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A.P. Economics Personal Finance Project

You are required to put together a single household unit. You will choose an occupation along with a median pay scale. You and possibly a pet are the only ones in your household. Based on this information you will be responsible for setting up the household and for putting together the budget. You cannot go bankrupt.

This project is worth a 100 point test grade. It will be graded on the how well you meet the requirements in this document. Be sure to look closely at the grade sheet. You will not be able to complete this is class. You will need to put this together outside of class. The due date for the project is October 8th. Late projects will be accepted deducting 10 points per day.

I am looking for a realistic approach to a somewhat unrealistic problem you are presented with. I want you to take the information (numbers) you find and to apply them to a budget. If you make lots of money you are required to spend lots of money. Make sure you do.

All work must be presented to me in a three ring binder. Dividers are fine but NO plastic sleeves. No content from the notebook will be returned, but you are welcome to have your binder back.

Requirements
Family:
You must include a description of your household and a picture of those involved. It serves as a summary of your project. Be sure to include such things as occupation, salary, tax situation, housing information, car information. Also include how much you save each month and your projected age of retirement. With this include how much you expect to have when you are to retire. You must include the information from the web site showing how you got this number. This has to be realistic based on your situation. If you are not saving enough now, how will you change this in the future?

Occupation:
You must provide me a job description from an actual job in your field. Be sure to include the amount of education, special training and pay scales. Be sure to use the median pay for your income. This must be printed or photocopied showing the source of the information.

Tax Returns:
Each student must complete a tax return form. Make sure you include your W2 form.
On your W2 form, you must have both net and gross yearly and monthly figures for federal taxes, state taxes, FICA, and property taxes. We will go over how to calculate each of these in class.

Home:
Each student will be required to purchase a house. In so doing, you must choose a house in the price range you can afford. (2-3 times your gross combined salary) You are not allowed to choose a house that is below your price range. The reason for this is that most people actually purchase above their price range. The monthly mortgage cost should be around 25% of your net monthly income. Once a house is chosen you must submit it to me for loan approval. Be sure to include this in the notebook. The interest rate you get is one you find from a specific lender. Just show me current published information on rates. You will use these to calculate your payments. Of course, you will have to pay all of the closing costs. Once you have this, you will need to include an amortization table for at least the first 2 years. Pictures of your house must be included. When you turn in the final project you must have a write up of what you looked at when choosing your house. (Size, cost, location, school district….)

Car:
Each student must own a car of some sort. You must do research on what type of car you are going to buy. This should be one you can physically go and see. Try not to pick one off the Internet! You must provide a write up on why you chose the car you did. Like the house, your payments will be based on the best current rate that you can find. The monthly car payment should be around 15% of your net monthly income. Once again, you must submit car to me with interest rate from a specific lender so I can approve it. Be sure to include this with the notebook. Make sure you include an amortization table. You must also provide proof of insurance quote. In your write up, tell me what your deductable is as well as your premium. Each individual is responsible for their own car.

Insurance:
You must have your house, car, life and health insured. Life and health may be included in your job. If so, provide proof. You will need to research this information. Use the homeowners insurance information provided below. For the rest of the information you will need to call or go see and insurance agent. Tell them you are working on a project and need quotes. Be sure to have all the information on hand to tell them. Don’t forget to tell me what your deductible is for each.

The following items are not included in the budget. They should be in your project under separate tabs. Each person must do these.

* Comparison Grocery Shopping:
Complete the comparison grocery-shopping sheet that is attached.

* Banking
Select a local bank. Visit the branch and collect a schedule of fees for the services and types of accounts that they offer. Prepare a report explaining the type of accounts and services that they offer.

* Appliance Purchase
Prepare a report on a major home purchase (refrigerator, TV, stereo, home theater). Select an item you want to purchase. Compare two different brands of this one item. Once you have chosen the brands you would buy, choose two stores that carry the items. Research the following for these two stores: List prices, costs to finance the purchase of that item from that store, warranty and extended warranty agreements. Include all research. At least 1 store must be brick and mortar store, not from the internet. Include a picture of the items.

* Vacation
Plan a three to seven day family vacation. Be sure to plan the costs for lodging, food, and travel. Include the cost of activities along with money for any souvenirs. You may want to use the internet or a travel agent to get information. You need to include brochures and pictures. Describe your vacation and show your budget. This is not part of your actual notebook budget. This is so that you will know how expensive vacations are in the real world. You may find other households to go with you to share expenses.

* Credit
Gather at least two blank credit applications from department stores (such as Wal-Mart and Best Buy) and one revolving credit card from a bank. Prepare a report comparing the cards by interest rate, grace period and number of merchants who accept the card.

* Clark Howard Report
Listen to at least one half hour of a Clark Howard program on AM 750 WSB. Clark Howard airs daily from 1:00 until 4:00pm, and on HLN TV, 6am, noon and 4pm Saturdays and Sundays. Write a summary of the personal financial information learned from the broadcast.

* Not included in the budget.

Budget:
Each household must prepare a budget (based on one month) in spreadsheet form. Look for examples and possible free templates on the internet. Be sure to show all of your calculations so I can see what you have left over after expenses. The following items must be included in your budget. If you do not include some of the optional stuff, be sure you have an explanation why. (things like cell phone, vacation….) The following are the categories you must have. * Gross and net pay * Taxes (These must be taken out of gross pay first thing.)
Federal, state (both based on income tax tables), local and FICA (7% of gross)
Your W2 form is used for your tax form. * Housing: mortgage, utilities (gas, water, electricity, garbage collection, sewage, phone, cable), maintenance of property, homeowners insurance * Transportation: car payment, gas and oil, maintenance, car insurance * Food: groceries, lunches at work, eating out (show these separately in budget) * Clothing: New purchases, dry cleaning, (Show these separately in budget) * Medical: Insurance (medical, life and dental) * Education: child care * Personal: entertainment, vacation, recreation (they must all be addressed) * Savings: retirement * Miscellaneous: Break this down!

At the end of your budget you must include a write up about each major section of your budget. Tell me why you used the numbers you used. Also tell me what you expected about that item before you started the project. I want this to be reflective (think about your thoughts).

Once you have completed the project, you are expected to take the project grade sheet that I gave you and grade your project. This needs to be the last page in your project.

Finally, I will be looking at the overall appearance of the project. I want to see that you have put lots of time and effort into the project. For example tabs, color, extra thought on some things….

Useful Websites:
Eloan.com, Fed-Tax.com,
Allstate.com, progressive.com, bloomberg.com/invest/calculators/retire.html , hughchou.org, bankrate.com, taxact.com amortization-calc.com/ bankrate.com/calculators/mortgages/amortization-calculator.aspx

Order of Events

Week 1
Choose occupation Research Occupation Search for a house Complete one of the * items
Week 2 Submit house for approval with interest rate Search for a car Complete W2 and tax return forms using net and gross salaries Complete second and third of the * items.
Week 3 Submit car for approval
Complete write up on house Calculate property taxes Use budget to check affordability of house and car Begin calculating utilities cost for budget
Complete a 4th * item
Week 4 Research insurance for house, car, life and health Complete write up on car Complete remaining budget items Complete a 5th * item
Week 5 Complete write up on family Complete write up on your budget Complete grade sheet checklist Organize project and turn it in

Use the following cost guidelines

Utilities
Gas and electricity combined: $110 (+ $10 for every $20,000 that your house is over $100,000)
Water: $25 (+$5 for every $25,000 that your house is over $100,000) You must double your water bill if you are on sewage rather than septic tank. If you are on septic then you need to add extra money to home maintenance for future septic tank problems. Be sure to tell me about this in your budget write up.

Garbage collection: research!

Phone: must research local, long distance and cell costs.

Cell Phones: If you have one now you will have one when you are on your own.

Cable: research

Homeowners insurance:
House Cost Insurance Amount
Under $100,000 $360 per year
$100,000 - $200,000 $480 per year
$200,000 - $300,000 $540 per year
$300,000 and above $540 plus $5 per $100,000 above $300,000

Food:
Household: $170 per person per month incomes less than $100,000. $200 for incomes over $100,000.
Lunches: Minimum of $30/week
Eating out: Minimum of $25 per month

Clothes:
Purchases: $35 per month
Dry Cleaning: $25 per month for people with professional jobs.

Transportation Costs:
Gas and Oil: $100 per month per car + $15 for houses over $150,000

Personal Costs:
You can determine this but it must be realistic.

Saving:
None are required but this is something you should shoot for.

Some of these numbers may appear too large. However, they are like this to offset the many, many things in our lives that we spend money on that we do not think about. Food includes all the other various things that we purchase such as cleaning supplies and personal hygiene stuff. Name ____________________________ Period ___________ A.P. Economics Personal Finance Project Grade Sheet The project should be presented in the numerical order below. | Pts | | Pts | 1. Family | X | 4. House | X | Description of Family | 1 | Explanation of why choose house (location, schools, price…) | 1 | Picture of Family | 1 | Was House Approved | 1 | Retirement (projected age and money expected at retirement with proof (realistic) | 3 | Amt. Schedule (correct amount?) | 3 | | | 5. Car | X | 2. Occupation | X | Explanation of why choose car | 1 | Salary | 1 | Was Car Approved | 1 | Description | 1 | Description | 1 | Education and special training | 1 | Amortization Schedule (correct amount?) | 3 | | | Proof of Insurance (deductable and premium) | 1 | 3. Tax Return Completed (address, taxes listed on back?) | 3 | | | The following items should have their own sections. | 6. Comparison Shopping | 4 | 9. Planning a Vacation (made up) | 4 | 7. Bank schedule of fees | 4 | 10. Credit Card Applications | 4 | 8. Appliance Purchase (brochure and pictures) | 4 | 11. Clark Howard Write up | 4 | 12. Budget Gross and net pay (both yearly and monthly) | 1 | Car Payment | 1 | Taxes | X | Gas and Oil | 1 | Monthly Federal | 2 | Car Maintenance | 1 | Monthly State | 2 | Car Insurance | 1 | Monthly FICA | 2 | Health Insurance | 1 | Monthly Local (also called property) | 2 | Life Insurance | 1 | Mortgage payment | 1 | Groceries | 1 | Maintenance of Property | 1 | Lunches | 1 | Homeowners Insurance | 1 | Eating Out | 1 | Utilities (Realistic?) | X | Clothes | 1 | Gas/Electricity | 2 | Dry Cleaning (for professional jobs only) | 1 | Water | 1 | | | Sewage | 1 | | | Phone | 1 | | | Cable | 1 | Vacation (based on finances) | 1 | Garbage | 1 | Entertainment | 1 | Cell Phone? | 1 | Savings/Retirement | 1 | Realistic Approach | 4 | Overall appearance of time and effort, Organization, Tabs and in order required, Write ups with thought, Color, three ring binder | 7 | 13. Explanation of things that surprised you in budget done completely independent of each other. | 6 | 14. Completed Grade Sheet | 2 |…...

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