Mathematics Math Assignment

1

Your First and Last Name

Portfolio Project

MATH201 College Mathematics: Quantitative Reasoning

Instructor’s Name

Date

The highlighted areas should be deleted before submission as they are directions.

Introduction

I. In this space provide three to five sentences on the purpose of this portfolio project. Why is this project important? What will it teach you? What are some calculations the reader might expect to see in this project?

Part 1 - Budget Basics

Budget Basics

a) Monthly Net Pay

I. In the table below, state your profession and provide your annual income (remember for this scenario, you have recently graduated and have been working in your industry for 5 years). You can research the median annual income for your profession based on the state in which you are working or just the median annual income for your state.

· The links below will assist you with your research on your profession.

1. Occupation Handbook and Salary Information

2. Median Income Information

II. Use your annual salary to determine your Gross Monthly Pay and Monthly Net take-home) Pay. Your net pay is your gross pay minus income taxes, FICA taxes, and benefits, including health insurance if provided. Realistic net monthly wages are about 20% less than gross monthly wages. Enter your income information in the table below:

Table 1: Income
Profession:
Annual Salary:	$
Gross Monthly Pay ( rounded to the cent): Annual salary divided by 12 Show your work!	$
Monthly Net (take-home) Pay ( rounded to the cent): Gross monthly pay minus 20% for income taxes, FICA taxes, and health insurance deductions Show your work!	$

b) Monthly Expenses

I. Calculate your monthly expenses for each category below and fill in Table 2: Monthly Expenses. You can share real numbers, or you can create a hypothetical experience with realistic estimates:

Table 2: Monthly Expenses

Fill in each category with the monthly amount you would like to budget. If you do not need a sub-category, you can delete it. Feel free to add sub-categories if you need to. If the category is on an “as need” basis, budget a certain monthly amount to go towards that category. (For example, I don’t get an oil change each month, but I might want to budget $30 each month so I have money for when I do need an oil change.)

Table 2: Monthly Expenses
Budgeted Category	Category Details	Total Budgeted Amount	Percent of Total Take Home Pay (Rounded to Nearest Whole Percent) – Show work
Housing (Need)	Rent or mortgage payment = property taxes = repairs = etc.	$	__% Work:
Food (Need)	Groceries = going out to eat = small snacks (lattes, vending machine, etc.) = Formula for Child(ren) =	$	__% Work:
Insurance (Need)	Life = Medical = Doctor Visits for Child(ren) = Home = Auto =	$	__% Work:
Transportation (Need)	Car payment = Fuel = Parking = Oil change = Bus Fares =	$	__% Work:
Utilities (Need)	Water = Electricity = Internet = Gas = Phone =	$	__% Work:
Personal care (Want)	Haircuts = Clothing = Make-up = Nails = Diapers / Clothing for Child(ren) =	$	__% Work:
Entertainment (Want)	Anything fun (leisure activities) = Netflix = Hulu = HBO Max = Disney Plus = Gym Membership = Subscription Boxes = Vacation = Birthday/Holiday gifts =	$	__% Work:
Miscellaneous (Want)	Donations = Day Care / School Expenses = Pet Expenses = Credit Card Payment = Student Loan Payment =	$	__% Work:
Savings (Savings)	Retirement / Savings = Emergency Fund (leftover income) =	$	__% Work:
TOTAL		$	__%

Note: Total budgeted amount column should add to your entire Monthly Net Take-Home Pay. Remainder of Monthly Net Take-Home Pay should be calculated into the Emergency Fund category.

Here are some realistic estimates for each category to use to compare to your budget percentages:

· Housing: ~20%

· Food: ~10%

· Insurance, such as life, medical, home, or auto: ~10%

· Transportation or auto services: ~5%

· Utilities: ~5%

· Personal care: ~15%

· Entertainment: ~10%

· Misc.: ~5%

· Savings: ~20%

c) Create a Monthly Expenses Pie Chart

I. Use the information from Table 2: Monthly Expenses to determine the proportion of your net pay currently allotted to needs, wants, and savings. Use Microsoft Excel to create a pie chart to represent the 3 categories. Add a chart title, a legend and include the percentage on each of the three pie slices (data labels). Paste your Microsoft Excel pie chart below. Use the following link to review how to create a pie chart in Excel. Use the below table to create your pie chart in Excel.

· Creating a pie chart in Excel.

Needs (Housing + Food + Insurance + Transportation + Utilities)	__%
Wants (Personal Care + Entertainment + Miscellaneous)	__%
Savings	__%

d) Compare your Monthly Expense Ratios to the 50-30-20 Rule

Using the 50-30-20 rule each month, a person spends 50% of their money on needs, 30% on wants, and 20% on savings. Use the following link to assist you with your expense ratio comparison to the 50-30-20 rule: 50-30-20 Rule

I. Describe how your pie chart (Part 1 c) compares to the 50-30-20 rule in 2-3 sentences.

II. Indicate whether you plan to make any changes in your needs, wants, or savings based on the comparison to 50-30-20 rule. Be specific with your plan!!

Part 2 - Debt and Expenses

Debt and Expenses

a) Calculate your Debt-to-Income Ratio

Your debt-to-income ratio is all your monthly debt payments (car payments, housing payments, credit card payments, student loan payments, etc. – food, utilities, etc. are not considered debt) divided by your gross monthly income. This number allows lenders to measure your ability to manage the monthly payments to repay the money you plan to borrow. Experts recommend your debt-to-income ratio should not exceed 43%. Use the following link to assist you with your calculation for the debt-to-Income Ratio.

Debt-to-Income Ratio

I. Use the information from Table 2: Monthly Expenses (Part 1) to determine your Debt-to-Income Ratio. Show the complete breakdown of your work.

II. Describe how your debt-to-income ratio compares to the recommended ratio in 2-3 sentences. Is this good or bad? Depending on which, do you need to do anything to change your debt-to-income ratio? If so, how?

b) Calculate your Life Insurance Policy

Life insurance is used to replace income when you die. A younger person with dependents likely needs more life insurance than an older person with few to zero dependents. Experts recommend, on average, your life insurance should be 10 TIMES your gross annual income. For more information about life insurance and how much your policy should be worth, use the following link to assist you: 10X Your Annual Salary – Life Insurance Ratio

I. Use the information from Table 1: Income from Part 1 and the suggested average of 10 times your gross annual income to calculate your recommended life insurance policy. Show the complete breakdown of work.

II. What are dependents? Why would someone who is younger with dependents need more life insurance than someone who is older with few or no dependents? Explain your answer in 3-4 sentences.

c) Calculate your Retirement Savings

Saving for retirement is something everyone should consider as soon as they can start saving. The “All About the Benjamin’s Report” should be evidence that the earlier you can start saving, the more you should be able to save.

I. Based on your current Savings from Table 2, calculate your retirement savings by the time you are 65. Calculate your retirement savings by the time you are 70. Show the complete breakdown of work.

II. Based on your previous answer, discuss whether or not you believe you are saving enough each month to have enough money saved by age 65 to retire. What about age 70? If not, what specific actions can you take now to ensure you are saving enough for retirement? Write your answer in 3-4 sentences.

d) Calculate your Emergency Fund

Do you currently have an emergency fund? Financial experts recommend having at least 6 months of expenses saved up for emergencies.

I. Calculate 6 TIMES your monthly expenses. Show the complete breakdown of work.

II. Determine how long will it take you to save 6 months of expenses based on your monthly savings from Table 2: Monthly Expenses (in Part 1). Show the complete breakdown of your work. Round your answer to the nearest month.

Part 3 – Mortgage, Monthly Payments, and Analysis

Mortgage, Monthly Payments, and Analysis

When you apply for a mortgage, the lender will assess your ability to pay back the loan. The lender will look for collateral (assets), which could cover the loan in case of default. As a future homeowner, you also want to make sure you can save for the future. There will be documents you need to submit to the mortgage company for approval.

a) Determine Documents for Mortgage Pre-Approval

In 2-3 sentences, describe the documents you will need to submit to the mortgage company for a mortgage approval.

b) Research Houses of Interest

Use Zillow.com or Realtor.com to research 5 houses currently for sale that you would be interested in buying. Be sure to look in the city and state you are interested in and fill out the table below.

Address, City, State	List Price	Number of Bedrooms	Number of Bathrooms	Square Footage

c) Calculate Monthly Payment

Calculate the monthly payment for each house based on a 30-year loan with a 5% interest rate and a down payment of $5,000. Use the following website to help you calculate the monthly payments. https://www.calculatorsoup.com/calculators/financial/loan-calculator.php

House Address	Monthly Payment

d) Calculate Housing Ratio

Financial experts recommend your monthly housing costs should not exceed 20% of your take-home (net) pay.

I. Calculate the housing ratio for each house. Show the complete breakdown of your work.

House Address	Housing Ratio (Show all work)

II. In 1-2 sentences, determine which houses are within your budget (remember, the housing ratio should be 20% or lower to be considered within budget).

e) Calculate Total Amount Paid and Interest

Choose one house that is within your budget that you would like to purchase.

I. Calculate the total amount paid over the 30 years. Show the complete breakdown of your work.

II. Calculate the total amount of interest paid. Show the complete breakdown of your work.

f) Calculate Closing Costs

Before taking ownership of your new house, you will need to pay closing costs. Closing cost fees will be approximately 5% of the list price of the house you are purchasing. Calculate the closing costs for the house you chose in part (e). Show the complete breakdown of your work.

g) Financial Analysis

Determine if you think you are ready to apply for a mortgage today, within 2 years, or more than 5 years in the future. Explain your answer in 3 – 4 sentences.