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Chapter 7 Financial Planning Exercise 2 Calculating debt safety ratio

Use Worksheet 7.1. Every 4 months, Leo Perez takes an inventory of the consumer debts he has outstanding. His latest tally shows that he still owes $2,750 on a home improvement loan (monthly payments of $225); he is making $50 monthly payments on a personal loan with a remaining balance of $625; he has a $1,500, secured single-payment loan that's due late next year; he has a $75,000 home mortgage on which he's making $600 monthly payments; he still owes $8,500 on a new car loan (monthly payments of $425); and he has a $750 balance on his Mastercard (minimum payment of $30), a $30 balance on his Shell credit card (balance due in 30 days), and a $1,300 balance on a personal line of credit ($100 monthly payments).

1. Use Worksheet 7.1 to prepare an inventory of Leo's consumer debt.

   Type of Consumer Debt	Creditor	Currently Monthly Payment	Latest Balance Due
   Auto loans		$	$
   Personal installment loans		$	$
   Home improvement loan		$	$
   Single-payment loans			$
   Credit cards	Mastercard	$	$
   (retail charge cards, bank cards, T&E cards, etc.)	Shell	$
   Personal line of credit		$	$
   Totals		$	$

2. Find his debt safety ratio, given that his take-home pay is $3,000 per month. Round the answer to 1 decimal place. %
3. Would you consider this ratio to be good or bad? -Select-GoodBadItem 16