Over the next week you and a partner are going to be given a salary and a FICO score and asked to find a place to live, cars to drive and create a budget. Your salary and FICO score will be determined at random and you will have to stay within those limits; this may be very challenging for some of you. In the process you will learn about credit and STRESS…try to have some fun too.
Step One:
Each person will select a salary and a FICO score from their teacher. On your budget sheet – list your income and your FICO score. You will also select a slip that tells you where your jobs are located. If only one of you works – you may pick one of the two locations. You will need this information later – write your job locations on your budget sheet.
Step Two:
Ok, so before you can spend any money you have to pay the man. The government wants their cut. You each must save 10%, that’s right, 10% of your NET earnings. Use the tax and savings worksheet to determine your tax burden and your savings. List your taxes and your savings on your budget sheet.
Step Three:
Groceries – yup – you gotta eat. So you and your partner need to figure out a shopping list that will include everything you need to feed the two of you three solids (plus snacks) for a week. A menu planner must be filled out and a shopping list prepared from that plan. Don’t forget the items at the end of the food planner. Then go shopping – someplace like https://www.meijer.com/
Print out your shopping cart. Multiply the total amount of your shopping cart times four to get your monthly food budget. Put that total on your budget sheet. For this step you will turn in three things: the menu planner, your shopping list and the shopping cart.
Step Four:
Find a place to live. You need to find an apartment that you can afford and list the monthly rent on your budget sheet. You will have to include the advertisement for the apartment in your packet. Highlight the rent payment.
Step Five
About half way there - utilities are the next thing you must pay for. Since you are renting you don’t have to pay for water. Check the apartment you selected – did it come with electricity or heat? If so – you don’t have to worry about those things – BUT YOU MUST HIGHLIGHT WHERE IT SAYS THAT ON YOUR HOUSING ADVERTISEMENT. If not – well – you have to pay for them. How much? Here’s how you will figure that out.
· To determine electricity use the following:
o If you have air conditioning: multiply the number of square feet in your dwelling times 8 cents. So a dwelling with 1500 square feet would be $120.00 a month.
o If you don’t have air conditioning: multiply the number of square feet in your dwelling times 5 cents. The same 1500 square feet is about $75.00 a month.
· To determine heating costs multiply the number of square feet by 9 cents. Our 1500 square feet costs about $135.00 a month for heat.
Use the Utilities worksheet to help you and make sure you list your electricity and heating costs on your budget.
Step Six:
You must each purchase a car, not a motorcycle or Vespa; a car. This is Michigan. You also may not purchase a vehicle that is under $2000.00. Cars that are that cheap are sold AS-IS and often have major problems. In real life – a car that cheap would cost you more in repairs – so – nothing less than $2000.00. If you make enough to buy a new car you can go on-line and find the car you want and use the tools available on the web to determine how much the car will cost to purchase (do not use the monthly payment given on the dealer’s website – you must use the URL below because that allows you to price your vehicle using your FICO score. If you can’t afford a new car then you must find a used car wherever you like. Here are a couple of websites you might try:
http://www.autotrader.com/
http://www.usedcars.com/
Do not forget your FICO score will impact your payment. Use this site to determine your payment: http://www.myfico.com/myfico/creditcentral/loanrates.aspx
Make sure you print out the auto information for each car you purchase along with the information from my FICO loan Savings Calculator with your payment highlighted and list your monthly payment on your budget sheet.
Step Seven:
Cars need gas. Look up the mpg for your automobiles. Print out proof of MPG for your car. Use the gas worksheet to determine your gas costs. You must include some evidence from the internet that shows how you got your average price for a gallon of gas.
Cars also need regular maintenance (an oil change and lube). How much will that regular maintenance cost? Find out and list on your budget sheet.
Step Eight:
Once you have your cars – you need to get insurance. Go on-line to a site like: http://www.usautoinsurancenow.com/welcome?id=181187316&creativeid=14791291098&adpos=1t5&matchtype=e&network=s&mobile=&placement=&target=&aceid=&apxkwid=1022171
If you have a friendly insurance agent, call and get a quote e-mailed to you. If you talk to an insurance agent please make sure you tell him/her that you are doing a project for Seaholm High School and you appreciate the help. Politeness goes a long way when asking for someone’s time. List the monthly insurance cost for each car on your budget sheet. You must each get your own insurance – you cannot insure the cars together. You must enter your correct birth date (if you are under 18 – you may make yourself 18.) If you buy an older car – you may purchase the minimum amount of insurance allowed by law. If you purchase anything that is less than 5 years old, you need to purchase full blown insurance. You are not a family so you must each get your own insurance.
Step Nine:
Communications – this is phone, cable and internet. Are you gonna bundle it? Find a package deal – you just have to watch Game of Thrones so you need the upgraded package – or can you only afford Basic Cable? What are you going to do? DSL or dial up? Cable modem or no internet at home? Whatever you decide – make sure you have “proof of your package” price and list the monthly cost on your budget sheet. If you are truly “poor” you may choose to have no internet or cable.
Step Ten:
And of course don’t forget your best friend – you know that thing that you carry in your pocket everywhere you go – the almighty cell phone. Yes, it too costs money. So find a plan and this is one of those things you each must have – no family plans folks – unless one of you drew the “homemaker” income – everybody is single in this little scenario. You do not need to buy your phone – we will assume you have one. You need only buy a service package.
WHEW
When you are all done you need to subtract your monthly bills from your monthly income. This balance must be more than zero or you have to go back to the drawing board. Once you have determined your “disposable income” – you are done. Make sure you have everything on the checklist and put it all in order and turn it in (in a folder of some kind).
EXTRA CREDIT
Put your documents in a decorated folder or binder. Make dividers – go artsy and use glitter. Up to 20 points available for presentation “style” points.