Budgeting and Debt

Figure out your debt limit and your budget so you stay on track with your finances.

Pay Down Your Debt or Invest?

This is a frequently asked question when it comes to managing finances. And since everyone’s financial situation is different, it can have a different answer each time.

According to Investopedia, “Financial advisors suggest that working individuals have at least six months’ worth of monthly expenses in cash and a monthly debt-to-income ratio
of no more than 25 to 33 percent of pretax income. Before you begin investing or reducing debt, you may want to build this cash cushion first, so that you can weather any rough events in your life.”

Investopedia continues, “Next pay off any credit card debt you may have accumulated. This debt usually carries an interest rate that is higher than what most investments will earn before taxes.
Paying down your debt saves you on the amount that you pay in interest. Therefore, if your debt-to-income ratio is too high, focus on paying down debt before you invest. If you have built a cash cusion
and have a reasonable debt-to-income ratio, you can comfortably invest.”

Need Help With Your Monthly Budget?

Everyone’s financial situation is different, and things can get complicated quickly. Like many people, you may find that creating a monthly budget gives a clearer picture of your finances, including how
much debt you can afford, while keeping you on track with expenses.

The budget sheet below is a useful tool that can help you figure out your monthly budget, keeping you out of a situation where your expenses and debt exceed your income.