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THE DEBT TEST

THE DEBT TEST. DR. AA NEIDERMEYER. DO YOU HAVE TOO MUCH DEBT?. Please complete the following questions from Smart Money to determine your working debt position. Question 1.

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THE DEBT TEST

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  1. THE DEBT TEST DR. AA NEIDERMEYER

  2. DO YOU HAVE TOO MUCH DEBT? • Please complete the following questions from Smart Money to determine your working debt position

  3. Question 1 • Is your monthly mortgage payment (including property taxes and insurance) more than 28 percent of your monthly gross income? • Give yourself 5 points for a yes response.

  4. Question 2 • Compare the balance on each of your credit cards to its respective credit limit. Now compare the total of all your card balances to your total limit. • Give yourself 5 points for each account above 50%, plus another 10 points if your total balance is more that half of your total credit limit.

  5. Question 3 • Is your auto payment more than 15% of your monthly take-home pay? • Give yourself 5 points for “Yes.”

  6. Question 4 • Now total all your monthly loan payments. Divide by your gross monthly income to see what percentage of your money is going to debt. • Give yourself 5 points for 30-35%; • Give yourself 10 points for 36-40%; • Give yourself 20 points for 40%

  7. Question 5 • Your should have an emergency fund that can cover at least three months’ worth of all debt payments plus your other living expenses. • Give yourself 10 points if you do not have the coverage. • Give yourself 5 points if you only have 2 months’ coverage

  8. Question 6 • Have your been late on a loan payment in the past six months: • Give yourself 10 points for “Yes.”

  9. Question 7 • In the past two years, have you looked into refinancing and calculated whether you’d save money? • Give yourself 5 points for a “No.”

  10. Question 8 • Have you checked your credit report in the past 12 months? • Give yourself 5 points for a “No.”

  11. Assessment • If your scored zero to 10 points, congratulations! • If you scored 15-30 points, you’re managing debt fairly well but need to stay alert to opportunities. • If you scored over 30 points, you’ve got problems and should review your status.

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