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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 79086  
Subject: Re: Strategy comparison S&P500 vs. IUL [rev 1] Date: 4/4/2013 6:18 PM
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$4,330 Gross Income
$3,887 take home income (after withholdings)
$1,212.42 housing (including 1.25% prop taxes & 0.3% hazard insurance)
$433 consumer payments ($28,800 credit card balances @ 18%)

That's a loan at 28/35 DTI ratios.

$10,000 reserves (x6 months of total lifestyle expenses,)
$2,251 monthly discretionary income

So, the expenses you provided.....

$1212 (housing)
$ 433 (consumer debt)

adds up to $1645 in debt payments. Take that from $3887, and you get $2242 in what you are calling 'discretionary' income. While you accounted for homeowner's insurance and property taxes, you didn't account for all those other expenses, like:

electricity/natural gas
medical co-pays/deductibles

much of which is not really 'discretionary'.

And the 'x6 reserves' that you are showing only cover the debt payments, not the 'lifestyle expenses'.

So, how much of the $2242 'discretionary' income are you assuming is put into savings?

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