Every step must be shown and CLEARLY LABELED.  That is, if you are computing the monthly mortgage amount, you must label that section:  Monthly mortgage.  And each step of the process must be clear.  If it is not labeled, then you may not get credit.  And you must write a SHORT analysis of their finances in order to justify whether the family should take the trip or not.

1.  In two years, the Family Alvarez wants to visit Yunnan China,  the birth region of their adopted daughter, Li Xiu.  Round trip plane fare for a family of 4 is $2800.  Housing for two weeks will be 9300 Yuan.  Food will be 5300 Yuan.  Transportation once they arrive in Yunnan will cost 4000 Yuan.  They are budgeting 1600 dollars in unanticipated expenses.

2.  The Alvarez family has $1600 in Savings.

3.  They have two cars.  Mom’s minivan they bought 2 years ago for $22, 425 and paid $3000 down and then financed for five years at 5.75% interest.  Dad’s C class Mercedes Benz was purchased for $56,000 dollars with $8,000 down 3 years ago and was financed at 4.65% interest over five years.

4. Their average monthly bills are:  phone bill $147, cable $79, Gas/electric $119, Garbage and water $120.

5.  When they moved into their house, 2 years ago, they put $18,437 on their credit card to pay for appliances (stove, refrigerator, and HVAC upgrade) at 1.5% monthly interest.  They have been paying that off steadily at $500/mo using the average daily balance method.  After loading up their credit card when they moved into their house, they did not use it again.

The family spends an average of $1350 month on food.

7.  They spend $1200/mo on incidental costs.

8.  They spend an average of $236/mo on gas.

9.  Two years ago, The Alvarez’s spent $248,000 on a house with a 30 year mortgage. They put 20% down on the house.  They paid 1.5 points (each point means 1 % of the loan) on the loan for the finance charges.  The other loan costs totaled to $2,800 dollars.  All of the subsidiary costs are rolled into the final loan amount (that is, the amount after the 20% has been deducted). Their mortgage rate was 3.75%.  They pay $1900/year in property taxes and $1,800 per year in homeowners insurance.

10. Katherine Alvarez makes $91,257 gross income per year and Pedro makes $61,733 gross income per year.  Before taxes from their paychecks is deducted 10% for SSI, 10% for medical insurance and 5% for their retirement fund.   They take the standard deduction then they pay 24% federal income tax and 8.5% state taxes on the remainder.

Does the Alvarez family have enough money to take this trip to China.