find out the status of their current net monthly cash flow. Read the detailed information about their finances and enter the prorated monthly amounts into the categories of income, payroll deductions, savings, and expenses. Make sure each amount is an accurate monthly reflection of their financial situation. Note: there may be more information than you will use, and the items may not necessarily match the order of the spreadsheet. Be sure to proofread afterwards.

1. Each month Garys payroll deductions include $367.45 for federal income tax, $162.50 for state income tax, and $378.68 for their FICA (Social Security and Medicare) tax. Currently $34.17 is being deducted and deposited into the Garys 401-k.

2. Probably one of the biggest concerns for the Davidsons right now is getting on top of the credit-card debt. Their current MasterCard balance of $4,730 is being assessed an 18% APR finance charge and they have a minimum payment of $95 monthly. They are hoping to pay off their debt within two years but this would require that they increase their monthly credit card payment to at least $236.14 to meet their goal.

3. The family bought a home 5 years ago for $250,000. Their loan is for 30 years at a fixed rate of 6% APR and their monthly payment is $1,349. To safeguard against theft, fire, and other calamities, they carry homeowners insurance with an annual premium of $984. They are insuring their home with a different company than their vehicle insurance company and hope to combine both types of policies with the same insurer to save 15% on premiums. The Davidsons pay $675 every six months for county property taxes on their home and lot.

4. They currently pay a monthly cable TV bill of $65.49, a landline phone bill of

$32.50, an Internet provider bill of $43.68, and a cell phone bill of $109.45. Their utility bills for electricity, natural gas, and water/sewer/garbage are $39.56,

$89.75, and $53.49 respectively.

5. The Davidsons are a two-vehicle family. They own an older mini-van that is paid for, but recently purchased a brand-new Ford F-150 4x4. They had to borrow just under $30,000 at a 7% APR, which resulted in a $586 monthly payment. They have estimated that they spend about $360 per year on vehicle maintenance and their vehicle insurance premium is $468 every six months. Lately, they have been averaging about $150 per month on gasoline for the van and truck combined.

6. Because the family rarely plans out their weekly meals or uses coupons $635 is a typical monthly average on groceries. They eat out quite often and spend about

$125 at restaurants. Both Gary and Michelle belong to a local health club and spend $48 per month on membership dues, their clothing expenditures average about $90 for the family, entertainment is $65, household supplies about $35, miscellaneous items $70, and their monthly dog food and vet bills for their golden retriever average about $42. They also pay approximately $60 to various charities each month.

7. Finally, the Davidsons are doing their best to protect the family with health and life insurance policies. Currently they pay $197.89 (their monthly share of the companys health insurance package) and $47.82 (their quarterly life insurance premium).

Analysis:

Help the Davidsons make a new budget action plan, print it out, and answer the following:

1. What was the original (status quo) net monthly cash flow for the Davidsons?

2. What percent of their monthly gross income is dedicated to the combination of their mortgage, homeowners insurance, and county property taxes?

3. What percent of their monthly gross income is dedicated to vehicle expenses?

4. List some of your creative but realistic recommended changes to their budget:

Discussion:

1. What do you think about the homeowners total percentage mentioned in #2 of the

Analysis? Do a little research, what do financial experts recommend as a maximum percentage?

2. How do you feel about the total vehicle expense percentage in #3 of the Analysis? How would you determine the line between affordable and not affordable in terms of a vehicle? Explain.

3. Reflect on the personal impressions you had as you put together the Davidsons original budget and how this activity might impact your future financial decisions.

100% al T RU + Student Template MA Suggested Budget H Davidson Family Monthly Budget Action Plan Monthly Monthly Monthly INCOME Miscellaneous Income Salary Income Total 0.00 PAYROLL DEDUCTIONS Federal Income Tax FICA Tax State Income Tax 401-k Retirement Plan Payroll Deductions Total 0.00 EXPENSES Insurance Auto Health Homeowner's Life Insurance Total Transportation Fuel Maintenance/Repairs Truck Payment Transportation Total 0.00 0.00 0.00 EXPENSES Home Cable TV Cellular telephone Electricity Home Mortgage County Property Taxes Internet Landline telephone Natural Gas Water/Sewer/Garbage Home Total Daily Living Charitable Contributions Clothing Credit Card Payment Dining Out Entertainment Groceries Health Club Dues Household Supplies Miscellaneous Pet Food / Vet bills Daily Living Total Total Expenses 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 0.00 FAMILY SAVINGS Emergency Christmas Medical/Dental/Vision Vacation Family Savings Total Net Monthly Cash Flow 0.00 0.00 Reminder: Cash Flow Income - Deductions. Savings - Expenses 0.00 100% al T RU + Student Template MA Suggested Budget H Davidson Family Monthly Budget Action Plan Monthly Monthly Monthly INCOME Miscellaneous Income Salary Income Total 0.00 PAYROLL DEDUCTIONS Federal Income Tax FICA Tax State Income Tax 401-k Retirement Plan Payroll Deductions Total 0.00 EXPENSES Insurance Auto Health Homeowner's Life Insurance Total Transportation Fuel Maintenance/Repairs Truck Payment Transportation Total 0.00 0.00 0.00 EXPENSES Home Cable TV Cellular telephone Electricity Home Mortgage County Property Taxes Internet Landline telephone Natural Gas Water/Sewer/Garbage Home Total Daily Living Charitable Contributions Clothing Credit Card Payment Dining Out Entertainment Groceries Health Club Dues Household Supplies Miscellaneous Pet Food / Vet bills Daily Living Total Total Expenses 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 0.00 FAMILY SAVINGS Emergency Christmas Medical/Dental/Vision Vacation Family Savings Total Net Monthly Cash Flow 0.00 0.00 Reminder: Cash Flow Income - Deductions. Savings - Expenses 0.00 11:21 LTE