Points will be graded accordingly:
Part I
Income Worksheet
10
Income / Expense Worksheet
10
Net worth Statement
5
Part II
Goals Worksheet
7.5
Ratio Calculations
7.5
Final Analysis
10
Total Points:
50
Income Worksheet - Tax Calculation to get AGI
Filing status - Ma
ied
Income #1 – Alexander’s Income
$ 98,000
Income #2 – Theresa’s Income
$ 49,000
Total Gross Income
$ 147,000
Deductions
Health Benefits (400 * 12)
$ 4,800
401k #1 (150* 12)
$ 1,800
401k #2 (100 * 12)
$ 1,200
Property Tax
$ 5,160
Student Loan #1 (250 * 12)
$ 3,000
Student Loan #2 (250 * 12)
$ 3,000
Adjusted Gross Income (AGI)
$ 128,040
Standard Deduction
$ 24,800
*AGI (Federal Taxable income)
$ 103,240
Taxable income (begin Federal Tax Calculation below)
$ 103,240
Federal Tax (use steps shown in class to calculate the tax in each tax
acket)
$ 14,293
State Tax (taken out of W-2 income per paycheck, calculate based on total gross income)
$ 7,350
FICA Tax (taken out of W-2 income per paycheck, calculate based on total gross income)
$ 11,245
Total Tax Owed/Paid
$ 32,888
Child Tax Credit
$ 4,000
Total Tax Paid (after credit)
$ 28,888
Taxable Income – Total Tax paid =
$ 74,352
+ Standard Deduction
+$ 24,800
**Total Income to ca
y over to Budget
$ 99,152
Please show your work HERE on how you calculate the Federal Tax using the
acket method shown in class. Show FICA and STATE calculations as well. ROUND each calculation to the nearest WHOLE DOLLAR.
Taxable Income: 103,300
Ma
ied: Federal
0 – 19,750 (10%) = 1,975
19,751 – 80,250 (12%) = 7,260
80,251 – 103,240 (22%) = 5,058
Total: 14,293
State:
Alexander and Theresa
98,000 * .05 49,000 * .05
4,800 + 2,400
Total: 7,350
FICA:
Alexander and Theresa
98,000 49,000
* 0.0765 * 0.0765
7,344 + 3,672
Total: 11,245
*AGI - Adjusted Gross Income after reducing income by tax deductions and standard deduction.
**Income to ca
y over to the budget includes the amount of the standard deduction, as this money was not spent or lost, merely reduced for a tax calculation
Income / Expense Statement (Budget) MUST HAVE BOTH COLUMNS – ALL THE WAY DOWN
XXXXXXXXXXMonthly XXXXXXXXXXAnnually
Income ca
ied over from budget XXXXXXXXXX,262 99,152
Fixed Expenses
Mortgage payment 1,850 22,200
Homeowners’ Association 320 3,840
Property Tax 0 see income statement – deduction from income
Gas, electricity, water 185 2,220
Streaming/Internet & cell phone 175 2,100
Car Payment 350 4,200
Life insurance XXXXXXXXXX XXXXXXXXXX
Car insurance XXXXXXXXXX 1,100
Homeowner’s insurance 175 2,100
Total Fixed Expenses $ XXXXXXXXXX3,187 XXXXXXXXXX38,244
Variable Expenses
Food (groceries) 650 7,800
Food (eating out) 275 3,300
Childcare 250 3,000
Additional babysitting 150 1,800
Entertainment 175 2,100
Disney Passes XXXXXXXXXX 1,680
Car maintenance/gas XXXXXXXXXX 3,300
Baby supplies/ diapers 200 2,400
Doctor Office Visits & RX XXXXXXXXXX XXXXXXXXXX
Haircuts 100 1,200
Clothing and misc. 400 4,800
Repairs XXXXXXXXXX XXXXXXXXXX
Debt/credit card payments 200 (*6 mos) 1,200
Total Variable Expenses $ 2,949 34,180
Savings for goals
Emergency Fund Savings 50 XXXXXXXXXX
Bikes for the twins 50 (*3) XXXXXXXXXX
Summer vacation 200 (*11) 2,200
Concert Tix 100 1,200
Disney Cruise 266 3,192
New TV 50 XXXXXXXXXX
Truck Tires 75 XXXXXXXXXX
Down Payment Home 646 7,752
College Savings 100 1,200
Retirement 250 3,000
Total Savings for Goals $ 1,786 20,794
**Do not subtract goal savings as variable expenses because the money wasn’t spent yet
INCOME - (FIXED + **VARIABLE EXPENSES) = $ 2,126 $25,512
(COMPARE FINAL CALCULATION TO SAVINGS GOALS TOTALS: Do they match, loftier goals than actual money, more money available than goal savings? How can you work this into your final analysis for advice for the Stephens? How can they reach their goals and stay within their income?)
Net Worth Statement
Net Worth = Total Assets - Liabilities
Monetary Assets
Investment assets:
401K - $42,000, College savings mutual fund $2,650, stock fund $250
Liquid assets:
Savings account - $3,750
Total monetary assets: $48,650
Physical Assets
Home 585,000 Furnishings 9,000
Toyota 8,000 Honda 20,000
Personal Belongings 16,000
Total physical assets: $ 638,000
TOTAL ASSETS $ 686,650
Liabilities
Home 363,000
Honda 4,200
Student Loans 32,000
Pottery Barn Credit Card 1200
TOTAL LIABILITIES $ 400,400
XXXXXXXXXXTOTAL NET WORTH $286,250 (686,650 – 400,400)
Goals – TVM Problems basically
Work must be shown as the examples demonstrate
You need to vary your savings vehicle used and research appropriate interest rates expected from chosen investment vehicle.
SHORT TERM GOALS
Goal
Amount Needed
Month/Year needed
Date Saving Starts
# of Months to save
Interest Rate Earned
Savings Vehicle Used
Monthly Amount to Save
Bikes
$150
Vacation
$2200
June 2022
July 2021
11
1.25%
Savings Account
$?
Concert Tix
$1200
Ex. Vacation: Complete calculation and replace “?” with actual money value in Goal Chart.
TVM Calculato
PV = 0
Payment = ?
FV = 2200
Interest Rate = 1.25
Periods = 11
Compound monthly
INTERMEDIATE GOALS
Goal
Amount Needed
Month/Year needed
Date Saving Starts
# of Months to save
Interest Rate Earned
Savings Vehicle Used
Monthly Amount to Save
Cruise
$6,500
June
2023
July
2021
24
1.8 %
CD
$?
TV
$600
Tires
$900
Ex. Cruise: Complete calculation and replace “?” with actual money value in Goal Chart.
PV = 0
Payment = ?
FV = 6,500
Rate 1.8
Period = 24 months
Compounding monthly
LONG TERM GOALS
Goal
Amount Needed
Month/Year needed
Date Saving Starts
# of Months to save
Interest Rate Earned
Savings Vehicle Used
Monthly Amount to Save
Home-down
$40,000
College
$110,000
August 2035
September 2019
192
(16 yrs x 12 mos)
10%
Mutual Funds
Retirement
Age 32
Age 65
Mutual Funds & Stocks
Ex. College: Complete calculation and replace “?” with actual money value in Goal Chart.
PV = 2650
Payment = ? (Is $100 enough?)
FV = 110,000
Rate = 10
Period = 192
Compounding monthly
You can create your own goal spreadsheet.
Please do not add in any additional or modify the goals provided.
From the many ways we’ve learned to invest, goals should reflect how to save/earn the most over time to reach the goals successfully. DO NOT COPY FROM THE EXAMPLES FOR INVESTMENT VEHICLES, there are varying ways to invest for the best possible outcome of growing money.
Financial Ratios
Measures of Cu
ent Financial Status: This is semi-guided to assist you. You should have 5 values for this section.
1. Consumption-to-Income Ratio: amount of spending from one's budget divided by disposable income
(Recommended: approx. 70-90% if using 10/20/70 Budget)
· Fixed spending + Variable spending = Total spending
· Total spending divide by the total disposable income (ca
y over, first line on the budget)
2. Basic Liquidity Ratio: amount of time, in months, a family can meet its expenses with its monetary assets (liquid assets in savings and checking – Assume their monthly income is direct deposited into their checking account.)
To find, add up all liquid assets and divide by monthly expenses. This is NOT a percentage.
(Recommended: 3 to 6 months)
· Savings divide by total monthly expenses:
Measures of Debt Burden:
3. Consumer Debt- Service Ratio: credit card and auto/car debt repayments by your disposable income, expressed in a Monthly figure
(Recommended: < 11%)
· 2 amounts to use here . . .
4. Annual Debt-Service Ratio: same as above plus one's mortgage payment, expressed Yearly.
(Recommended: < 40% for Homeowners; < 15% if Renting)
Measures of Progress toward Goals: USE THE VALUES YOU FOUND ON THE GOALS CHART USING TVM AND INVESTMENT SAVINGS VEHICLE - NOT THE VALUES FROM THE NARRATIVE, SO ANSWERS HERE WILL VARY BY GROUP.
5. Long-Term Savings-to-Income Ratio: take the amount one is saving for long-term goals such as college and retirement and divide by disposable income (monthly or