Using the 28/36 ratio, determine the maximum allowable recurring debt for someone with an annual income of $86,250.

The 36% limit applies to total monthly debt payments. First convert the annual income to monthly income: $86,250 ÷ 12 = $7,187.50. Then calculate 36%: $7,187.50 × 0.36 = $2,587.50, so the maximum allowable recurring debt is $2,587.50.

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