The next step to determining your debt-to-income ratio is calculating your monthly income.
Start by totaling your yearly income. Add up your yearly:
- Gross income
- Bonuses or overtime
- Alimony/child support
- Other income
Then, divide your yearly income by 12 to determine your monthly income.
Example
Remember, Sam spends $1,540 each month on debt payments. This is what he receives in income each year.
- annual gross income = $42,000
- child support = $6,000
Sam's total annual income = $42,000 + $6,000 = $48,000.
Let's divide his annual income by 12 for his monthly income.
$48,000 / 12 = $4,000 monthly income
| 