Michelle's annual take-home pay is $29,000. What is the maximum amount that she can spend per month paying off credit cards and loans and not be in danger of credit card overload?

242 dollars / month. See guidelines below

Step-by-step explanation:

That depends largely on where she lives. The rule of thumb is to allow about 1/3 for rent after the government takes it's cut (that's all governments).

Here is an actual breakdown of how budgeting should be done.

Rent 33% Transportation 15% No car Food 10% very low. That means 240 / month Debt 10% Personal 5% Savings 10% Utilities 10% Clothing 3% Medical 4% very low. Particularly if she is American. Total 100%

These numbers are meant for Canada and are meant as a guide. In reality, if you live in the United States you will have to be spending more on medical for example and less somewhere else.

Now to your question. She has 29000 dollars. Debt is listed at 10%

10% of 29000 = (10/100) * 29000 = 2900 dollars.

Like most numbers having to do with money, most people don't understand large numbers and have to have them broken down. In monthly terms, she can spend 2900 / 12 = 241.67 dollars / month on debt. That does not mean that she can add 241.67 of new debt every month. It means that she must first pay off what she owes, and then she gets to spend the balance on debt, but that is a very dangerous way to think. What she should say is if she has left over money that money can be transferred over to another category.

I know of very few people that can consider themselves debt free. Fewer of our American friends can make the claim.

The sources of these %s come from Credit Counselling Society (of Canada)