at Jenny's finances since they're the same. Because she can't find work in her field, she instead manages a sandwich shop.  She currently has:  a car loan with $10,000 remaining, to be paid over the next 4 years at 6% interest $30,200 in Federal student loans, to be paid over the next 10 years at 3.65% interest $2,000 in a high-yield savings account earning 4.5% annually no investments  Here's the breakdown of her income and expenses: Gross Income per month $3,333.33 Student Loans $300.00 Taxes $776.00 $9,312.00 Takehome Incom...

Jessica and James are two lawyers in their late 30s, with 3 kids. They each make $325,000 a year from their work as lawyers, and they make an additional six figures a year in revenue from renting out five properties other than their primary residence, which they bought in cash after saving aggressively, leaving them with only equity in that home, and not a mortgage. They have mortgages on their five other properties, but those pay for themselves, given how much they charge their renting tenants.  Their primary residence was bought outright 7 years ago for $850,000 and has now appreciated to $1,165,000. Their first rental property mortgage is 1139 rents for 1460 has been generating rental income and equity for 8 years $177,200 in equity had a 20% down payment starting the equity at purchase time  Their second property mortgage is 1365 rents for 1750 has been generating rental income and equity for 7 years $132,820 in equity  had a 20% down payment starting the equity at pu...

Next in this series of sample budgets, we have John. John graduated from college 3 years ago, with a bachelor's degree, and he now works as a software engineer making $91,500 a year before taxes.  He has: $29,520 in federal loans left, at an average rate of 3.72%, which his minimum payments will allow him to fully clear in 7 years $44,900 in his retirement accounts, which earn the historical average return of the S&P500 $26,700 in a brokerage account which is earning the historical average return rate of the S&P500 $17,100 in a high-yield savings account earning 4.5875% interest annually a mortgage on a house he bought as soon as he graduated for $420,000, which he could buy because his grandparents gave him the down payment, with  2.599% interest on the $350,000 he borrowed  Here are his monthly expenses: Gross Income per month $7,625.00 Student Loans $400.00 Taxes $2,003.00 $24,036.00 ...