Comments on: Debt-to-Income Ratio: Frugalist begs to differ

By: Anne

Anne — Wed, 15 Apr 2009 19:38:23 +0000

http://www.cnbc.com/id/30213635

A nice little blog piece on this for future reference. At its peak LA averaged 102%

By: frugalscholar

frugalscholar — Wed, 15 Apr 2009 01:55:02 +0000

I have heard so many people (esp students with major loans) say “I thought it was ok to borrow this much because the bank said I could.” Why do we let the people who benefit financially from our indebtedness get to be “experts” on how much is ok to borrow?

When I was thinking about re-doing my decrepit kitchen, people said “It is a ‘rule of thumb’ to have kitchen renovations of up to 10% (or was it 20%?) of a home’s [inflated] value.”

There was a scandal last year concerning college loan officers who had been getting consultant fees and vacations from private lenders. These were the ‘experts’ working for the colleges who advised students and families.

All these things seem related to me.
Thanks for the post.

By: funnyaboutmoney1

funnyaboutmoney1 — Wed, 15 Apr 2009 00:08:49 +0000

As far as I can tell, it’s a scam used by lenders to persuade people that they can go into debt up to their eyeballs. Don’t worry. Be happy! You can afford it!

By: Revanche

Revanche — Tue, 14 Apr 2009 23:32:29 +0000

You know, I have never understood the point of calculating anything-to-income ratios using gross income. Did that ever make sense? Seemed like you were always going to start off disadvantaged by at least 20% that way.