# Max's (Brent's) Financial Project

## How much do I make?

As a construction foreman, I earn an annual salary of \$50,000. After taxes (which is roughly 30% of my gross income), I earn a net income of \$35,000 annually. Broken down monthly, I receive \$2,916.67 take-home pay every month.

## How do I break down my monthly budget?

After conducting research and taking classes such as Economics, I have determined that no more than 30% of one's monthly net income should be used for housing. This leaves 70% for remaining necessities. Within this 70%, I specifically bought a \$23,000 car with a 5 year loan at 6.5%. Using the Present Value equation, my monthly payment is \$450.02 for the car. For housing, 30% of my monthly income is \$875.00. After subtracting the housing and car expenses, I will have \$1591.65 remaining for food, gas, car insurance, utilities, cell phone, entertainment, and other wants and needs.

## What type of loan will you take out on your housing?

I will take out a 30 year fixed loan at 3.78%. This interest rate is from bankrate.com and is associated with the most recent date, 2/10/16.

## What is the most expensive house I can afford?

Given my \$875.00 limit for a monthly payment towards housing, I can afford a \$188,245.09 house. This cap was established through Present Value calculations.

## The Ideal House

By using all of my monthly housing budget (\$875.00), I can purchase a \$188,245.09 house. However, if I were to cut back on some of my other expenses and find another 15% of my current monthly housing payment, I would be able to pay \$1,0006.25 monthly for housing. With this payment, I would be able to pay off the theoretical house in 23.58 years, rather than the given 30. With this payment amount, I would have save \$30,271.50.

## My Actual House

This house is listed at \$182,000 on realtor.com and is located at 9212 W 82nd St Overland Park, KS 66204. This house was slightly under budget, meaning that rather than paying \$875.00 monthly, I will only have to pay \$845.97 (\$29.03 in monthly savings) a month after the necessary Present Value calculations. However, if I were to pay 15% more of this payment (\$972.87), I would be able to pay off the house in 23.58 years. Using this payment would allow me to save \$29,265.90.

## APA References

9212 W 82nd St Overland Park, KS 66204. (n.d.). Retrieved February 15, 2016, from http://www.realtor.com/realestateandhomes-detail/9212-W-82nd-St_Overland-Park_KS_66204_M89442-55999

Amortization Schedule Calculator. (n.d.). Retrieved February 15, 2016, from http://www.bankrate.com/calculators/mortgages/amortization-calculator.aspx?loanAmount=188245

Current Mortgage Interest Rates | Bankrate.com. (n.d.). Retrieved February 15, 2016, from http://www.bankrate.com/finance/mortgages/current-interest-rates.aspx

Home Budget: Cost-Of-Living Reality Check. (n.d.). Retrieved February 15, 2016, from https://quicken.intuit.com/support/help/budgeting-basics/home-budget--cost-of-living-reality-check/INF16169.html