2. Determining the Debt Payments–to–Income Ratio. Louise McIntyre’s monthly gross income is $2,000. Her employer withholds

$400 in federal, state, and local income taxes and $160 in Social Security taxes per month. Louise contributes $80 per month for her IRA. Her monthly credit payments for Visa, MasterCard, and Discover cards are $35, $30, and $20, respectively. Her monthly payment on an automobile loan is $285. What is Louise’s debt payments–to–income ratio? Is Louise living within her means?

Explain. (Obj. 3)