09/15/2026
One thing that trips people up when it comes time to finance something is that it isnt just your credit score that’s taken into account.
Something less well known is your DTI, or Debt To Income ratio.
Simply put, that’s how much money you have coming in regularly compared with how much you have going out. We’re talking about fixed expenses here, not how much you spend at Buc-ees. That means car payments, rent, insurance, utilities, and so on. The higher your DTI the less “available” credit you have.
You can have a decent credit score and still be denied a loan for a home if you have a DTI ratio that’s too high. Practical advice is to always try to keep it 30% or lower.
This is challenging for most of us. Taking on credit card debt, housing costs, financing a new vehicle, seem like basic moves, but remember that when you obligate yourself to these payments, they can take years to get out of.
30% DTI on $6,000 a month income is around $1800 a month. Housing alone will hit that in most areas.
I’m pretty frugal, but I also won’t tell anyone to try too hard to pinch pennies. Live a little, but be responsible with every dollar that comes your way.
Jim Rohn gave a great example of how to manage money. He used $1 as the example.
“What do you do with a dollar?” He asked.
The ideal scenario is the $.70 you spend. $.10 you give away, charitable donations, church, a worthy cause of some kind. $.10 you actively invest, meaning buy something and sell it for a profit. $.10 you set aside to passively invest, meaning you give it to someone else to invest for you to try to make a profit with.
That’s it. Most of us don’t do that, or were never even taught that. I wasn’t. If you have children, start having them do this now. If you’re already grown and have a full life, you may not be able to start at 70%, that’s ok. Start at 97%, 1%, 1%, and 1% if you have to, just start.
Another simple way to help with this is to earn more money. Wild right, who knew?
Side hustles are common these days, and many of us actually need them just to get by. Keep a positive attitude about it, build a side income however you can, and manage each dollar wisely, ideally like I outlined above. If you start now, in a few months or a couple years life could look totally different.
Give every dollar a job, correct bad habits, write down your goals, and track progress regularly. If you do this, when it comes time to finance a home, you will already know where your DTI is, and the lower it is, paired with the higher your credit score, the more options you have.
Take action. Reach out if you want help.
Onward.
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