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Debt to income ratio explanation?
Last Post 22 Feb 2020 09:47 AM by SpiralOut46. 9 Replies.
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abeachedwhaleUser is Offline
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abeachedwhale

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12 Feb 2020 04:19 PM
    It is unclear to me what exactly is counted into “debt” in the debt to income ratio. My understanding was debt like credit card debt, student loan debt, car payments etc. But I’m being told that it includes any expense that I will carry into the Coast Guard like car insurance, phone bill, utilities, rent, etc. I have a wife so there would be BAH and I’m told that also affects the debt to income ratio. But if we calculate rent payments as a debt that already blows the ratio up. 

    Does anyone have a clear understanding of how debt to income is calculated? 

    Thank you.
    CCCSDUser is Offline
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    CCCSD

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    12 Feb 2020 06:14 PM
    To ensure you can actually live on the wages you get paid.
    abeachedwhaleUser is Offline
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    abeachedwhale

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    13 Feb 2020 07:12 AM
    Thanks. But I understand why it’s a thing. I’m asking if anyone has more detailed info on what they are counting at debt. If 30% if your pay is wrapped up in paying off debt (I.e. credit cards, loans) you still have 70% for “bills” like electricity and groceries.

    CPORJMUser is Offline
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    CPORJM

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    13 Feb 2020 10:21 AM
    Posted By CCCSD on 12 Feb 2020 07:14 PM
    To ensure you can actually live on the wages you get paid.

    That wasn't the OP's question.  To the OP, have you asked your recruiter?   Below is a link to the Debt to Income Caluculator that is used when screening personnel for overseas assignments.  While it doesn't directly address your situation, it should give you some idea as to what is considered debt.

    https://media.defense.gov/2017/Sep/11/2001806686/-1/-1/0/CG_1300A.PDF

    Regards
    "When a true genius appears in the world, you may know him by this sign, that the dunces are all in confederacy against him."-Jonathan Swift
    abeachedwhaleUser is Offline
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    abeachedwhale

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    13 Feb 2020 11:00 AM
    Thanks. I did ask the recruiter and they were wishy washy and unsure said they had to ask their boss. Got back to me saying any bills you will continue to pay while in the CG. But that just doesn’t make any sense. If you can pay all of your monthly bills with 30% of your income what’s the point of the rest of your income? Obviously you can save it but practically speaking if you’re making E-3 pay about $2000 a month (in 2020) you’re gonna be spending more that $600 a month of that on monthly expenses. Even if you don’t count rent because it’s canceled out by BAH. Further more they are saying all of your spouses debts count towards your name too but non of their income. I just need a straight answer from someone and the recruiter cant seem to provide it.
    abeachedwhaleUser is Offline
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    abeachedwhale

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    13 Feb 2020 11:09 AM
    Also to be clear it’s not like I have some huge amount of debt. I’m just not an 18 y/o kid with zero financial history. I’m in my mid 20s with a good job a car payment etc. I will be taking a our cut going into the CG and need to adjust my lifestyle and spending accordingly. I’m trying to figure out how much adjusting needs to be done and understand a criteria of the recruiting process that knocks out 25% of otherwise qualified candidates. Maybe so may get knocked out because it’s so opaque and unclear
    CCCSDUser is Offline
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    CCCSD

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    13 Feb 2020 01:31 PM
    My answer stands and is correct.
    Old Guard2User is Offline
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    14 Feb 2020 06:13 AM
    CCCSD while your answer is totally correct, no denying that. It didn't answer the specifics of the question. I think the OP understands the necessity of the 30%, just not the full understanding of what is or is not included in the 30%. I, myself, don't completely understand the mechanics of this is calculated, this isn't.
    Sector NY, Staten Island
    nenglandUser is Offline
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    nengland

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    18 Feb 2020 05:39 AM
    Utilities, car insurance, weekly trips to Starbucks are not considered factors in your DTI by financial institutions. Rent, though not a true debt, is usually considered a factor by financial institutions.

    One of the best things you can do as a Coastie is read the rules for yourself. Anyone can run their mouth including your recruiter and maybe they're giving you good information but there's no way to know unless you read the manual for yourself.

    https://media.defense.gov/2018/May/16/2001917927/-1/-1/0/CIM_1100_2F.PDF

    Regarding DTI I see nothing about utilities, car insurance or your HBO subscription. Treat this like a bank would and only count debts/loans/rent. If your recruiter asks for something else then ask them why and where that requirement/instruction comes from. They can't just make things up.

    Spouse's digits don't count unless you are joining the reserves OR your spouse is already active duty. (4.C.5, see notes) That should simplify your math a little.

    Best of luck!
    SpiralOut46User is Offline
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    SpiralOut46

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    22 Feb 2020 09:47 AM
    My recruiter sent me a spreadsheet which did the calculations for me.  I had the same issue.  I'm almost 32 and have a fair amount of debt.  Lucky, our mortgage is in my wife's name and therefore does not count against me.  My recruiter was in contact with CGRC frequently about this issue and I believe he got the spreadsheet from them.  He told me to only include MY direct debts; as others have mentioned: loans, debts, and rent.  He told me I should not include my wife's debts (which would have definitely put us over the top).  I filled this out and attached billing statements from all of my accounts as proof for what I pay each month to an email for my recruiter to forward to CGRC.  I was approved and ship out on 3/31.  I would ask your recruiter about this specifically and see what they say before doing much else, but as always: take what you find on the internet with a grain of salt.

    (I attempted to attach the file to this message, however the forum gave me an error: "File type is not allowed".  When I tried to adjust the file type so I could send it through, the spreadsheet showed as password protected.  Maybe your recruiter can ask CGRC directly for a copy of the "Financial Obligation Estimator Auto Calculate" spreadsheet file.  Alternatively, PM me your email if you want and I can also forward it to you that way, although I'd like to avoid violating any kind of proprietary documentation limitations.  Maybe someone on the forum here can shed light on whether or not I can send this file as it only appears to be a simple calculator and would not be a national security threat.  Regardless: again, talk to your recruiter!  It sounds like they're having difficulty locating this information, but it is out there.  Just mention the file name to them and that they may be able to get it from CGRC, but "you're not really sure, only what you heard through the grapevine, just trying to help".  Don't be a know-it-all or disrespectful, but I'm sure you already knew that.)

    Best of luck to you.
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