By calculating how much credit fits into your budget, you can avoid getting into debt.

Let's Look At The Facts

Charging purchases can be very tempting. It can, however, cause you to spend far beyond your means. The formula below is an easy way to figure out exactly how much you can buy on credit and pay back without getting deeper into debt. Imagine that the budget shown below is yours.

$\backslash$table$[[\backslash$table$[[$Monthly$],[$take$-$home$],[$pay$]],$minus,$\backslash$table$[[$Fixed expenses$],[($rent$,$ food,$],[$transportation$,],[$etc$.)]],$minus,$\backslash$table$[[$Other$],[$regular bills$],[($phone$,],[$utilities$,],[$installment$],[$loans$,$ etc.$)]],$minus,$\backslash$table$[[$High$-$priority$],[$expenses$],[($savings$,],[$insurance$,],[$medical care,$],[$recreation$,$ etc.$)]],$equals,$\backslash$table$[[$Amount$],[$available$],[$for monthly$],[$repayment$]],\backslash$table$[[$multiply$],[$by $12],[$months$,],[$equals$]],\backslash$table$[[$Your$],[$credit$],[$limit$],[$for the$],[$year$]]],[0,,,,,,,,,,],[1400,-,$$$700,-,$$$150,-,$$$400,=,$$$150,12=,8]]$

Let's Discuss Why

If your monthly take$-$home pay is $$1,400,$ what is your annual take$-$home pay?

What percent of your annual take$-$home pay does an $$1,800$ credit limit represent?

What percent of your monthly take$-$home pay is used for:

a$.$ Fixed expenses?

b$.$ Regular bills?

c$.$ High$-$priority expenses?

d$.$ Monthly credit repayment?