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Credit Counselor

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AVG. SALARY

$57,390

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EDUCATION

Bachelor's degree

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JOB OUTLOOK

Increasing

Real-Life Activities

Real-Life Math -- Solution

Your clients need to know their debt-to-income ratio. That means they need to know what percentage of their income is paid towards bills. They have to know this before they can make changes in the way they manage their finances.

To determine the debt-to-income ratio on a monthly basis, you must first determine the full amount of the debt the couple pays each month. Do this by adding all of the monthly payments.

Monthly payments = $51 + $359.47 + $239.65 + $643.17 + $12 + $28 + $30 + $125 + $80.42 + $36 + $70
Monthly payments = $1,674.71

Then determine the total monthly income of the couple. Do that by first adding the two incomes, then dividing that sum by the number of months in each year.

Total monthly income = $19,670 + $10,800 / 12
Total monthly income = $30,470 / 12
Total monthly income = $2,539.17

Now, to find the debt-to-income ratio, divide the total monthly debt by the total monthly income, then multiply by 100 to get the percentage.

Ratio = ($1,674.71 / $2,539.17) x 100
Ratio = 66 percent

About 66 percent of the couple's total income is paid out each month on debts.

"We use a lot of math," says Judith Stevens. She is an education specialist for a credit cunseling service. "But most of it can be done using a calculator. We need basic math skills. And we use them every day."


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OCAP believes that financial literacy and understanding the financial aid process are critical aspects of college planning and student success. OCAP staff who work with students, parents, educators and community partners in the areas of personal finance education, state and federal financial aid, and student loan management do not provide financial, investment, legal, and/or tax advice. This website and all information provided is for general educational purposes only, and is not intended to be construed as financial, investment, legal, and/or tax advice.