Are You Spending Too Much?
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As seen in
Parade Magazine
Intelligence Report June 9th, 2002

"Do You Spend Too Much?"

"A Formula Helps You Determines If You Are Out of Kilter Financially"

RELEASE: June 2002
CONTACT: Paul S. Richard, ICFE Executive Director
Banks use a simple formula to determine your eligibility for a loan. You can use the same formula to check your financial health. Start with your take-home pay (after deductions); subtract your rent or mortgage payments, then multiply by 0.2. That's what you should be spending each month on loans and nonessentials. For example, if you take home $2400 a month and have an $800 mortgage, loans and nonessentials shouldn't exceed $320 a month. The balance ($1280) should be enough for utility and medical bills and other needs. If your numbers are higher, you need to cut your spending. To learn more, visit the Institute of Consumer Financial Education at

According to some experts, some 70 percent of all adult working Americans have no money left after paying their basic expenses and bills each month. "Many are out of kilter, financially speaking, and they don't even know it," said Paul S. Richard, executive director for the nonprofit Institute of Consumer Financial Education (ICFE), a San Diego based group helping consumers become better spenders, regular savers and wise users of credit.

"How do you tell if you are financially out of kilter, or in danger of being there? There is a simple formula that most retail lenders rely on to determine if a loan applicant has too much debt and out of kilter," explained, Richard. The formula is: monthly take home pay, less housing expense (rent or first mortgage) equals X multiplied by 20 percent equals the total amount of money you should be paying towards loans, credit cards or other debts.

EXAMPLE Monthly take home pay is $2400. Less housing expense: $800 a-month, equals $1600 multiplied by 20 percent equals $320 maximum amount to be paid on car or other loans including charge cards. "Consumers who apply the formula to their own finances and find they have too much going towards charge cards and loans have limited choices to in order to alter their course. They need to increase income or reduce outgo, if possible, by refinancing, and sometimes, by a consolidation loan," Richard said, adding, "The next focus is spending, because that's the key to debt reduction and, eventually, savings and investing for the future."

Take Home Pay: $2400
Less Housing (-800)
Balance $1600
x 20%= $ 320 available for credit payments.

"The ICFE has a wide variety of aid for consumers, especially those who find themselves out of kilter," said Richard, whose group has helped thousands of people through its Web site at:

For information about "Mending Spending," monthly budgeting guidelines, and warning labels for your charge cards, visit the ICFE's Web page at:

The site also includes helpful sections on increasing savings, using credit wisely, plus "How to set up and implement a spending-plan" (with a one page work sheet) for personal and/or family finances. To receive the same information by mail, please send $1 and a self-addressed, 60 cent stamped envelope to:

ICFE Money Helps
PO Box 34070
San Diego, CA 92163-4070

About the ICFE:

The Institute of Consumer Financial Education (ICFE) was founded in 1982 by the late Loren Dunton (creator of the Certified Financial Planner (CFP) designation).  The ICFE is dedicated to helping consumers of all ages to improve their spending, increase savings and use credit more wisely. 
The ICFE is an award winning, nonprofit, consumer education organization that has helped millions of people through its education programs and Resources. It publishes the Do-It-Yourself Credit File correction Guide, which is updated annually. The ICFE has distributed over one million Credit/Debit Card Warning Labels and Credit/Debit Card Sleeves world wide.

The ICFE became an official partner with the Department of Defense/Financial Readiness Campaign in June of 2004.The ICFE was an active partner in the California Student Debt Resource Awareness Project (CASDRAP) which resulted in a new web site: (  CASDRAP disbanded in 2010, shortly after the web site project was completed.  In 2011 the ICFE assumed the single sponsorship of the ( web site and is now responsible for its content and operation.

The ICFE is also an on-line help for consumers who spend too much.  ICFE's spending help was featured in PARADE Magazine in the Intelligence Report section. The money helps and tips are from the ICFE's Money Instruction Book, our course in personal finance.

Visit the ICFE's other web sites at: and  Both sites helps consumers and students with mending spending, learning about the proper use of credit, budget and expense guidelines, how to set up and implement a spending-plan and also how to access financial education courses and how to teach children about money. Other ICFE services include: Ask Mr. G,  a free eNews, and an online resource center for students, parents and educators, plus financial education learning tools and a book store.

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PO Box 34070
San Diego, Ca 92163
Paul S. Richard, Executive Director
Phone 619-239-1401

FAX 619-923-3284

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