What Is Debt To Income Ratio And How It Affects You? 

VIDEO TRANSCRIPTION – What is debt to income ratio and how it affects you? As we’re talking to clients, personal and business clients, we’re going over a few scenarios which I’m about to share with you today. Hi, I’m Steven D. Cooper, your tax strategist with Coopers Accounting Service because your financial freedom matters.

If you’d like to learn more great tax tips, download our popular financial guide at our website, yourfinancialfreedommatters.com or click on the link below this video. Once again, we’re talking to a client, business client for example, we’re telling them, say hey, we want you to turn around and put your car, for example into your business name.

Also want you, key thing now, we want you to pay for the car out of your business account, not out of your personal account. By you paying it out of your business account, you then can turn around and leverage it as a company expense. So now from your personal debt to income ratio, it does not count because you paying for it out of the business account.

Now we’re going to go with a new word right now that’s not common to people. DTI, Debt to Income Ratio. There’s also a DTI calculator. You can Google this. Going back to the auto again, we want you to make 12 consecutive payments. That way when you’re trying to get a loan or refinance, it does not count against you for my personal clients. 

We want you to turn around and when lenders look at your debt to income ratio numbers, we want you to be at a certain percentage. So typically, we want your first paycheck to be able to cover all of your debt. Your second paycheck should be your money. You want to get to these ratios as that makes sense to you. So for example, if you make $12,000 a month.

We want that first paycheck to cover all of your personal living expenses and credit cards, whatever debt you have. Then the second paycheck, that is your money. That is the leverage that we want you to get in your debt to income ratio.

For more easy financial tips, sign up for our financial tip newsletter by going to yourfinancialfreedommatters.com or click on the link below this video. You can also download our financial guide as well. 

If you’d like a free 20-minute smart money consultation, call us ⁓ at 562-436-2600. Well again, I’m Steven D. Cooper, your tax strategist, also known as Coach Coop with Coopers Accounting Service. 

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