1. Career Development 11 Module 3

3.  If you earn $1500 a month after taxes, then your net income in one year is…  12 x 1,500 = $18,000  Calculate 20% of your annual net income.  18,000 x 0.20 = $3,600  So you should never have more than $3600 outstanding debt.

4.  If you earn $560 a month after taxes, then your net income in one year is…  12 x $560 = $6,720  Calculate 20% of your annual net income.  6,720 x 0.20 = $1,344  So you should never have more than $1,344 outstanding debt.

6.  If you earn $560 a month after taxes (take- home pay), then your monthly payments shouldn’t exceed…  $560 x 0.10 = $56  Your total debt payments shouldn’t total more than $56 per month.

7.  If you earn $1500 a month after taxes (take- home pay), then your monthly payments shouldn’t exceed…  $1500 x 0.10 = $150  Your total debt payments shouldn’t total more than $150 per month.

11.  Handouts for the previous two slides will help you complete the activity.  Using an APR of 12% with a 5 year loan, estimate the total cost if you borrow:  $5000  $5000 x 0.12 x 5 years = $3000 interest  $8000  $8000 x 0.12 x 5 years = $4800 interest

12.  Handouts for the previous two slides will help you complete the activity.  Using an APR of 12% with a 5 year loan, the total cost if you borrow $5000:  $5000 x 0.12 x 5 years = $3000 interest  $5000 (money borrowed)+ $3000 (interest) = $8000  Monthly payments would be:  5years = 60 months  $8000 / 60 = $133.34 per month