Financial Planning

37

Financial Planning

Project

Name: _________________________Period: _____________

College Bound MathTeacher: ___________

All your links are found at www.schenectadymath.weebly.com under the College Bound tab in Financial Math Project

Table of Contents

Introduction

Page 2

Part 1 – Job vs. Career

Pages 3 – 5

Part 2 – Public vs. Private Schools

Pages 6 – 8

Part 3 – College Loans

Pages 9 – 12

Part 4 – Obtaining a Car

Pages 13 – 18

Part 5 – Renting a Place to Live

Pages 19 – 29

Part 6 – Buying a House

Pages 30 – 33

Reflection

Page 34

Grading Rubric

Inside Back Cover

There are many written and mathematical components to this project. You are expected to answer the written components using complete sentences and show, at a minimum all formula substitutions. All the information needed to perform this project is located in this packet and will require you to read thoroughly in-order to locate much of that information. Therefore it is in your best interest to diagram the reading passages, as in your English classes, in-order to comprehend what is expected of you.

This project is your opportunity to show your ability to use technology and assimilate the information that you have learned leading up to this point. This project is your opportunity to earn a high 3rd quarter assessment grade since this project replaces that exam. This project is your opportunity to challenge yourself and prove to me your level of commitment to be successful in this course. Therefore a decision to do your due diligence and effort should translate into a high score, while a lack of effort and commitment will negatively affect your ability to be successful this quarter.Introduction

So what are your plans for after high school? Will you get a job or go to college? If you go to college, do you know what kind? Will you attend a 2-year or 4-year school? Will you attend a University or Technical School? Or will you go straight into the work force? What kind of lifestyle do you want to live? Do you want to drive a nice car? Do you want to have your own apartment or house? In the box below, describe how you plan to see yourself after high school.

What is your plan on affording the things you mentioned above? We all know the things we want and like to do have a price. What are some costs you may encounter after high school? Let’s create a web.

COSTS

AFTER HS

This project will help you look at and calculate some of these costs before you get out of high school so you are not surprised when you get out into “the real world.”

Part 1 – Deciding on a Career Path/Job

You are graduating from high school and you are trying to decide your future employment. Are you going to go to college or are you going to get a job right out of high school? If you decide to go to college, what career path are you going to study towards? Will it require an associate’s degree, bachelor’s degree, or a graduate degree?

You should never make a life-changing decision without doing some brainstorming and some research. (There are some sites to explore on the next page)

Jobs (no college)Careers (college required)

If college wasn’t an option for you, what jobs would you be interested in or think you could perform?

If college was your goal, based on your interest and abilities what careers would you be interested in exploring?

Jobs & Careers (may or may not require college)

Some professions college is an option and not necessary but maybe you’ll need technical training, mentoring or life experience. Are there any Job/Careers that you are interested in that may fall in this category?

Part 1 – Researching a Job vs. a Career

Now you are going to do a comparison of a job that you would like to pursue right out of high school and a career that requires a higher education or technical degree.

Go to http://www.indeed.com/salary and explore the salary for different jobs and careers.

Enter the job or career you are interested in.

Use the drop down menu to check out different areas around the US.

Remember: Higher pay somewhere other than Schenectady does not mean that you are really going to have more money to spend. Some places that have a higher salary may be a more expensive area to live in (housing, food,…)

You can also explore options at:

http://allhealthcare.monster.com/careers/articles/2933-10-best-paying-jobs-with-a-bachelors-degree,

https://www.bestcollegereviews.org/best-college-majors-for-the-future/

https://www.bachelorsdegreecenter.org/highest-paying-bachelors-degrees-future/

https://money.usnews.com/money/careers/slideshow/25-best-jobs-that-dont-require-a-college-degree

Part 1 - Comparing Job and Career Options

Choose a job that DOES NOT require college? ________________________________________

Choose a career that DOES require college? _________________________________________

Why did you decide on these two options to explore?_________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________

Fill in the table below comparing the two.

If on http://www.indeed.com/salary it gives you an hourly salary multiply that by 2000 to get approximately your Gross National Salary.

Job Title:

Career Title:

Median Gross National Salary

(What would you make on average?)

Net Salary

(Salary after taxes and health insurance)

Multiply Gross National Salary by (0.70)

Multiply Gross National Salary by (0.70))

Net Monthly Pay

(What you take home every month after taxes, etc.)

Net Salary divided by 12

Net Salary divided by 12

What is the difference between how much you make per year between having a job and having a career? _______________________________________________________________

Which would you take and why? ____________________________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________Part 2 – Looking into Public vs. Private Colleges

Now we are going to look at the career path and compare the different option choices for colleges/technical schools. Do you need to go to college/technical school for 2, 4, 6 or 8 years to reach your career goal? Are you going to attend a community college, public college or private college? Will it be in state or out of state? Are you going to live on or off of campus? There are a lot of things to think about when making these decisions.

What kind of degree does your career choice require? (circle one)

Associates

(2 years)

Bachelors

(4 years)

Masters

(6 years)

Ph.D/MD

(8 years)

Geological Tech

Petroleum Tech

Admin Manager

Admin Assistant

Auto Technician

Computer support

Real Estate Broker

Teachers Assistants

Paralegal

Landscaper

Pest Control

Librarian

Writer or Editor

Manager

Sales Rep

Website Developer

Public Affairs

Event Planner

Human Resources

Reporter

Journalist

Sound Technician

Photo Editor

Flight Attendant

Media Programmer

Teacher

Lawyer

Guidance counselor

Business Admin

Principal

Social Worker

Physical Therapist

Medical Lab Tech

Doctor

Scientist

Immunologist

College Professor

Anthropologist

Astronomer

Astrophysicist

University Dean

University VP/Pres

Federal Reserve

Psychologist

Explore the different options and choose two different types of schools (FULL TIME).

**The information you will need concerning your colleges can all be found on the following website.

http://www.collegecalc.org/

**If you are unsure of what major you are looking for or the type of school you should be looking at then you can use the following website.

http://www.campusexplorer.com/ or http://www.techschooldirectory.com/

School #1 Name:

School #2 Name:

Type of School (circle all that apply):

Community Public Private On-line

Technical In-State Out of State

Community Public Private On-line

Technical In-State Out of State

Tuition for 1 year:

(Remember to calculate out of state fees if you choose an out of state school.)

Other fees

Room and Board

(this is for the cost of housing and food)

Books & Supplies

Total Cost for 1 year

(already calculated for you on collegecalc)

Add up the above four boxes

Add up the above four boxes

Total Number of years attending:

Total College Costs:

Multiply Total cost by # of years

Multiply Total cost by # of years

Federal Loan Percent:

Out of Pocket Percent:

On the http://www.collegecalc.org/ scroll down to Average Financial Aid Mix and locate the following 2 percents: Federal Loans & Out of Pocket.

What are some conclusions you can draw about the two different types of schools you researched? (Examples: which was more expensive, which had more fees, why do you think this may be so?)________________________________________________________________

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

_____________________________________________________________________________________

Which school do you think you would go to after doing the research? Why? ___________

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

Part 3 – Student Loans

Most people do not have the cash reserves to pay for college up front, so you can take out school loans. Getting scholarships can help off-set some of the costs along with Financial Aid. In this section you will look at how much your school of choice will cost you, up front and in the long-term.

The Going Interest Rate

Direct Subsidized and Unsubsidized Loans for undergraduates with a first disbursement date between July 1, 2017, and June 30, 2018: 4.45%

In order to understand a student loan better we are going to look at taking out a loan for 10, 7 and 5 years.

Standard Repayment

With the standard plan, you'll pay a fixed amount each month until your loans are paid in full. Your monthly payments will be at least $50, and you'll have up to 10 years to repay your loans.

The standard plan is good for you if you can handle higher monthly payments because you'll repay your loans more quickly. Your monthly payment under the standard plan may be higher than it would be under the other plans because your loans will be repaid in the shortest time. For the same reason—the 10-year limit on repayment—you may pay the least interest.

Consequences of default:

https://studentaid.ed.gov/repay-loans/default

What is the difference between being delinquent on a loan vs being in default?

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

____________________________________________________________________________________

In your own words, why is it important NOT to default on your loan? What goals could that prevent you from achieving in your life?

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Re-paying your loan

Total Cost of the school you chose

Use from previous section Pg 7

What percent will you have in Student (Federal) Loans? pg 7

%

How much money will you have covered in Student Loans?

This is the number you will be using when calculating your loan repayments below.

P = Amount being financed X (Federal Loan Percent as a decimal)

P=

What percent will you have in Out of Pocket costs? Pg 7

%

How much of the college cost will be in Out of Pocket costs?

This is the amount of money you will need to find other sources to cover.

Things such as books, dorm room furnishings, transportation, etc. are not always eligible to be covered by loans, so you may need to come up with these costs out of pocket. How will you pay for these items? Have you started saving money? Has a relative offered to help? Will you get a job while you are also at school?

Work Study Programs: The Federal Work-Study Program, FWS, provides a method for postsecondary education students to earn funds that are used toward their education. The program was formerly known as the College Work-Study Program.[2] The FWS program helps students earn monetary awards towards their postsecondary education. The program is based on financial need and students must be accepted into the program to qualify.

Eligible college students join work programs through their college to earn money for tuition and other expenses. There are many different types of jobs that qualify for the program. Students are assured of receiving at least federal minimum wage for the duration of their employment. The FWS program helps to ensure that college students who are truly in need of the money get the jobs.

Federal Work-Study (FWS) provides part-time jobs for undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses. The program encourages community service work and work related to the recipient's course of study. (Source: Wikipedia)

P = Amount being financed

(page 10)

r= interest rate (as a decimal)

(page 9)

t = time in years

We will look at how time affects your loan below.

How will time affect your loan?

10 Year Loan

(120 months)

7 Year Loan

(84 months)

5 year loan

(60 months)

Monthly Payments: (use the formula r = interest rate)

Total Monthly Payment:

Overall Cost of financing college including Interest

(Monthly payments X # months)

(Monthly payments X # months

(Monthly payments X # months)

Total interest paid on the loan

(Overall cost – Financed amount(P))

(Overall cost – initial loan amount(P))

(Overall cost – initial loan amount(P))

How much will you save if you pay off your loans in 7 years instead of 10 year? _____________________________________________________________________________________

How much will you save if you pay off your loans in 5 years instead of 10 years? _____________________________________________________________________________________

How do you think this would affect your motivation in paying off your loans? _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

What factors in life could possibly inhibit you from paying your student loan back in a shorter time? ________________________________________________________________________

_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Go to https://studentaid.ed.gov/ and the drop down How to Repay Your Loans

If you are having problems repaying your student loans, other than going into default what other options do you have?

_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

You still have your Out of Pocket costs. Costs not covered by grants, scholarships or your student loans. In your own words explain how you will get this part of the college expense covered.

_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

_____________________________________________________________________________________

Part 4 – Purchasing vs. Leasing a Car

Now that you are gainfully employed, you are in the market for a car. You aren’t sure whether you would like to own or lease a car, so you are going to do a comparison before making your final decision.

First, let’s explore the option of buying a new or used car. Follow the steps below to find a vehicle that meets your needs. Your vehicle can not be older than 2014 & must have less than 30,000 miles.

Go to www.autotrader.com and follow the steps to find the vehicle that you choose to “purchase”. You’ll want to find an automobile that is within 50 miles of Schenectady and you’ll want to “shop around” a bit. Compare prices and try to find a good deal!

Your Vehicle Information:

Car #1

Car #2

Make

(Ford, Honda, Chevy, Dodge, etc.):

Model

(Edge, Accord, Cavalier, Ram, etc.):

Special Designation

(Engine displacement, Class etc.):

Year:

Price:

Pre-existing Miles:

Gas Mileage (newer cars only):

(sometimes the gas mileage is listed on the main page, other times you need to look in the left column under “Model Information” and click on “Specifications”)

City:

City:

Highway:

Highway:

Where are you purchasing from?

If pre-owned, is it certified? (Make sure you know what that means!)

Which car will you choose? __________________________________________________________

Part 4 – Car Loans

Just like with purchasing your house, you’ll need to take out a loan to purchase your car. Again, similar to purchasing your house, you’ll want to have some kind of a down payment. We are going to say that you’ve got $3,000 for a down payment. Use the price of your car and the amount that you’ve saved as a down payment to determine the amount of money that you’ll need to finance in order to purchase your car:

We are going to use the car loan rates that the First NY Credit Union has on their website:

Monthly payment amount shown is calculated per $1,000 and is based on a 30-day month.

Notice that the bank gives the option to choose different “terms” of the loan. The longer the term, the lower the “Monthly Payment per $1,000”, this may seem like a good idea, but what is the disadvantage to taking out a longer term loan vs. a shorter term loan? (Think back to your student loans!) _____________________________________________

_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

What do you notice happens to the interest rate as the loan term increases? Why do you think this happens? _____________________________________________________________

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

The table on the previous page was for NEWER car models. The bank, however, breaks down their loan tables into groups of different years.

What do you notice about taking out a loan for the purchase of an older model car versus a newer model car? __________________________________________________________

___________________________________________________________________________________________________________________________________________________________________________________________________________________________

Why do you think the bank sets up their loan system in this manner? ___________________

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Try it out:

So that you can better understand how taking out a car loan works, let’s run a comparison of two different loan scenarios. Let’s compare taking out a 4 year loan to a 6 year loan.

Amount you need to finance

(don’t forget about your down payment!):_______________________________

4 year loan:

6 year loan:

Number of $1,000 increments:

(!!round up to tenths!!)

Monthly payment per $1,000:

(from chart)

Total monthly car payment:

Multiply # of increment by payment

Multiply # of increment by payment

Total amount paid after term of loan is completed:

Monthly payment X # of payments

Monthly payment X # of payments

Amount of interest paid

Total amount – financed amount

Total amount – financed amount

How much money can you save by taking out a 4 year instead of a 6 year loan?

_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

_____________________________________________________________________________________

Why wouldn’t everyone take out a 4 year loan?

_____________________________________________________________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________

Part 4 – Leasing A Car

When you lease a car, it is yours for only a short period of time, often 2 – 4 years. Once this term is up, the car must be returned to the leasing company. Let’s look at the pros and cons of leasing a car. Check out the following articles:

http://usnews.rankingsandreviews.com/cars-trucks/Buying_vs_Leasing/

http://www.leaseguide.com/lease03/

http://www.edmunds.com/car-buying/compare-the-costs-buying-vs-leasing-vs-buying-a-used-car.html

Using the articles above, fill in the table below listing the pros and cons of buying and leasing a car.

Buying a Car

Leasing a Car

PROS

CONS

Part 4 – Choosing Car Insurance

You must have car insurance in order to legally drive a car in New York State. The following website lists an “Average Premium (annual)” for car insurance based on the make/ model of the car.

https://www.cheapcarinsurance.net/rates/

Search for the car that you’ve chosen and fill in the information below. Some vehicles are not located on this list because they are no longer currently being produced. Raise your hand and ask for help if this is the case. We’ll match your vehicle up with the closes comparable current model.

Monthly Payment (using the average premium):_____________________

Average Yearly Premium:_____________________

(multiply monthly premium by 12 months)

Remember, the Premium that you’ve just determined is an “average”. Your actual insurance costs could be higher or lower depending on a multitude of factors. Factors that can increase or decrease your premium include: where you live, your age and experience, the type of vehicle to be insured, your credit score and your past driving record (tickets, accidents, etc). Do you think that there are any factors that might increase or decrease your insurance premium?

______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________

Part 5 – Where will you live? Buying vs. Renting…

Before you can figure out what you can afford, we need to take a look at the finances you have incurred throughout the beginning of this project.

Fill in the table below with the information from the beginning of the project.

Job/Career Title:

Net Monthly Pay (pg 5):

Monthly Student Loan Payment (pg 11):

Car Make: (pg 13)

Car Model:

Car Year:

Monthly Car Loan Payment (pg 16):

Monthly Insurance Payment (pg 18):

Net Monthly Income

Next we will figure out your net monthly income (how much you have to spend each month after loans and car payments).

Total up current bills: Student loan payment + Car payment + Insurance Payment

( _______ + _______ + _______ ) = _______

Monthly take home pay – Total current bills = NET MONTHLY INCOME

___________ - ___________ = __________

How much money will you have left for rent/mortgage each month? Does that seem like a lot of money, or a little amount of money?

_____________________________________________________________________________________

_____________________________________________________________________________________

Saving Some Money

Be Nice to your Parents….

For the first 5 years of your job/career your parents are allowing you to live at home to help save up for moving into your first place. During this time it’s expected that you can save up 20% of your income. (You’re hopefully not paying for everything)

Net Monthly Income * 20% = Net Monthly Savings

(________________)(.20) = ________________

If you make monthly deposits into an account that pays 2.5% interest compounded monthly, how much money will you have saved up while you’ve been living at home?

B = Ending Balance (total savings)

P = Starting Principal (net monthly savings)

r = rate (as a decimal)

n = # of times compounded (12)

t = time in years (5)

How much money could you potentially save by living with your parents for 5 years?

________________________________________

Do you think it would be worth it? What could you do with that extra money? _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

***The money you save could eventually go towards the down payment of a house, which could earn you equity over time. Many people live with their parents for a period of time to help them save money.***

Part 5 – Renting vs. Buying a Home

When you move out on your own a few options will open up for you. You will possibly be able to purchase your first home (if you have the down payment), or you will rent for some time and then purchase a home, or you may decide never to purchase a home and always rent.

Read the following article, mark the text and use the information fill the table on pg 24.

http://www.thetruthaboutmortgage.com/renting-vs-buying-55-pros-and-cons/

Renting vs. Buying: 55 Pros and Cons

Colin Robertson December 17, 2012

Pros of Renting

Let’s start with the beauty of renting an apartment or a home. When you rent, you pay a landlord a certain dollar amount each month. Put simply, this dollar amount is typically less than the going cost of a mortgage, assuming you factor in the insurance and taxes.

Oh, and the maintenance. Sure, a mortgage may appear cheaper, but guess what happens when your toilet breaks? You can’t call your helpful resident plumber and get a free fix. You’ll either have to get down with some DIY or open your checkbook. So renting, while seemingly the same price or even more expensive than owning, might still wind up cheaper.

There’s also a huge psychological freedom to renting. You aren’t locked in for 30 years. At most, you probably have a 12-month lease agreement. And there’s even a good chance you’ve got a month-to-month deal in place.

In short, you won’t feel trapped, and you can freely move on if you want/need to for any reason, such as job relocation, downsizing, upsizing, etc. This should make it a lot easier to sleep at night.

Cons of Renting

On the other side of the coin, renting seems to be synonymous with temporary. If you want to establish a household, renting an apartment or a home might not be the best way of going about it. You might also be limited to what you can do to the unit. Pets aren’t allowed? You can’t paint the place? You can’t do X, Y, or Z?

Oh, and those rent payments never stop – sure, 30 years is a long, long time, but your lifetime will probably be longer. There won’t be any relief in retirement when you rent – you’ll keep paying your landlord for “as long as it takes.” And at the end, you won’t have anything to say for it, no home equity or ownership, despite all those payments. Nothing to hand off to your kids or to sell for cash proceeds.

Additionally, your rent can and will most likely rise, even if some level of rent control is in place. So you might be paying less than your neighbor with the mortgage today, but if your neighbor’s mortgage is fixed, they’ll still be paying the same amount in the future while your rent shoots higher.

Pros of Buying

Okay, so we’ve discussed some pros and cons of renting, but what about buying? Well, the obvious advantage is that you actually gain home equity, or ownership in your home. In other words, over time the home or condo actually becomes your property, as opposed to renting, where you never own anything aside from the measly contents.

Additionally, owning might be a cheaper alternative than renting these days in many markets across the United States thanks to the low interest rates on hand.

Do a simple online search and you’ll find plenty of places where it’s “better to buy than rent.” In many cases, your mortgage payment, even when factoring in taxes and insurance, may be less than what a landlord charges for rent. Why pay $2,500 in rent if you can make a $2,200 mortgage payment, especially if you can write off the interest and the taxes? That’s right, with homeownership comes tax benefits. Of course, the future of the mortgage interest deduction hangs in the balance, but real estate taxes are still fully deductible. Factor in the tax savings and your mortgage payment gets even cheaper compared to a rental payment.

An owner of property also has fewer restrictions, and can add or modify to their heart’s content, less any government bureaucracy. This means you can make your property worth even more over the years, or simply make it more useful/attractive for you and your family.

Cons of Buying

There are plenty of disadvantages to owning property as well. First off, you must come up with a sizable amount of money, either for down payment or to buy outright.

With rent, typically you just need the first and last month’s payment. When buying, you’ll need at least 3.5% of the purchase price in most cases (FHA loans), which can be a hefty amount in higher-priced areas of the nation.

There’s also a good chance your mortgage payment will exceed the rents in your area. This can certainly vary, but don’t be surprised if it comes at a premium. You also have to pay real estate taxes and insurance, which don’t stop once the mortgage is paid off. You may even need to pay costly HOA dues. Factor that all in and you could still be paying thousands each month to live “rent-free.” That doesn’t sound very free, does it?

You also become the landlord when you own. Remember that helpful handyman at your old apartment complex that fixed your leaky faucet with a smile? That’s your responsibility now Bob Vila. Oh, and you better believe that every little thing that’s wrong with YOUR property will give you stress, each and every day. You can’t just pack up and move along with ease. It takes time (and money) to unload a property, and you might not make out as much as you think once you factor in real estate commissions and less-than-anticipated home price gains. Heck, your house might even lose value and you could be foreclosed on if you don’t hold up your end of the bargain.

In Summary

As you can see, there are plenty of pros and cons to buying vs. renting, and vice versa. When you rent, you pretty much know what you’re getting into. You’re not going to make any money, but you’re not going to explicitly lose any either. And it’s mostly a hands-off type of deal. With a home, you’re making a bit of a gamble on your future, and the future of the economy. After all, you need to put a certain amount down, and you need to ensure you keep making money so you can keep up with your mortgage payments. You’ve also got to set aside an emergency fund so you’re able to pay for repairs if and when necessary. But ideally, the tradeoff is that you’ll be rewarded for making that homeownership leap of faith.

Renting

Purchasing/Buying

Pros

Cons

Here are a few more articles if your interested in learning more about buying VS renting.

http://www.zillow.com/home-buying-guide/rent-vs-buy/

https://michaelbluejay.com/house/rentvsbuy.html

Looking at a Lease (for a Rental Property)

Most people will end up renting an apartment at some point in time, meaning you will sign an agreement, called a lease, with a landlord or rental agency. These leases are binding contracts, so you MUST read EVERY section CAREFULLY or you may end up signing something that you don’t agree with or understand.

On the next few pages, you will look at a lease and answer a few questions, and ultimately decide if it’s a fair lease that you would sign, or a vague lease that may be a risky move. Get together in a small group to look over the lease and answer the questions. In the end, would you sign it?

Terms of Leases and Rental Agreements Vocabulary

1. damage

harm to property, making it

useless or unattractive

2. evict

to make someone move out

3. lessee

person who agrees to a lease, usually a tenant of rental property

4. lessor

the landlord or person who rents his or her property under the terms and conditions of a lease

5. monthly rental amount

the amount the lessee or tenant agrees to pay to rent something each week, or month (also called “rent”)

6. nonpayment

not paying money that is owed

7. nonrefundable

money that will not be refunded or given back

8. pet fee

a fee that a tenant or lessee pays to have a pet

9. premises

land and the buildings on it

10. rental agreement

another word for “lease agreement”

an agreement between the lessee and lessor concerning property

11. security deposit

another word for “deposit”

the amount of money given to the lessor to rent the property

12. vacate

to move out

Rent and other costs…

Now that you know what leases look like, it’s time to figure out the type of apartment you could afford before you sign one!!!

You first need to calculate the maximum amount you can afford in rent before you can search for the perfect apartment. By moving out on your own you’ve now added to your monthly costs that need to be budgeted for: food, utilities, entertainment, incidentals, savings, and clothing.

Food: Using the attached chart from the USDA find which plan you believe you would fall into using the 19 – 50 years group. Pick an overall monthly plan on how much you think you would spend in groceries each month.

“Thrifty Shopper”

buys very few name-brand products and always using coupons

“Low-Cost Shopper”

only buys exactly what you need, when you need it

“Moderate Shopper”

likes to buy the brands you like with a few extra here and there

“Liberal Shopper”

buys what you want, when you want without a second thought

Official USDA Food Plans: Cost of Food at Home at Four Levels,

U.S. Average, January 2018 https://www.cnpp.usda.gov/sites/default/files/CostofFoodJan2018.pdf

This only covers food expenses not the other expenses of your houshold. What could those be? ______________________________________________________________________________________________________________________

____________________________________________________________________________________

MONTHLY Totals:

Type/Company(Circle one)

Cost

Food:

ThriftyModerate

Low-costLiberal

Utilities (Heating/

Electricity):

1bd apt ≈ $80 2 bd apt ≈ $120

Cable/ Internet

Time Warner CableVerizon

Other:_________________________

***Research each company – pick which one you prefer.

Cell Phone

SprintVerizonT-Mobile

Net10Other: __________________________

***Research each company and plan – pick which one best suits your needs.

Total MONTHLY Living Expenses:

https://www.zillow.com/blog/rules-of-thumb-for-estimating-apartment-utility-costs-100024/

The BIG Reveal!

So how much money will you have to spend on an apartment each month? Take your Net Monthly Income and subtract your Total Monthly Expenses AND your Savings from each month.

May need to stop saving if your monthly income is to low

Net Monthly

Income (pg 19)

Savings each

Month (pg 20)

Total Monthly Living Expenses

Money for Rent/ Pocket Money

-

-

=

How much of this money do you think you’ll put towards rent versus pocket money? Explain your reasoning.

_____________________________________________________________________________________________________________________________________________________________________________________________So let’s start looking for some apartments!!!

Where do you want to live staying in Albany, Schenectady, or Saratoga Counties?

What kind of apartment would you like? Look at and Compare two different apartments.

http://www.apartments.com/

Apartment #1

Apartment #2

Name or location:

Rent Cost:

Any utilities included in the Rent Cost?

Amenities (number of bedrooms/ bathrooms/pool, etc.)?

Do they allow pets?

So which apartment will you pick? Why? _________________________________________

__________________________________________________________________________________________________________________________________________________________________________

_____________________________________________________________________________________

Renter’s Insurance will also cost you about $20 a month, so how much will you NOW have left over as pocket change once you’ve taken out Rent and Insurance?

Money for Rent/etc. from previous page

Total Cost

for Rent

Renter’s

Insurance

Pocket Change

-

- $12

=

Part 6 - Finding A Home

In this activity you’ll be browsing homes for sale, choosing one to purchase, and calculating the monthly mortgage payments for owning the house that you’ve chosen.

First we must figure out how much you can afford! Google “Zillow Mortgage Calculator” or go to http://www.zillow.com/mortgage-calculator/house-affordability/ . Once there you will have to input the following information, so you might as well gather it from your packet first.

Total Amount

Annual Income

(Your Gross Salary) pg 5

Monthly Debts

(Car & School Loans) pg 19

Down Payment

(At MOST 75% of your total savings) pg 20

At the top, Zillow has calculated what it thinks you can afford. Use this to determine your budget.

Total

House Cost:

Estimated Monthly Mortgage Payment:

If you remove your Monthly Debts How much home could you afford? $_______________

On to the house search!

We are going to restrict your search to NEW YORK STATE. Head over to www.coldwellbanker.com or www.zillow.com to begin your search. Enter the place you would like to live with a search radius of 25 miles.

Keep this number, total house cost, in mind and begin your search! Once you’ve decided on your “dream home” or even “starter home” record the necessary information on the next page.

Address: # and Street: _________________________

County: __________________ Town: __________________ Village/City: ______________

School District: __________________________

Not every property is in a Town or village/city and some are in both.

Property Cost:_____________

Details about the house:

Calculating Your Monthly Mortgage Payment

Use the “Zillow Amortization Calculator” to calculate you’re your monthly payment

https://www.zillow.com/mortgage-calculator/amortization-schedule-calculator/

Say you ended up with an interest rate of 3.875% and to keep your current costs down, you take out a 30-year mortgage.

This payment does not take into consideration property taxes or home owners insurance. We still need to add these to your Monthly Mortgage Payment.

Property Taxes

You will need to calculate property taxes for the home that you’ve just purchased as they will become a part of your monthly payments.

Property taxes vary by county, municipality, and school district. Make sure to go to www.schenectadymath.weebly.com to find the tax rate per $1000 on the home that you purchased. This dollar amount is located in the FULL VALUE TAX RATE column.

2015 Property Tax Rate TablesCounty________________

We all live in a county and have a school district we pay taxes to. Not everyone lives in a village/city or town and some people live in both.

Village/City*_________________

Town_________________

2017: School Tax Rates

School +________________

Total Full Value Rate= ________________

Your YEARLY Taxes:

(additional to mortgage)

Insurance

You need to have property insurance if you have a mortgage or loan on property you own. The table below shows Representative Annual Premiums from 5 different Insurance Agencies. Find the median value of these premiums – we’ll use this as the estimate for our property insurance cost.

Median Annual Insurance Premium:_________________

Add your taxes & median insurance Premium:_________________

Divide by 12 to find your monthly payment:_________________

Add this amount to your mortgage payment:

Total Monthly Mortgage Expenses:__________________

This new value is the TOTAL cost of keeping a roof over your head each month.

So what?

You have just spent a good amount of time looking at your future. No one really knows how your future will pan out, but it’s nice to see what you are in for in “the real world.” How has this project influenced you? Has it made you change your mind in any way? Has it made you more aware of the costs you will incur when you move out? Has it motivated you to think about saving for the future?

The last part of the project is to write a reflection on what you’ve learned throughout this project and how you will use what you’ve learned in the future. It must be at least one page, double spaced, 12pt New Times Roman Font, typed paper. You must use complete sentences and correct punctuation. It must be clear that you put some thought into writing your paper. And because it is short, it must be concise and be to the point.

You do not need to print your paper unless you choose to but, even if you print it please email a copy to __________________@schenectady.k12.ny.us If you use google docs and share the link please be sure click advanced and change access to Anyone with the link.

Use the bubbles below to jot a few ideas down and get your thoughts together on the one or two main things that this project did for you. What impacted you the most?

CCEL Guide

Financial Applications Project Grading Rubric

(100 possible points)

10 Points

5 Points

0 Points

Job/Career Paths & College

Portion is completed appropriately. Questions answered & math correct. Great work.

Portion is partially completed. Questions semi-answered & math mistakes. Good work.

Portion is not completed. Questions are not completed & math is completely wrong. Poor work.

Purchasing/Leasing a Car

Portion is completed appropriately. Questions answered & math correct. Great work.

Portion is partially completed. Questions semi-answered & math mistakes. Good work.

Portion is not completed. Questions are not completed & math is completely wrong. Poor work.

Purchasing/Renting a House

Portion is completed appropriately. Questions answered & math correct. Great work.

Portion is partially completed. Questions semi-answered & math mistakes. Good work.

Portion is not completed. Questions are not completed & math is completely wrong. Poor work.

Reflection *2

Reflection is well-written and demonstrates thoughtfulness. Writing is grade-level appropriate and reflects clarity of thought.

Reflection is adequate and demonstrates some thoughtfulness. Writing is not quite at grade-level.

Reflection is either not completed or very poorly done. Writing is well below grade level and demonstrates very little thoughtfulness.

Mathematics *2

Math is correct & logical overall.

Math is partially correct & semi-logical overall.

Math is completely wrong or missing.

Ability to Answer Questions

Answers are thoughtful & insightful. Students incorporated their own opinions.

Answers are semi-thoughtful & insightful. Students’ opinions are lacking.

Answers are missing. There are no opinions.

Overall Appearance of Project *2

Packet is completed fully with math work shown & questions answered in complete sentences.

Packet is semi-completed with minimal math work shown & a lack of complete sentences.

Packet is hard to follow and unorganized. Questions are left unanswered.

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