The 20–10 Rule for Borrowing Limit
| $ Total of | Should Be LESS Than | of Your |
| Amount Borrowed* | 20% | Annual Net Income |
| Monthly Payments | 10% | Monthly Net Income |
Directions:
- Use the 20-10 Rule to calculate the debt limits for Mariah’s and Jesse’s older siblings.
- If you earn any income now, also compute your debt limits.
| Borrower | Annual Net Income | Maximum Total Debt (20% Annual Net Income) | Maximum Monthly Payments (10% Monthly Net Income) |
| Mariah’s sister | $6,500 | ||
| Jesse’s brother | $24,750 | ||
| Jesse’s sister | $35,800 |
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Question 1 of 6
1. Question
Calculate Mariah’s sister’s Maximum Total Debt.
CorrectIncorrectHint
Annual Net Income x 20% (.20)
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Question 2 of 6
2. Question
Calculate Mariah’s sister’s Maximum Monthly Payments.
CorrectIncorrectHint
(Annual Net Income divided by number of months in a year) x 10% (.10)
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Question 3 of 6
3. Question
Calculate Jesse’s brother’s Maximum Total Debt.
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Question 4 of 6
4. Question
Calculate Jesse’s brother’s Maximum Monthly Payments.
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Question 5 of 6
5. Question
Calculate Jesse’s sister’s Maximum Total Debt.
CorrectIncorrect -
Question 6 of 6
6. Question
Calculate Jesse’s sister’s Maximum Monthly Payments.
CorrectIncorrect