- Budgeting
- Cash Management
- Consumer and Mortgage Loans
- Debt and Debt Reduction
- Time Value of Money 1: Present and Future Value
- Time Value of Money 2: Inflation, Real Returns, Annuities, and Amortized Loans
- Insurance 1: Basics
- Insurance 2: Life Insurance
- Insurance 3: Health, Long-term Care, and Disability Insurance
- Insurance 4: Auto, Homeowners, and Liability Insurance
- The Home Decision
- The Auto Decision
- Family 1: Money and Marriage
- Family 2: Teaching Children Financial Responsibility
- Family 3: Financing Children’s Education and Missions
- Investments A: Key Lessons of Investing
- Investments B: Key Lessons of Investing
Case Study #2 Answers
Their income statement should look like this:
| Annual Income | ||
| Wages | $50,000 | |
| Taxes (15%) | 7,500 | |
| Income for Living Expenses | $42,500 | |
| Paying the Lord (12%) | 6,000 | |
| Paying yourself (10%) | 5,000 | |
| Total Income | $31,500 | |
|
Expenses |
||
| Mortgage | 7,730 | |
| Utilities, Taxes | 2,270 | |
| Food | 6,000 | |
| Insurance | 1,500 | |
| College Loan | 1,160 | |
| Car Payment | 7,410 | |
| Other Expenses | 5,430 | |
| Total Living Expenses | $31,500 |
They seem to be doing OK, they are saving money and it appears that they are living within their income. We need more information though.
This is the way Steve and Mary Jo calculated their annual expenses. For information on using a financial calculator, see Learning Tool 3: Financial Calculator Tutorial and Key Time Value of Money Formulas and Learning Tool 12: Excel Financial Calculator.
Mortgage PV=$100,000, I = 6%, N=25*12, Pmt=? *12 = $7,730
College Loan PV=$10,000, I=3%, N=10*12, Pmt=? * 12 = $1,160
Car PV=$20,000, I=7%, N=3*12, Pmt = ? * 12 = $7,410
