Car insurance: $60

Student loan: $230.16

Food: $250

Utilities: $200

Cell phone: $80

Gas/transportation (including car payment for $400 per month) : $520

Entertainment/Other: $150

Total Monthly Expenses: $1,490.16

Budget Monthly Payment: $259.84

Mortgage Interest Rate: 3.13%

House I Can Afford: $60,618.57

I will purchase the condo for $60,000 or less in order to not max out my budget.

Actual monthly payment: $240.04

Over the course of the loan I will pay: $86,414.4

Interest: $30,414.4

New payment: $204.03

How long to pay off new amount? 17 years

Difference in total amount paid: $44,123.78

This situation does not take savings into account when it can make a big difference on your monthly expenses. It is good to keep extra money in order to cover emergences, etc. It is also not a good idea for Jenny to be paying $400 a month for a car that she cannot afford. I take all of this into account in my next SMARTER situation.

Jenny still works at the bank and lives close enough to walk, allowing her to sell her car and take the bus.

Jenny sold her 2011 white Jeep patriot with 75,000 miles for $7,500. She will use the $7,500 for my down payment on my new home.

Jenny will use the basic rule of thumbs of 50% to necessities, 40% to extra, and 10% to savings.

Necessities (payments per month)

Bus: $30

Food: $250

Utilities: $200

Student loan

$230.16

Extra

cellphone: $40

Entertainment/other: $150

Savings

$175

Total Monthly Expenses: $1,075.16

Monthly budget for house: $674.84

Mortgage interest rate: 3.13%

What can I afford: $157,434.70

I will purchase the home for $130,000 in order to not max out my budget.

Actual monthly payment: $471.08

My monthly payment was significantly lower than my original estimate because my home is $201,000 cheaper than intended.

Over the course of the loan I will pay: $169,588.8 in interest

11721 Roundtree Street Olathe, KS 66061 - $109,900

Loan Value: $102,400

By selling Jenny's car, we only need $102,400 in loan value from the bank which decreases her monthly home payment.

Also, taking the bus helped her monthly budget because she lives close to the bank she works at.

Money left for insurance and taxes on my home: $47,534.7

Also, this leftover money can be used for emergencies. Having a cushion is good incase something happens.