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Personal Finance Life After School

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Page 1: Personal Finance

Personal Finance

Life After School

Page 2: Personal Finance

Jobs

• Jobs selected are typical jobs in a typical salary range for Northern Virginia

• On average, high school graduates make 2x more than high school dropouts

• College graduates make 2x more than high school graduates

• If you make $10/hr for 40 hours per week, 2 weeks off (hourly work – unpaid leave) – comes out to be $20,000/year

Page 3: Personal Finance

Taxes

• Withheld from paychecks

• Social Security - 6.2%

• Medicare – 1.45%

• State taxes ~ 5%

• Federal Taxes – after $6,500.– $6,500 – 10, 500 – 10%– 10, 501 – 36,000 – 15%– 36,001 – 72,000 – 25%

Page 4: Personal Finance

Living

• Rent• Sign a lease

– 1 year– Multiple years w/ set price

increases

• Give 30 days notice to terminate

• No equity

• Own• Take out a loan• Mortgage terms

– Be careful– 30 year fixed– ARM (adj rate mortgage)

• Sell or refinance to get out

• Real estate appreciates 8% per year on average

Page 5: Personal Finance

Housing Costs

• You should spend no more than 1/3 of your pay on your living space

• Calculate the max you can pay per month and write it on your pay stub

Page 6: Personal Finance

Housing Choices

• Live with Mom & Dad– $ - daily lectures and $200/mo

• Share an apartment with a friend – 2br =$900– $ - $450 per month

• Rent your own apartment– $ - 700 per month

• Buy a starter townhouse - $150,000– $ - 1,000 per month + (includes taxes & insurance)

• Buy a fixer-upper in the country on 10 acres– $ - 1,200 per month (includes taxes & insurance)

Page 7: Personal Finance

Deposit your Paycheck

• Write in the amount of your take home pay on your register.

Page 8: Personal Finance

Cost of Living

• Pick a payment – it must be less than your max payment

• If you buy, you cannot change it. You must pay that amount for the remainder of the game.

• If you rent, you can change next month.• Enter in your register.• How much do you have left out of your monthly

check?• More bills to pay• More choices to make

Page 9: Personal Finance

Savings

• You should set aside 5-10% of your income to save before anything else – Retirement– Emergencies– Home purchase

• Decide 5 or 10%• Assume 12% Annual return so add in 1% more• Compounding interest movie• If you are a church-goer, God wants 10%

Page 10: Personal Finance

Monthly bills - July

• Electricity – its summer, its hot, run the AC– $100 apartment ($50 if sharing w/ friend, 0 w/ Mom)– $150 town home– $75 Fixer-upper – sorry no AC

• Internet/cable/phone bill = $75 ($37.50 sharing)• Car insurance = $75• Health Insurance = $100 females, $50 males• Gasoline = $200• Food

– Cook at home daily - $200– Eat out every day - $350

Page 11: Personal Finance

College Graduates

• Engineers, Teachers, Forester, RNs & Accountants

• Pay $300 = Monthly payment on student loan (every month for the next 10 years)

• Average student graduates from college with almost $30,000 in debt

• Add your loan in the debt side• Subtract your payment from your checking acct• Deduct $ 7.00 from your loan balance

Page 12: Personal Finance

Driving

• New car? – Loan for 5 years at 0% Interest– Toyota Camry - $20,000 - $330/mo– Ford F150 4WD - $27,000 - $450/mo– Mini-cooper - $19,000 - $320/mo– Ford Focus - $12,000 - $200/mo

• Used?– Used Chevy Cobalt - $6,000 - $100/mo– Used Toyota Tacoma 4WD - $16,000 - $270/mo

• Nevermind – I’ll take the bus or keep driving ‘Ol Rusty

• Add the loan amount to your debt balance

Page 13: Personal Finance

Entertainment

• Friends are going to the movies. $20 each time

• How many times in a month will you go?

Page 14: Personal Finance

Miscellaneous

• Oops – you dropped your cell phone in the sink.

• New phone - $100

Page 15: Personal Finance

Hurray

• August Payday!!!!!!!!!!!

• Add in your monthly salary

• Pay your rent/mortgage

• Set aside money for saving &/or giving

Page 16: Personal Finance

August bills

• Electricity – its summer, its hot, run the AC– $100 apartment ($50 if sharing w/ friend, 0 w/ Mom)– $150 town home– $75 Fixer-upper – sorry no AC

• Internet/cable/phone bill = $75 ($37.50 sharing)• Car insurance = $75• Health Insurance = $100 female, $50 males• Gasoline = $200• Food

– Cook at home daily - $200 Eat out every day - $350

Page 17: Personal Finance

Debt payments

• Student Loan

• Car Loan

• Adjust your debt balance

Page 18: Personal Finance

Entertainment

• Friends are going to the beach. Need $100 for gas/spending money

• Do you want to go?

• Any movies this month?

Page 19: Personal Finance

Other expenses

• You ripped your best jeans – need to buy a new pair $45

• Oops – speeding ticket $125.00

Page 20: Personal Finance

Hurray

• September Payday!!!!!!!!!!!

• Add in your monthly salary

• Pay your rent/mortgage

• Set aside money for saving &/or giving

Page 21: Personal Finance

September bills

• Electricity – it’s still hot, run the AC– $100 apartment ($50 if sharing w/ friend, 0 w/ Mom)– $150 town home– $75 Fixer-upper – sorry no AC

• Internet/cable/phone bill = $75 ($37.50 sharing)• Car insurance = $75• Health Insurance = $100 females, $50 males• Gasoline = $200• Food

– Cook at home daily - $200– Eat out every day - $350

Page 22: Personal Finance

Debt payments

• Student Loan

• Car Loan

• Adjust your debt balance

Page 23: Personal Finance

Entertainment

• Your old computer died and you can’t keep up with Facebook. Do you want a new one? $500.

• Any movies this month?

Page 24: Personal Finance

Hurray

• October Payday!!!!!!!!!!!

• Add in your monthly salary

• Pay your rent/mortgage

• Set aside money for saving &/or giving

Page 25: Personal Finance

October bills

• Electricity – it’s cooler, – $50 apartment ($25 if sharing w/ friend, 0 w/ Mom)– $75 town home– $75 Fixer-upper

• Internet/cable/phone bill = $75 ($37.50 sharing)• Car insurance = $75• Health Insurance = $100 female, $50 males• Gasoline = $200• Food

– Cook at home daily - $200– Eat out every day - $350

Page 26: Personal Finance

Debt payments

• Student Loan

• Car Loan

• Adjust your debt balance

Page 27: Personal Finance

Birthday

• Take your best friend to dinner for their Birthday - $50.

• Need cool new shoes for Winter - $75

Page 28: Personal Finance

Hurray

• November Payday!!!!!!!!!!!

• Add in your monthly salary

• Pay your rent/mortgage

• Set aside money for saving &/or giving

Page 29: Personal Finance

November bills

• Electricity – getting cold out – turn on the heat– $100 apartment ($50 if sharing w/ friend, 0 w/ Mom)– $150 town home– $175 Fixer-upper – drafty windows

• Internet/cable/phone bill = $75 ($37.50 sharing)• Car insurance = $75• Health Insurance = $100 female, $50 males• Gasoline = $200• Food

– Cook at home daily - $200 (split for sharing, 0 MD)– Eat out every day - $350

Page 30: Personal Finance

Debt payments

• Student Loan

• Car Loan

• Adjust your debt balance

Page 31: Personal Finance

Thanksgiving Day Sale

• Get ready for Football Bowl Season!!!!

• $1,500, 50” Flat Panel HDTV

Page 32: Personal Finance

Ahhw, Don’t have $1,500

• Do I have a deal for you!

Page 33: Personal Finance

Fine PrintAnnual Percentage Rate for purchases and balance transfers*2.99% APR (.00819% daily periodic rate) on purchases

and balance transfers until the first day of the billing cycle that includes the six (6) month anniversary date of the opening of your account. In the absence of the introductory rate, 12.99% APR (.03559% daily periodic rate) on purchases and balance transfers.

** Grace period for repayment of the balance for purchasesYou will have a minimum of 25 days without a finance charge on new purchases if the total New Balance is paid in full

each month by the statement closing date.Method of computing the balance used in calculating finance charges for purchasesAverage daily balance (including new purchases)Annual fee$25Minimum finance chargeFor each Billing Period that your Account is subject to a finance charge, a minimum total Finance Charge of $0.50 will

be imposed.Miscellaneous feesCash advance fee: 2.5% of amount of the cash advance, but not less than $2.50.Late payment fee: $25 Over-the-credit-limit fee: $25 Returned check fee: $25** If you fail to make any payment when due, exceed your credit limit, make a payment which fails to clear and is

returned unsatisfied, otherwise default on this or any other account with us, or upon any closure of your account, by you or by us, we may immediately increase all rates on your account to a variable rate of the higher of (a) 24.99% APR (.06847% daily periodic rate) or (b) up to the three months London Interbank Offered Rate published in The Wall Street Journal on the third Wednesday of March, June, September and December (¡°LIBOR¡±) plus 18.331% (24.99% APR, .06847% daily periodic rate, today).

Page 34: Personal Finance

Example

• $1,575 on your card. • Every day you are charged 1/365 of the

APR, usually 12-15% (.033 -.041% every day) on your balance

• If you are late, the rate goes up to 25%• 30 – 31 days in a month ~ $18 per month• May include a daily fee as well• Minimum payment each month = interest +

a percentage of the balance.

Page 35: Personal Finance

December Credit card bill

• $1,575 balance + $18 interest = $1,593.• Minimum payment = $25

• January bill = $1568 + $18 interest = 1,586

• If you just pay the minimum, it will take you 12 years to pay this off and cost $1,250 additional in interest.

• Your $1,500 TV cost $2,825

Page 36: Personal Finance

Credit

• The best rule for credit is:

• “Never use credit to pay for anything that does not increase in value”

• Example– Home – Education– Business

• What about cars?

Page 37: Personal Finance

So will you buy it or not?

Page 38: Personal Finance

Hurray

• December Payday!!!!!!!!!!!

• Add in your monthly salary

• Pay your rent/mortgage

• Set aside money for saving &/or giving

Page 39: Personal Finance

Monthly bills

• Electricity – it’s cold, turn on the heat– $100 apartment ($50 if sharing w/ friend, 0 w/ Mom)– $150 town home– $175 Fixer-upper – Need to chop more wood

• Internet/cable/phone bill = $75 ($37.50 sharing)• Car insurance = $75• Health Insurance = $100 female, $50 males• Gasoline = $200• Food

– Cook at home daily - $200– Eat out every day - $350

Page 40: Personal Finance

Debt payments

• Student Loan

• Car Loan

• Adjust your debt balance

Page 41: Personal Finance

Entertainment

• Christmas presents: $500– Mom & Dad– Brothers & Sisters– Friends

• Christmas Decorations - $50

• New clothes for Christmas party - $100

Page 42: Personal Finance

End of the Year

• How much did you end up with?• Add your checking balance + savings balance –

your debt.

• Points to remember:– Those with the greatest income don’t always finish

with the most money– Lifestyle choices and buying decisions have a greater

impact on a person’s financial status than income– Debt has the most significant impact on financial

status