Managing a Budget

Your good friend Amari needs some financial advice. He is thinking about buying a car and a house. Help Amari calculate his expenses and give him some friendly advice on his planned purchases. Here is Amaris story. Amari just graduated from CPCC in nursing and received his LPN license. He is starting his new job and will be making 70,000 a year. He will have to pay 19% of his income to pay for taxes and social security (SS) and 5% of his income to a forced employer retirement plan. How much of his income will he have left to spend? Fill in the table below:

Description	Amount
Income	70,000
Amount Paid to Taxes and SS	13,300
Amount Paid to Retirement Account	3,500
Amount Left to Spend	53,200

Help Amari evaluate his budget. His current rent payment is $1,200 a month and his utilities total $150 each month. Amari spends $100 on a bundle for his house phone, cell phone, internet, and cable bill every month. He has always believed that it is important to live a healthy lifestyle, so he spends $450 a month on groceries and $89.00 a month for a gym membership. His health insurance for the month totals $100.00. Amari does not have much time to go out but he makes sure that he treats himself to dinner and a movie at least twice a month that costs $50.00 each time. He always puts away $250 each month into his personal savings account for retirement so he will not use this money for paying bills. Amari also puts away $20.00 each week for a vacation fund (assume that there are 4 weeks in a month). Amari loves his lattes and spends $4.50 on coffee 2 times a week. Amari wants to purchase a car but is not sure if it will fit his budget. Compute Amaris income and expenses and determine if he can afford buying a new car.

Monthly Expenses: Enter the monthly expenses for each item, then add them together to find the Total Monthly Expenses.

Monthly Expenses	Description	Amount
Home	Mortgage/Rent/HOA	$1200
	Utilities (Gas, Electric, Water)	$150
	Phone/Internet Bundle	$100
Food	Groceries	$450
Health	Health Club	$89.00
	Health Insurance	$100
Entertainment	Dining Out/Movies	$50.00*20 =100
	Vacation	$20*4=80
Savings	(Put into an account each month)	$250
Other		$4.50(2)*4=36.00
Total Monthly Expenses	Add up all the rows	$2,555

Fill in the summary table below to see if they are on budget. Subtract the expenses from the income to find the monthly net total.

Monthly Budget Summary	Amount
Monthly Income Total	$4,433.33
Monthly Expenses Total	$2,555
Monthly Net Total	$1,878.33

Suppose Amari has some unexpected health care expenses that makes his monthly net total decrease by $2000. How does this expense affect his monthly net total compared to before (what you calculated in #21). Use the new monthly net income to explain your reasoning. All verbal responses must be in complete sentences. Your response should be at least 6 sentences.

Amari would like to buy his dream house for $375,000. He finances the whole purchase price of $375,000. Calculate his monthly payment if he secures a home mortgage loan at 3% APR for 30 years.

Financial advisors use a general rule that your monthly payment for your home mortgage should not be more than 1/3^rd your monthly income. Find 1/3 of Amaris monthly income. Discuss whether Amari will be able to afford his dream house in number 22. Give details to justify your reasoning and discuss Amaris options. All verbal responses must be in complete sentences. Your response should be at least 6 sentences.

What have you learned from this project? All verbal responses must be in complete sentences. Your response should be at least 6 sentences.