In a memorable General Conference address in October 1998, President Gordon B. Hinckley advised members of The Church of Jesus Christ of Latter-day Saints around the world that “the time has come to get our houses in order.” In the years since President Hinckley’s remarks, the United States has endured two economic recessions, including the most severe recession of the post-World-War-II era. But did you realize that in every decade since the 1930s, the U.S. has experienced at least one and in some cases two recessions? When difficult financial or economic conditions arise, having your financial house in order will allow your family to weather the storm.
Below is a simple checklist to help you assess whether your family’s financial house is in order:
1. Is your total debt-to-income ratio below 35%? Your debt-to-income ratio refers to the portion of your gross monthly income that you must use to stay current in paying off your debts. Ideally, no more than 25% of your monthly income should be used for a mortgage, and your total debt-to-income ratio should be 35% or less. If the amount you pay toward your debts monthly is higher than 35%, it’s a good sign you have taken on too much debt, which means your financial house could be on shaky ground.