Personal Finance Project

You will be doing some research on things that will have an impact on your future: a career, car,
retirement, house, and credit cards. There are six parts to this project (Future Career, Taxes, Buying a House,
Planning for Retirement, Purchasing a Car, Credit Card Debt). Each part of your project must include all
questions thoroughly answered, all work shown including formulas for your calculations, labels, and reflections
or summaries when needed. Cite your sources for all information found on the internet (i.e. interest rates for
loans, dealerships for cars, house listings, etc.) and be sure to include a work cited page.

Part One: Future Career

1. What career do you see yourself having in the future? An interest assessment is a great first step,
whether you’ve always had a dream career or you have no idea where to start. You can use it to reflect
on what you enjoy, what you’re looking for, and what options you have.
a. First, complete the CareerOneStop Interest Assessment by rating how much you enjoy different
activities. Take a screenshot of your results page and upload it below. Here is an example of
what your results may look like.

b. Click “details” to see more information about the graph labeled “Your Interests”. Based on the
graph, which interest area did you score the highest in (Realistic, Investigative, Artistic, Social,
 Enterprising, or Conventional)? Read the description of that interest area. Do you think it
matches you? Why or why not?

I feel like it matches because I don’t really like doing research and doing labs and stuff, and
investigative was the one I had 0 matches with. However, my highest number of matches was 7 with
artistic, and I think I’m very artistic and creative.

2. Now that you have done some reflection and exploration, it’s time to dive deeper into researching your
top career choices. Choose TWO careers that most interest you - it doesn’t have to be from your interest
assessment results. Use My Next Move to research the two careers you’re interested in. Complete the
chart below.
Career Name Sound Engineering Technicians Musicians and Singers
Starting Salary $13.30 $11.17
Average Salary $25.73 $31.40
Knowledge, skills, or abilities Engineering and Technology, Communications, Hearing and
needed for this career that Communications, Arts and Speech, Ideas and Logic, Basic,
applies to me Humanities, Problem Solving, and Social Skills
Hearing and Speech, Ideas and
Logic, and Attention
How this career relates to my I like to be creative and show I love to sing, and I have
personality my personality and I really like performed in many concerts and
to listen to music and see all the am familiar with the stage. I
different components of it to also have a wide voice range,
make it a full masterpiece. and can sing a wide variety of
songs.

3. Which of the two careers would be your first choice? Explain why.
Probably sound engineering technicians, because it’s something I could do alongside singing. I really
want to create and/or modify sounds in order to make them sound better to fit the feeling. I also want
to create my own vocals for my own songs, or even other people’s songs.

4. What do you need to do to obtain your chosen career? Some things to think about and use as your
response:
a. Do you need to attend a four-year college? Community college? Go into the military? Maybe
attend a trade school?
b. Do you need a bachelor’s degree? Something more? Something else?
c. Can you get this dream job by entering the workforce right away?
d. How long until you can get this dream job?
a. I need medium job preparation, 3 to 4 years of experience
b. I most likely need a bachelor’s degree, or I could do more if I wanted
c. No
d. Probably at least 4 years
 5. Do you need to or plan to relocate to a different area to obtain this future career or will you stay local?
Explain. If you do plan to relocate, where do you plan to relocate to?
I plan to stay local because you can make music really wherever.

Part Two: Taxes

1. What is the average salary from your chosen career in part one?
$53,520

2. Use this salary as your gross income for the year. You are going to use this information to calculate your
income taxes for the year. Assume you are going to file as single with no dependents. You are entitled
to a $3,800 personal exemption and the standard deduction of $5,950. Assume you contributed $2,400
to a tax-deferred savings plan and are entitled to a $1000 tax credit.
a. Calculate your adjusted gross income. Show your work.
53,520 - 2400 = $51120

b. Calculate your taxable income. Show your work.

51120 - 3800 - 5950 = $41370

c. Calculate your income taxes (use tax table on p. 501). Show your work.

10% 15%

17400(.10) = 1740 41370 - 17400 = 23970

23970(.15) = 3595.5

$0 $17400 $41370

3595.5 + 1740 = 5335.5

5335.5 - 1000 = $4335.5

Part Three: Buying a House

1. Financial advisors recommend spending no more than 28% of your gross monthly income on your
mortgage. Use your average salary from part one to calculate the maximum amount you can afford for a
monthly mortgage payment.
53520/12 = 4460 per month
4460(.28) = 1248.8 per month

2. Where do you plan on buying a house? Please be specific with a city and state.
Meridian, Idaho

3. Use a website such as Zillow (or similar) to find a house in your price range. Remember, you can
always spend LESS than your budget, but try not to spend more than you can afford.
 a. Describe the house you plan to buy. Be sure to include details and/or pictures. Some things to
think about and use as your response: How many bedrooms and bathrooms? How many square
feet is the house? Does it have a big yard? Does it have a nice backyard? How big of a lot? Is
it an open concept floor plan? One-story or two-story?
Bedrooms: 2
Bathrooms: 3
Sq Ft: 1200
Yard? Yes
Backyard: Big for its size
Lot size: a little on the smaller side
Open Concept? Yes
How many stories? 1

b. Why did you pick this house? Explain.

I picked this house because it’s a good house for its price. Although a little smaller, it’s still
doable.

4. Let’s say you are going to purchase the house for the listed price. Assume the bank you are going
through requires you to put 20% down when purchasing the house.
a. Assume you have decent credit (700-750). Research current interest rates for home loans. What
interest rate can you get? Include a screenshot of your results and cite your source.

https://www.myfico.com/loan-center/home-mortgage-rate-comparison/default.aspx

b. How much is needed for a down payment? Show all work.

150,000(.2) = $30,000

c. How much is needed to loan from the bank after the down payment? Show all work.
150,000 - 30,000 = $120,000
 d. Calculate the monthly payment AND total interest for a 15 year fixed-rate loan. Show all work.
𝑟
𝑃( 𝑛 )
PMT = 𝑟 −𝑛𝑡
[1−(1+ 𝑛 ) ]
.03822
120,000( 12 )
.03822 −180 = $876.96 (monthly payment)
[1−(1+ 12 ) ]

876.96 (180) = 157,852.8

157852.80 - 120000 = $37,852.80 (total interest)

e. Calculate the monthly payment AND total interest for a 30 year fixed-rate loan. Show all work.
.03822
120,000( )
.03822
12
−360 =$560.65 (monthly payment)
[1−(1+ 12
) ]

560.65(360) = 201,834
201834 - 120000 = $81,834 (total interest)

f. Which loan would you choose based on your budget? Why?

I would choose the 15 year fixed rate loan because it has fewer interest and a fewer amount
you have to pay in total. The interest isn’t even half of the 30 year fixed rate. Although the
monthly payment is a lot more, you pay less of it.

Part Four: Saving for Retirement

What you can afford to do in retirement depends on your average income while you work, when you
start saving, how much you save, and where you invest it.

Part A: Use the Social Security Administration’s Quick Calculator to determine how much income you can
expect, per month, from Social Security using the directions below.
● For birthday, use your own birth date (Month/Day). However, for the year, put the year that makes you
at least 22 years old (otherwise the calculator won’t work).
● Use your Average Salary from part one as your “Annual Salary”
● For a future retirement date, decide how old you want to be when you retire. Then, use the month of
your birthday and calculate the year of your retirement based on the age you’ll retire
o Ex: if your birthday is 1/15/1993 and you’re retiring at 63 years old, your retirement is 1/2056
● Choose to see your benefit in today’s dollars.

1. What is your estimated Social Security income per month? Be sure to include screenshots of results.
 My estimated Social Security income is $2,506 per month.

Part B: Use Vanguard’s Retirement Income Calculator to determine how much income you can expect, per
month, from investments you made in saving for your own retirement using the directions below.
● For your age, use the age you plan to start saving for retirement.
● Use the same age you will retire from part A.
● Use your average salary from part one.
● Insert how much of your own money you plan to save per year for retirement.
● Use $0 for how much you have already saved.
● Insert what percent of your current income you expect to need when you retire.
● For expected average rate of return, use 7%.
● Click “additional income sources” and insert monthly Social Security Benefit calculated from part A.
● Click “Calculate”

1. What is your total estimated monthly income you expect to receive (blue/orange bar located on left)?
Be sure to include a screenshot of your results.

Monthly Income: $12877

 2. What is your estimated monthly expenses you can expect to need for retirement (maroon bar located on
right)? Be sure to include a screenshot of your results.

Monthly Expenses: $3791

Part C: Daydream about your ideal retirement.

1. How would you spend your time? What would you value doing? Be specific.
I don’t really know what I would be doing. I would probably value family time with my grandkids,
maybe watching movies. I would also value creating music

2. Does your monthly income and/or monthly budget allow you to achieve these dreams? What, if any,
changes would you have to make?
Yes

3. You’re young now, but someday in the not-too-distant future, you’ll be entering the full-time workforce,
and it will be time to start planning for your retirement. While this project is fresh in your brain, write
FIVE tips for yourself on planning for retirement.
1. Try to save as much as possible while also having as much fun as possible
2. Know all your expenses and keep track of your income (cash and card)
3. Make a budget
4. Build your credit score
5. If you set aside money to retire every month, don’t touch that money to spend it.

Part Five: Purchasing a Car

Suppose you are shopping for a vehicle. You are trying to decide between purchasing a brand new
vehicle (2021 or newer) or the same vehicle that is 2-3 years old.
1. Financial advisors recommend to spend no more than 36% of your gross monthly income on ALL debt
including mortgage, medical debt, credit card debt, car loans, etc. Use your average salary from part one
and your monthly mortgage payment from part three to calculate the max amount you should spend
monthly on a car loan (assuming you have no other debt).
53520(.36) = $19,267.20
2. What is your realistic dream vehicle? Make? Model? Color? Fuel economy of the vehicle? Feel free to
include pictures as well.
I don’t really have a dream vehicle, I want something like a 2019 Subaru Ascent, or a 2019 Honda
Passport

3. Find a dealership that sells your new and used vehicle. The bank requires you to put up to 25% of the
cost of the vehicle down as a down payment. You plan on getting a 5-year loan.
a. Research interest rates for car loans based on a decent credit score (700-750). What interest rate
can you get? Include a screenshot of your results and cite your source.

https://www.bankofamerica.com/auto-loans/auto-loan-rates/

b. What percent do you plan to use as a down payment? Why did you choose this amount?
I plan to use about 65% as a down payment because it’s low enough that it’s not that much
money, but it’s high enough so I can pay the rest of it monthly after that.

c. What are the dealership’s prices for the new and used vehicles? Include a screenshot of the
vehicles with sale prices displayed. Be sure to cite your source.

https://bestprice.cars.usnews.com/style-selector/honda/passport/2022/?linkto=configurator&u1
=970cc4174b740000679e0e6287000000ac720200&utm_campaign=overview&utm_content=t
 op-button&utm_medium=profile-pages&utm_source=usn-site-link&utm_term=desktop&vipr
MakeId=15&viprModelId=10763&viprStyleId=91647&zipcode=83646

https://cars.usnews.com/cars-trucks/honda/passport/2019

d. Calculate the down payment for the new vehicle. Show all work.
40,496(.65) = 26322.40

e. Calculate the monthly payment AND total interest for the new vehicle.
40496 - 26322 = 14174
𝑟
𝑃( 𝑛 )
PMT = 𝑟 −𝑛𝑡
[1−(1+ 𝑛 ) ]
.0259
14174( )
.0259
12
−60 = 252.11 (monthly payment)
[1−(1+ 12
) ]

252.11(60) = 15126.6
15126.6 - 14174 = 952.60 (total interest)

f. Calculate the down payment for the used vehicle. Show all work.
33069 + 41661 = 74730/2 = 37365
37365(.65) = 24287.25

g. Calculate the monthly payment AND total interest for the used vehicle.
37365 - 24287.25 = 13077.75
.0279
13077.75( )
.0279
12
−60 = 233.77 (monthly payment)
[1−(1+ 12
) ]

233.77(60) = 14026.2
14026.2 - 13077. 75 = 948.45 (total interest)

h. Which car would you choose based on your budget? Why?

I would choose the 2019 one because it’s cheaper overall and I think it looks better anyways.

i. Using the fuel economy for your particular vehicle, calculate the annual fuel expense assuming
you drive 15,000 miles a year and the gas prices stay where they are right now. Show all work.
𝐴𝑛𝑛𝑢𝑎𝑙 𝑚𝑖𝑙𝑒𝑠 𝑑𝑟𝑖𝑣𝑒𝑛
Annual fuel expense: 𝑚𝑖𝑙𝑒𝑠 𝑝𝑒𝑟 𝑔𝑎𝑙𝑙𝑜𝑛
𝑥 𝑝𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑔𝑎𝑙𝑙𝑜𝑛
15000
22.5
𝑥 3. 520 = $2346.67 per year

j. Pretend that you were given a device that would increase the fuel economy of your vehicle by 5
miles per gallon. How much does this change your annual fuel expense? Show all work.
15000
27.5
𝑥 3. 520 = $1920 per year
2346.67 - 1920 = $427.67 less
Part Six: Credit Card Debt
You know that making only the minimum payment on your monthly credit card bill leads to long-term
debt and a large total interest payment. That said, how much you can afford to pay depends on your monthly
income and spending --- in other words, your budget.

Part A: Use the ADP Salary Paycheck Calculator to find your Net Monthly Pay. To do this correctly, use the
following values:

Check Date: Today’s date

State: Idaho
Gross Pay: Average salary from part one
Gross Pay Method: Annually
Gross Pay YTD: $0
Pay Frequency: Monthly
Exempt: Be sure all of these say “NO”
Federal Filing Status: Single
# of Federal Allowances: 1
Round Federal Withholding: Yes
State Total Allowances: 1
State Filing Status: Single
Voluntary Deductions: None

1. What will be your net monthly pay, rounded to the nearest whole dollar? Include a screenshot of
your results.
$3477 per month

Part B: The Department of Labor issues a report each year on how the average American spent his or her
income. Using the percentages below and your net monthly pay, calculate the amount you would spend on each
of the categories per month.
My Monthly Budget (round to
Category Average American Spends
nearest dollar)
Housing 29% 3477(.29) = 1008
Transportation 16% 3477(.16) = 556
Food 11% 3477(.11) = 382
Insurance, Retirement, etc. 10% 3477(.1) = 348
Student Loan Payments 7% 3477(.07) = 243
Health Care 6% 3477(.06) = 209
Entertainment 5% 3477(.05) = 174
Clothes 3% 3477(.03) = 104
Everything Else 13% 3477(.13) = 452

1. How do these figures compare to what you assume you’d actually budget for these categories as an
adult? Are there areas where you thought you’d spend more? Spend less?
I think I would spend less for insurance, because it doesn’t get used very often, but I might pay more
because I need insulin. Clothes would definitely be lower because I don’t spend very much on clothes.
I think food and entertainment would be a little higher because I like food and I like to be entertained.

2. What do you imagine would fall into the “Everything Else” category?
I think things like vacations, home improvements, emergencies, gifts, tv’s maybe.

Part C: You know you should only use a credit card responsibly so you don’t accumulate too much debt, but
let’s assume you have a credit card that has no interest for four years and doesn’t require you to make a monthly
payment until you are out of school. Let’s assume the following:
● Twice a year, for all four years of college, you used your credit card to pay for books and supplies,
which amounts to $516 a semester.
● In addition to that, you charged a yearly spring break trip, which averaged about $700 per trip, each of
the four years.
● Finally, each of the 48 months you spent as a college student, you ended up charging some eating out,
entertainment, clothes, etc., and you end up adding a balance of $100 per month.

1. After your “responsible” college spending, what would be your credit card balance upon graduation?
Show all work.
516(8) = 4128
700(4) = 2800
100(48) = 4800
4800 + 2800 + 4128 = $11728

2. Do you think the credit card balance sounds reasonable after four years of college? Why or why not?
Sort of, because I don’t think you would go on a $700 vacation each year of college. However, I feel
like housing would alleviate that, so it could sound reasonable.

Part D: Now that you’ve graduated from college and got a full-time job (chosen career from part one), you
have to start paying off your debt. Assume your annual percentage rate (APR) is 19.9% and that you want to
pay the card off in 12 months.
1. What would be your monthly payment if you are aiming to pay the card off in 12 months? Show all
work.
𝑟
𝑃( 𝑛 )
PMT = 𝑟 −𝑛𝑡
[1−(1+ 𝑛 ) ]
.199
11728( )
.199
12
−12 = $1085.86 per month
[1−(1+ 12
) ]
2. How much would you pay in interest over the 12 months? Show all work.
1085.86(12) = 13030.32
13030.32 - 11728= $1302.32 (interest)

3. Does this monthly payment surprise you? Is it more or less than you assumed it would be? Explain.
It’s a little more than I expected because it’s $1302 you can spend on other things. It’s $1302 extra
that you saved from that credit card. I was expecting it to be just around the price of the credit card
balance after college, because it would be paying off the stuff you already got from the government.

4. Assume your credit card payment will need to come from the “Everything Else” category from your
monthly budget above. Use the credit card calculator to determine how many months it would take to
pay off your credit card debt so that the monthly payment fits into your budget. Include a screenshot of
your results.

It would take 35 months to pay off

5. How much will you pay in interest over the length of your debt with this new monthly payment?
452(35) = 15820
15820 - 11728 = $4092 (interest)

6. Which monthly payment would you choose to utilize to pay off your accumulated debt? Would you
choose to pay off the credit card in 12 months, use the budget allowed in the “everything else” category,
or a different monthly payment? Explain your reasoning.
I would rather pay off the 12-month one because it’s only a year of big payments, and you have your
credit card paid off. You have it over with. However when you have the 35-month option, it takes
almost 3 years to pay it off, and there’s 2790 more dollars worth of interest you have to pay.