math

REALITY OF DEBT

You will graduate in the near future and will begin working. You negotiated the offer and will be making $40,000 per year. After taxes and deductions, you will bring home 70% of that $40,000 ($28,000) or 2,333 per month. This is what you will have to live on each month. Rent, utilities, food, etc. must come out of the $2,333.00 each month. These are living expenses.

But you also have debt. See the table below.

A	B	C	D	E	F	G
ITEM	PURPOSE	DEBT BALANCE	INTEREST RATE	MONTHLY PAYMENT	MONTHS TILL PAID OFF	TOTAL PAYMENTS & INTEREST
STUDENT LOAN	SCHOOL	$22,000	6.8	$253.00	120
CREDIT CARD	MISC.	$3000	18.9	$120	33
STORE CARD	CLOTHES	$1500	12.9	$75	23
TOTAL

IN THE ABOVE TABLE, FILL IN TOTAL PAYMENTS & INTEREST FOR COLUMN G AND YOUR TOTALS FOR COLUMNS C, E AND G

What percent is the Column E total of your $2,333 take home pay?_______________________

THINK ABOUT

WHAT IS YOUR DEBT? How do you compare to the above example? It is important to know the answers to these questions now so you can budget properly in the future. You can see from the example above that debt eats up your money and is an opportunity loss as it relates to savings. If your making debt payments that is money you could have saved.