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Use worksheet 7.1. Every six months, Leo Perez takes an inventory of the consumer debts he has outstanding.  His latest tally shows that he still \$4,000 on a home improvement loan (monthly payments or \$125); he is making \$85/m payments on a personal loan with a remaining balance of \$750; he has a \$2,000 secured, single-payment that ‘s due late next year; he has a \$70,000 home mortgage on which he’s making \$750/m payments; he still owes \$8,600 on a new car loan (monthly payments of \$375): and he has \$960 balance on his MasterCard (minimum payment of \$40), a \$70 balance on his shell credit card ( balance due in 30 days ), and \$1,200 balance on a personal line of credit (\$60 monthly payment).

Use worksheet 7.1 to prepare an inventory of Leo’s consumer debt.  Find his debt safety ration, given that his take-home is \$2500/m. Calculate a 5% savings of take home pay. Would you consider this ratio ratio to be good or bad? Explain.

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