Precalc Finance Project
"Jenny went to college for two years, and then dropped out. Unfortunately, by the time she dropped out of college, she had $20,000 in student loans with an interest rate of 6.80%. She has been working as a bank teller for the last three years. Her salary is $30,000. She also has a car payment of $400 per month. She is excited to buy her first home"
Jenny makes a salary of $30,000 and lands in the tax bracket of 15%, meaning she only takes home $25,500 a year or $2125.00 per month.
Student Loan Payment
Since Jenny has $20,000 in student debt at a 6.8% interest rate, I calculated her monthly student loan payment which ended up being $230.16.
Monthly Budget Estimates
Transportation (car payment, gas, insurance)= $540
Student Loans: $230.16
Cell Phone: $80
Total Monthly Expenses: $1520.16
Possible Monthly House Budget:
What is Affordable...
The 30 year fixed rate loan is 3.625% (Bank of America, 2/15). I will look for houses for Jenny around $120,000 so that I do not go over budget and have some wiggle room for other expenses.
While looking for houses $120,000 or less, I came across some very ugly houses. Luckily, I found a great looking one right near $120,000, actually costing $119,950 right in Overland Park, feeding into the Shawnee Mission School District.
Actual Monthly Payment
The actual (minimum) monthly payment is $547.03.
Amortization chart for first year:
Over 30 Years...
196930.80-119950= $76,980.80 will be paid in interest.
If increased monthly payment by 15%...
New payment: 547.03+(547.03*.15)= $629.08
t= 23 years and 8 months
Difference in amount paid: