For this step, you’ll need the current balance information for any tax payments or unsecured debt, so you can exclude things like mortgages and car loans. We’re going to add up these totals into one big number, and then compare this to your income.
Grab your calculator again:
TOTAL DEBT / GROSS INCOME (ANNUAL) x 100 = % TOTAL DEBT
While, again, your ultimate goal should be to keep these numbers as low as possible, anything below 50% offers several options. If your total debt is greater than 50% of your income, your finances are at risk. If your total debt is greater than 75% of your income, your finances are at serious risk.