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Jessica and Ben met in their last year of college. They married later that year and both found jobs earning $78,640 per year between the two of them....
Jessica and Ben met in their last year of college. They married later that year and both found jobs earning $78,640 per year between the two of them. However, they had accumulated a lot of student loans, credit card debt, and car payments, as shown.
Debt Loan/Debt Balance Interest Rate Min. Monthly Payment
Jessica student loan $12,380 8% $251.02
Ben student loan $28,600 9% $419.00
Credit cards $14,860 15% $225.00
Jessica's car $18,230 9% $453.65
Ben's car $6,350 12% $298.92
In addition to the debt payments, their other monthly expenses (rent, utilities, food, auto, etc.) total $4,380.78 per month, in which $985 of that total is rent.
*The total amount of their debt payments per months is $1647.59
*The amount of spending money they have each month once all their debt payments and expenses have been paid is $524.96
Question: Assume the couple applies the extra left over at the end of each month and adds that to their monthly rent payment. This is an amount they could apply to a mortgage payment. If interest rates are 5% on 30-year fixed-rate loans, estimate the largest debt they can finance (to the nearest thousand).
