If your monthly net (after tax) income is $ 1500,what should be your maximum amount spent on credit payments?

a)$ 200
b)$300
c)$400
d)$500
IS B CORRECT ANSWER?THANK YOU:)))

I don't know of any formula that determines such numbers. It also makes a huge difference whether the credit payments are for car payments or mortgage.

Check your text to see what it recommends.

To determine the maximum amount you should spend on credit payments based on your monthly net income, you need to consider your debt-to-income ratio. This ratio is an important measure to ensure that your debt payments are manageable and do not overwhelm your budget.

The general guideline is to keep your total debt payments (including credit cards, loans, mortgages, etc.) under 36% of your monthly income. So, to calculate the maximum credit payment amount:

Debt-to-Income Ratio = Total Debt Payments / Monthly Net Income

In this case:
Monthly Net Income = $1500
Maximum Debt Payments = 36% of Monthly Net Income = 0.36 * $1500 = $540

Therefore, you should spend a maximum of $540 on credit payments.

Out of the given options, the correct answer would be (d) $500 as it is the closest option to the calculated maximum credit payment.