Managing Your Money Personal Finance. Disposable Income.

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Presentation transcript:

Managing Your Money Personal Finance

Disposable Income

Budget

Expenses

Savings

Net Worth

John and Marsha’s Budget (Monthly Spending Plan)

John and Marsha’s Budget #2

John and Marsha’s Budget #3

Monthly Loan Payment Monthly loan payment (mortgage) Includes principal (amount borrowed) and interest (cost of borrowing) John and Marsha have saved $10,000 for a down payment The house costs $150,000 Find the monthly loan payment for a loan of $140,000 at 6% from the table The monthly loan payment is $840.00

Can John and Marsha afford the house? The monthly loan payment is $90 more than the rent they are paying Their homeowners insurance and property taxes are $210, an increase of $195 Their utilities will go up by $65 They will go back to saving $400 (saving $100) They will save $250 on their state and federal taxes

Percent of Income spent on mortgage, taxes and insurance Rule of thumb is mortgage, taxes and insurance should be 28% or less of monthly gross income Marsha and John’s monthly gross income is $5,400 25% of $5,400 is $1,512 John and Marsha have monthly loan payment of $840 + taxes and insurance of $210 = $1,050