# Matt's Finance Project

## Scenario

Harper earned her bachelor's degree in business two years ago. She is now 25 and is managing a retail store. Her annual salary is \$70,000. She has \$35,000 in student loans, and also has a car payment of \$325 per month. She wants to buy her new home in the next few months.

## Taxes

30% of Harper's annual income goes straight to taxes. This means that she spends \$21,000 per year on taxes, or \$1750 per month.

## Student Loans

Because Harper has \$35,000 to spend on student loans, she must spend \$402.78 per month over 10 years in order to pay that off.

## Exepnses per Month

Taxes: \$1750
Student loans: \$402.78
Car insurance: \$113
Food: \$303.30
Utilities: \$259
Cell phone: \$60
Gas: \$167
Entertainment: \$200
Car payment: \$325

Total: \$3580.08

## Buying a House

The amount Harper can spend on a house after all of her other expenses is \$2253.25. The mortgage rate at Bank of America is 4% with 30 years fixed interest. That means Harper can get a house at a maximum price of \$468,198.24, but she's planning on spending \$420,000 so she doesn't max her budget.

After finding the perfect house for \$419,000, Harper decided to find out how much she'd actually be paying per month. It ended up being \$2000.37.

## How much Will Harper Actually End Up Paying?

With a monthly payment of \$2000.37 over 30 years, Harper will end up paying \$720,133.20! That's \$301,133.20 in interest! Talk about pricey!

## How Can Harper Save Some Money?!?

It's simple! All she has to do is increase her monthly payment. In this situation, Harper has decided to pay 15% more per month, which makes her monthly payment \$2300.42. Because of this payment increase, Harper will finish paying off the house after 23 years and 3 months, and she'll end up saving \$74,550.99! Nice move, Harper!