Four years later, you and your spouse each are earning $140,000. Both car loans are paid off.

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Question:

Four years later, you and your spouse each are earning $140,000. Both car loans are paid off. But you've taken out a $165,000 home equity line of credit* (3.6% APR) to put an extension on the house ... and for good reason, you're now the parent of TWINS!!!!! This presents you with a decision: One of you works part-time and earns $40,000 and you incur no child care expense. You both continue to work full-time and incur $2,500 per month in child care costs. All other debts remaining from part three remain constant. Calculate a D/I ratio, correct to the nearest tenth of a percent, for each option. What would you do in this case if this was real life? *Assume for your calculation that this is the first month of the home equity line of credit