Texas State University Life after College Budget Project

Name: ________________________Life after College Budget Project
This project will walk you through some post-college realities that you may or may not have pondered. For the
calculations and work you need to show for solving for n, you may handwrite and then insert images of your
work in the space provided for calculations or utilize the equation editor in word.
Formulas:
FV = amount after t years
i = rate per payment period
n = number of payments
PMT = monthly payment
PV = Present value of a loan or annuity
1) College Loan
You choose to attend college at _______________________, which costs $__________ per year for tuition, room,
and board. You spend ____ years there for a total cost of $________________. You get a scholarship for
$________________; you are also able to pay $_____________ outright. To pay for the remainder, you take out a
loan for $_____________ (minimum of $2000 – assume you have some college debt) for ____ years at
____% APR compounded monthly from ___________________________ (bank name). $____________ is your
monthly college loan payment.
Calculation:
2) Car Loan
Your car is nearing the end of its life. You must purchase another one – no leases – and it may be new or
used. The cost of the car you want to purchase is: $_________________ Your present car, worth
$______________ may be used as a trade-in. Therefore you will be financing $_____________ for
_____ years (choose 2, 3, 4, 5, or 6 years) compounded monthly at ____% APR from
______________________________ (bank name).
a) Monthly car loan payment = $__________
Calculation:
Name: ________________________
3) Salary
Your job as a(n) ___________________ has a median starting salary of $_____________.
Monthly gross salary = $_____________
Taxes are deducted from your paycheck. Calculate each for your monthly salary.
i) 15% Federal income tax:
$___________
ii) 7.6% FICA tax
$___________
iii) 3.3% State tax
$___________
iv) 1% County tax
$___________
Total taxes:
$____________
Monthly net salary (take-home pay) = salary – total taxes = $_____________
4) Retirement Savings
You plan to start work at age
_____ is the age at which you plan to start your career, and
_____ is the age at which you hope to retire. You will try to save
$______ per month in a mutual fund. Over time, this mutual fund earns 9.0% APR compounded
monthly for _____ years (start of work to retirement age)
When you retire, your mutual fund is worth $__________________
Calculation:
Name: ________________________
Using your great-great grandparents’ and great-grandparents’ ages when they passed away (if
you don’t know estimate), you estimate that you will live to age _______. You will be living off
your retirement savings for _____ years (retirement age to death). Your income will be
$______________ per year.
Calculation:
5) Mortgage
You would also like to purchase a house in _____ years that costs $________________.
You need to save enough for a down payment, usually 10-20% of the purchase price:
$_______________.
Savings per month to achieve this goal in ______ months: $______________
When purchasing the home, you would then finance $_____________ for ____ years (choose
from either 15, 20, or 30) at ____% APR compounded monthly from ______________________
(bank name).
Monthly payment: $_____________
Calculation:
Name: ________________________
With this payment, how much will you eventually pay for your house?
(monthly payment x months + down-payment) (36) $________________
Calculation:
Suppose you could only afford to pay half as much as you found above. How long would it take to
pay off the mortgage? ________
Calculation:
6) Other Expenses
a) What other expenses will you be responsible for when you graduate and live on your own?
i) Electric/Nat. Gas
(37)___________ (vi) Phone
(42)__________
ii) Gasoline
(38)___________
(vii) Food
(43)__________
iii) Water/sewer/trash
(39)___________
(viii) Auto insurance
(44)__________
(iv) Cable/Satellite
(40)___________
(ix) Renter insurance (45)__________
(v) Internet
(41)__________
(x) RENT
(46) __________
TOTAL : (47) $_________________
7) Monthly Balance
Net monthly salary – (college pymt + car pymt + annuity pymt + down pymt svngs + mo. expenses)
___________ – (________ + ________ + ________ + _______ + _______) = (48)$________
Name: ________________________
8) Credit Cards
a) Will credit cards help? The average undergraduate student leaves college with a diploma and
around $2750 in credit card debt (graduate students, $4800). Suppose you have a credit card with a
balance of $2750 and an interest rate of 19.8% APR. The minimum payment is $45.00. The amount
ærö
of interest due each month is figured as current balance · ç ÷ , where r is the rate (decimal form) and
ènø
n is 12.
b) Fill in the table, making minimum payments.
Month
Current
balance
Interest
Payment
Amount applied to principal
1
$2750.00
$45.38
$45.00
-$0.38
2
$2750.38
$45.00
3
$45.00
4
$45.00
5
$45.00
6
$45.00
7
$45.00
8
$45.00
9
$45.00
10
$45.00
11
$45.00
12
$45.00
c) Will you ever be out of debt with the credit card company? Explain. (Hint: Use the Present value
formula and solve for n).
Calculation:
Name: ________________________
d) Suppose you begin making a monthly payment of $75.00. Fill in the table.
Month
Current
balance
Interest
Payment
Amount applied to principal
1
$2750.00
$45.38
$75.00
$29.62
2
$75.00
3
$75.00
4
$75.00
5
$75.00
6
$75.00
7
$75.00
8
$75.00
9
$75.00
10
$75.00
11
$75.00
12
$75.00
e) Will you ever be out of debt? Explain.
Calculation:
f) How much must you pay per month to be out of debt in two years? __________
(HINT: use the Present Value formula)
Calculation:
Name: ________________________
9) Type a brief summary about this assignment (6+ complete sentences, 1-2 paragraphs).
* What surprised you most in this unit?
* What are a few other things that you have learned?
* Describe at least one thing you will do this year to improve your financial future.
* How else has this unit changed the plans that you have for your future (as a college student
and when beginning your career)?
Life after College Budget Project – STEP ONE: Research
College Loan
1. Where do you want to attend college? (Pick just one university for this project or if your
degree plan is entirely ACC state so.)
2. What is the cost of attending this college per year? (That’s the semester cost times 2.)
Don’t forget to include room & board!!!
3. Do you have money saved up for your college expenses. If so, how much? If not, write
“none”. You might also want to do some research on possible sources of scholarship
money.
4. Research banks or government loan rates and choose a bank and rate for a loan of at
least $2000.
Car Loan
5. Research a car that you would realistically like to purchase upon graduation. Give the
year, make, & model of automobile & its price. I recommend www.cars.com . Print off this
ad & attach it to your final project. Also if you have a trade in car, look at Kelly Blue book for
the value of a car similar to yours that is 6 years older than yours. www.kbb.com or
www.edmunds.com
Salary
6. What is the career that you realistically expect to have?
Go to http://money.usnews.com/careers/best-jobs/rankings/the-100-best-jobs or
http://jobsearch.about.com/od/salaryinformatio1/a/salary-list.htm
http://www.careeronestop.org/SalariesBenefits/Sal_default.aspx
http://www.careerprofiles.info/salaries.html
http://www.careercast.com/jobs-rated/2012-ranking-200-jobs-best-worst
and read about this career. REALLY read the information about your career. Pay special
attention to the description of the job to make sure this sounds like something you would
enjoy. If not, find something else. When you find something that sounds appealing,
continue to #7.
7. What training & education is necessary for this career?
8. What is the job outlook for this career over the next decade, compared to other careers?
9. What is the median ANNUAL salary for this career?
Mortgage
10. Research a house that you would realistically like to purchase within a few years after
graduation. List the MLS number, the number or bedrooms, number of bathrooms, location,
& price. I recommend www.remax.com . Print off this ad & attach it to your final project.
Other Expenses
11. Research the average cost for each of these monthly bills for yourself:
• Electricity & Natural Gas:
• Gasoline
• Water/Sewer/Trash:
• Cable/Satellite TV:
• Internet:
• Phone:
• Food:
• Auto Insurance:
•
•
•
Renters Insurance:
RENT
Others?: