1. Buying the Necessities Chapter 5

2. Shopping for Food Chapter 5, Section 1

3. Comparison Shopping For prices, sizes and even which store to shop in Time is a scarce resource; spend only as much time comparison shopping as is worthwhile. Club warehouse store: store that carries a limited number of brands and items in large quantities. It is less expensive than grocery stores. Examples: Costco, Sam’s Club Convenience store: store open 16 to 24 hours a day carrying a limited selection of higher priced items Examples: 7-Eleven, corner liquor store

4. Comparison Shopping Private-labeled products: lower-priced store brand products carried by some supermarket chains and club warehouse chains Examples: Meijer brand, Spartan brand, Kirkland brand (at Costco) Bulk foods: sold in large quantities (from club warehouse stores) or sold loosely from the grocery store where you bag the good yourself Cents-off coupons: will lower your grocery bill but take a lot of time to collect and organize Store discount cards: a loyalty card that allows holders to get lower prices on items in that store.

5. Clothing Choices Chapter 5, Section 2

6. Comparing Clothing Value Style: consumers can choose brand name or store- brand clothing that is less expensive Durability: the ability of an item to last This may not matter to you if you prefer trendy clothing. Service flow: the amount of time that you will be able to use a product Cost of Care: machine wash may be preferable to dry clean (expensive) or hand wash (time consuming)

7. Alternatives to Full Retail Price Consignment shop: a store where used items are bought and sold Shop regular sales and seasonal sales Avoid designer labels or look for them at clearance stores like TJ Maxx

8. To Rent or to Buy Chapter 5, Section 3

9. Reasons to Rent Buying requires a large down payment. Renting only requires a security deposit and one or two months rent. No maintenance costs No property taxes Its easy to move when your lease ends. With a home, you have sell in order to move.

10. Reasons to Buy Income tax benefits (mortgage interest and property taxes are tax deductible) It is an investment – as you pay off the mortgage you build equity in the home Equity: market value of the home minus mortgage owed Freedom to remodel or redecorate Pride of ownership

11. Renters’ Rights and Responsibilities Security deposit: funds that the owner holds in case rent is not paid or the property is damaged Lease: contract describing the terms under which property is rented May limit how the property is used (no pets) Renter has right to privacy – landlord cannot enter property except to do maintenance Renter has to give notice (formal warning) if they plan to move from the property.

12. Renters’ Rights and Responsibilities Renters’ responsibilities: Tell the landlord if the property requires maintenance Take reasonable care of the property Pay the rent on time

13. Landlords’ Responsibilities Make sure property has minimum services such as heat and water (even though renter may have to pay for it) Make sure property is fit to live in Obey building safety laws (such as fire escapes and smoke detectors) Make necessary repairs If the landlord does not do this, the renter can pay to have the repairs made and deduct the cost from the rent payment

14. Costs of Buying a House Down Payment – if you put down less than 20% of the purchase price you will also have to pay PMI insurance on top of your mortgage payment Mortgage Payment – this monthly loan payment should not be more than 1/3 of your total income Closing Costs – fees involved in arranging a mortgage or transferring ownership of property $1,000 - $2,000 Points – fees paid to a lender, computed as a percentage of the loan This is done to get a lower interest rate This is paid at closing

15. Costs of Buying a House Property taxes – paid to your city based on the value of your home Several thousand dollars each year Sometimes this is added to the mortgage payment Homeowner’s Insurance – insurance to cover damage to your home At lease $1,000 per year Sometimes this is added to the mortgage payment Maintenance – you are responsible for repairs to your home Utilities – Gas, electric, heating and water

16. Buying and Operating a Vehicle Chapter 5, Section 4

17. Costs of Having a Car Down payment – you can choose whether or not to make a down payment Monthly loan or lease payment – varies with the price of the car Sales Tax – in Michigan this is 6% on top of the price of the car. It is added to your lease or loan payment Car Insurance – this is required by law. Different types of coverage and different deductibles will change the cost Liability Insurance – Pays for bodily injury and property damage

18. Costs of Having a Car Registration fee – annual licensing fee paid to the state for the right to use a car. $100 or more Maintenance costs – you must pay to maintain the car as parts start to wear out This is not covered by insurance Extended warranty – you may purchase this to guard against having to pay for major repairs Fuel Costs

19. Getting a Car New or Used? Used is cheaper but you may have more repairs than you would if you get a new car. If buying used, get the accident and repair history on the car and have it inspected by a mechanic. Buy or Lease? A lease may be more expensive each month but worthwhile if you plan to buy a new car every few years. It’s expensive to get out of a lease early. Depreciation: a decline in value over time On average, a car depreciates 20% per year. More in early years, less in later years

20. Factors Affecting Car Insurance Rates Type of car you drive Location: where you live Purpose: work or leisure Marital status Accident history Grades Number of drivers in household Credit rating