FHCE 3200 Lecture Notes - Lecture 5: Compact Car, Geico, Vehicle Insurance

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skychimpanzee456

27 Apr 2018

School

University of Georgia

Department

Financial Planning, Housing and Consumer Economics

Course

FHCE 3200

Professor

Williams

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10/15/2017 Reading Questions 5 Hiren Patel

1. Complete the following automobile purchasing steps for yourself. Depending on what is most relevant

for you, either use your current financial information or your anticipated information after you

graduate.

a. Figure out what are your transportation needs.

I estiate that I o’t hae to trael log distaes to go to ork, so a ie opat ar ill

ork fie for e, it does’t hae to e a hrid, ut I ould like soethig luurious.

b. Determine how much you can you afford.

I also expect a monthly wage, so I can afford to put $400 to $500 to finance a new car, therefore

I o’t have to pay for it all at once.

c. Shop for a loan if you plan to borrow money.

I do’t pla to get a loa.

d. Research specific models of vehicles and identify those that best meet your needs and budget.

I picked the new 2017 BMW 3 Series 320i because it is cheaper compared to a new model and

budget wise, it is a little less than $400 per month.

e. Obtain an estimate for auto insurance based on the specific car you are investigating.

The lowest estimate I received was from Geico, which was $102 per month.

f. Locate the specific vehicle you will purchase and negotiate a purchase price.

The price for a new 2017 BMW 3 Series 320i is $39000. However, I believe I can negotiate for a

better price and by trading in my current car.

2. Complete a personal balance sheet for yourself if you are single or for your family if you have a

partner or others in the household. Be sure to carefully document all the assets you own and obtain fair

market value estimates for your assets. Similarly, gather information on all unpaid liabilities and other

debts. Once these data have been input into the balance sheet, calculate your net worth and the current

and debt ratios for your situation. Be sure to comment on the status of your asset and liability situation

and what the financial ratios indicate about your financial situation.

Assets

Checking Account: $485

Car: $8000

Shoes: $400

Clothes: $300

Electronics: $1300

Watch: $75 Total Assets: $10560

liabilities

Chase Bill: $75.24

Discover Bill: $6.28

St. Mary Medical Bill: $72.61 Total Liabilities: $154.13

Net Worth: $10405.87

Current Ratio: 68.51

Debt Ratio: 0.02%

I do’t hae a det fro loas eause  parets are paig for ollege. As for my Assets, that is

almost everything that has value. I have a high current ratio which means I can meet most short-term

obligations. As for the debt ratio it means for every dollar I have, I have 2 cents worth of liabilities.

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Document Summary

Hiren patel: complete the following automobile purchasing steps for yourself. Depending on what is most relevant for you, either use your current financial information or your anticipated information after you graduate: figure out what are your transportation needs. I also expect a monthly wage, so i can afford to put to to finance a new car, therefore. I (cid:449)o(cid:374)"t have to pay for it all at once: shop for a loan if you plan to borrow money. I do(cid:374)"t pla(cid:374) to get a loa(cid:374): research specific models of vehicles and identify those that best meet your needs and budget. The lowest estimate i received was from geico, which was per month: locate the specific vehicle you will purchase and negotiate a purchase price. The price for a new 2017 bmw 3 series 320i is . Be sure to carefully document all the assets you own and obtain fair market value estimates for your assets.

Related Questions

Find an article dealing with budgeting and prepare a 1 page summary of how you can apply the information to your personal finances.

ARTICLE:

Budgeting is the foundation of personal finance. Whether or not you write a personal budget, use a budget spreadsheet, use a budgeting app, or simply keep track in your head â youâre probably already budgeting.

And budgeting is never more important than in your early adult life as you figure out how to stretch a paycheck, pay off debt, and â hopefully â save a little bit, too.

This page will give you the basic tools youâll need to start budgeting.

What is a Budget, Exactly?

A monthly budget is a plan for how you will allocate income to meet your expenses for a designated month. Some think of budgets as spending constraints, but budgets are better described as âspending plansâ. If you budget correctly you will be able to spend money on things you enjoy without worrying about meeting other financial obligations, overdrawing your accounts, or going into credit card debt.

A monthly budget typically consists of a list describing your income sources and expenses. Each description is followed by the amount you project for the amount of the income or expense for the designated month. A monthly budget can be an Excel spreadsheet, managed within a software program like Quicken, or simply jotted on a piece of notebook paper.

Writing Your Budget

A monthly budget is an estimate, but your goal should be to make as educated an estimate as possible. To do this, you will want to collect a monthâs worth of pay stubs, bills, and bank statements, if possible.

INCOME

Assuming you are budgeting for an upcoming calendar month, start by looking at your previous monthâs take-home pay.

If you are paid monthly or semi-monthly, this will be easy.

If you are paid every other week, multiply your paycheck by 2.166 to determine your monthly pay.

Paid weekly? Multiply your check amounts by 4.333.

Budgeting is a bit trickier if your main source of monthly income varies (if you work variable hours or earn tips), you can average several months of income or estimate based upon experience. But be conservative. In a monthâs time you want to have spent less than you planned for in your budgetâa difficult goal when you donât bank as much cash as you thought.

You also want to take other income sources into account.

Do you work more than one job?

Will you get a bonus next month?

Do you pick up odd gigs or sell old stuff from time to time?

Do you have any investments paying dividends?

Create entries in your monthly budget for these additional income sources and create a line for your total monthly income. This is the amount you have to spend for the month and the basis for your âspending planâ. You cannot spend more than this in any one month. If you anticipate unusually large expenses next month for which you have money saved (a vacation, for example), consider including the savings you will use to pay for the expense as income. This will allow you to see a more typical monthly spending plan despite the inclusion of a non-monthly expense.

EXPENSES

For your monthly budget to work, your expense projections need to be as accurate as possible. Some expenses, like your rent, car payment, and insurance bill, are simple. From there, it gets trickier.

Chances are your utility bills fluctuate from month to month and how much you spend on groceries, dining out, and clothing may vary drastically. Hereâs where having a few bills and bank statements will be useful so you can average several monthâs worth of data.

Place each expense on a line and write down the amount next to it. You may find it useful to create categories of expenses like:

âTransportationâ

âHouseholdâ

âFoodâ

âEntertainmentâ

âDebtâ

Consider expenses that may not be monthly, such as clothing or car maintenance. You should still budget for these items. If you allocate money every month for these things, that money will be available when you do need it.

Tracking and estimating your monthly expenses will be harder, but not impossible, if you frequently pay in cash. While cash is a good way to moderate your spending, you need to be diligent about collecting receipts if you want to know where your money went. A new benefit of credit and debit cards now that you can use them virtually everywhere, even for micro payments of just a few dollars, is at the end of the month you get a statement with all of your monthly expenses on one page. If youâre struggling with credit card debt, definitely stick with debit cards or cash. But if you can learn to use a credit card responsibly and pay it off in full each month, I actually think a good credit card can make budgeting easier.

Your Bottom Line

When you have a complete list of your monthly expenses, add them up and subtract the sum from your monthly income. You should have a positive number. No? Uh-oh. If you have been spending according to this budget, you are going into debt. You will need to find out why your expenses exceed your income and find ways to cut your expenses â fast! Look at your list of expenses and separate discretionary spending. This includes entertainment, travel, gifts, and all dining (including lunches!) Most people can cut their monthly expenses significantly by learning to give up small daily expenditures like coffee or snacks.

If your budgeted expenses fall below your income, congratulations! You are successfully living below your means. The question, now, is how to use your extra money. Follow our six steps to financial stability to help you prioritize your money goals.

Finally, Keep It Simple

If you ever want to build wealth and stay out of debt, you have to spend less than you earn. And a budget can ensure that you do that. Still, rigidly tracking every dime you spend is like counting calories â it sounds good in theory, but most of us fail to keep up with it.

But you can stick with a budget if:

You keep your budget as simple as possible.

You harness the power of automating your money.

After you get a handle on your budget, youâll be able to focus on other priorities like getting out of debt, building emergency savings, and begin to save for retirement. They arenât the most exciting financial goals of your lifetime, but once they are out of the way they provide solid footing for financial security for the rest of your life.

Read more at: https://www.moneyunder30.com/budgeting-in-your-twenties