The amount of income left over after debt is subtracted is called:

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Prepare for the Principal Lending Manager (PLM) Test. Access multiple choice questions and flashcards with detailed explanations and hints to enhance your learning experience and boost your confidence for test day.

Multiple Choice

The amount of income left over after debt is subtracted is called:

Explanation:
The amount left after debt payments is residual income. This reflects what remains of your earnings once you’ve covered existing debt obligations, giving you money available for living expenses and savings or for taking on additional debt. For example, if your monthly income is 6,000 and you have 2,000 in debt payments, your residual income would be 4,000. Other terms describe different stages: gross income is what you earn before any deductions; net income is after taxes and other withholdings but not specifically after debt; disposable income is the post-tax amount you have to spend or save, not the leftover after debt service.

The amount left after debt payments is residual income. This reflects what remains of your earnings once you’ve covered existing debt obligations, giving you money available for living expenses and savings or for taking on additional debt. For example, if your monthly income is 6,000 and you have 2,000 in debt payments, your residual income would be 4,000.

Other terms describe different stages: gross income is what you earn before any deductions; net income is after taxes and other withholdings but not specifically after debt; disposable income is the post-tax amount you have to spend or save, not the leftover after debt service.

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