Debt Calculator

The Debt-to-Income (DTI) ratio and Debt-to-Savings ratio are important metrics for assessing an individual’s financial health.

1. Debt-to-Income (DTI) Ratio:

   • Definition: The DTI ratio is the percentage of an individual’s monthly income that goes toward debt payments.
   • Healthy Range:
     • A DTI ratio of 36% or less is considered healthy and manageable.
     • A ratio between 36% and 43% is acceptable but may require closer monitoring.
     • A ratio above 43% is considered high risk and may affect an individual’s ability to secure loans or other financial opportunities.

2. Debt-to-Savings Ratio:

   • Definition: The Debt-to-Savings ratio is the percentage of an individual’s total savings that is offset by total debt.
   • Healthy Range:
     • A Debt-to-Savings ratio of 50% or less is considered healthy.
     • Higher ratios may indicate that an individual is carrying too much debt in relation to their savings, which can pose financial risks in case of unexpected expenses or loss of income.

Maintaining a healthy DTI and Debt-to-Savings ratio is important for financial stability and flexibility. Individuals should aim to keep their ratios within these recommended ranges and manage their debt levels responsibly.

The formula for Debt-to-Savings ratio is based on comparing the total debt with total savings, not monthly debt payments. 

Debt-to-Savings Ratio: 

Debt-to-Savings Ratio = (Total Debt/Total Savings) × 100% 

For example consider below example where total debt is 32 Lakhs and total savings is 24 Lakhs.

Given the provided values:

• Total Debt: 3,200,000 INR
• Total Savings: 24,000 INR

Debt-to-Savings Ratio = (3,200,000/24,000) × 100% = (133.33) ×100% = 1333%

A Debt-to-Savings ratio of 1333% indicates that your total debt is much higher than your total savings. This is a very high and risky level of debt in relation to your savings. It is important to work on increasing your savings or reducing your debt to improve your financial health.