1982 Hemmeter
Saginaw, MI 48603

Phone: 989.799.8500
FAX: 989.799.0260


One of the biggest questions right now is "Can I afford more credit?"  To get your answer to that question, you need to consider your credit capacity, your monthly expenses, your monthly income, and what it all means.

Your Credit Capacity

Not too long ago, almost everything was paid for with cash, so the big question was "Do we have enough saved to buy this?"  Today--thanks to credit--consumers can enjoy merchandise and services while paying for them.  So now, the question is "Can we afford more credit?"

Being able to afford it depends more on the person than the income.  Some with big incomes live beyond their means, while some with limited incomes are good money managers.

Always keep your credit capacity in mind:

  • How is your take-home (not overall) pay?
  • How does the amount of money required for regular living expenses compare with your total income?
If your expenses are less than your income and you are including savings in your monthly budget, you probably can afford more credit.

But remember: credit is a remarkable tool, except when you use it as a magic wand.  To use it wisely, you need to know how much credit you can carry with your income.  To help you do this, fill in the blanks below.

Your Monthly Expenses
Housing - How much do you spend on housing each month?  (Include rent/mortgage, taxes, insurance, utilities (electricity, gas, water, telephone, etc.), and repairs/upkeep)
HOUSING TOTAL $_________________

Food - What are your expenses at the grocery store, restaurants, etc.?  This includes anything consumed for food and beverage.
FOOD TOTAL $___________________

Clothing - What is your average amount spent on clothes (Includes shoes, coats, and anything else you wear.  Don't forget about back-to-school spending, or clothes for holidays, special events, etc.!)?
CLOTHING TOTAL $_______________

Transportation - Include your car payments, license, insurance, gas, oil, repairs, etc.  Or this may be bus fare, taxis, etc.

Health Care - List health insurance payments, bills for physician, dentist, hospital, optician, prescriptions, etc.  Remember to take an average of what your annual bills would be.
HEALTH CARE TOTAL $___________

Miscellaneous - Include all other living expenses (e.g.: life insurance, charitable contributions, entertainment, etc.).  Make sure this doesn't include things listed above.


Your Monthly Income
Take-Home Pay - Include all salaries that go to support your household.  List only take-home pay (not salary before payroll deductions!).  And, do not include overtime pay (because this can stop at any time--the best thing to do with overtime pay is to put it directly into savings!)

Variable Income - List any other income you have (bonuses, profit sharing, gifts, tax refunds, stock dividends, etc.).  Anything that is not a certain income should be included here (and is another good way to grow your savings account to fall back on in difficult times!).


So, what does all this mean?
If expenses are more than income--you obviously cannot take on any additional loans or expenses.  In fact, it would be wise to begin trimming expenses immediately.

If expenses equal income--it might be helpful for you to make some spending changes because you could get into financial trouble very fast.  Budget a certain amount monthly to put into a savings account.  This prepares you for any emergency expenses and allows for special spending for things like vacations, furniture, etc.

If expenses are less than income--you have funds for saving and spending, and you can commit yourself to additional credit use.  But, don't forget that credit is only a temporary substitute for cash.  It must be repaid.

Decide how much you can use now without putting a strain on your future and present income.  And, before taking on more credit obligations, be sure that what you gain has value to you while you pay for it.

Credit can be a great convenience, but in order to use it wisely, you must know exactly how much credit you can afford before you say, "Charge it!" or take out a loan.