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240ch18answerkey2010 - E 1815 Personal Budgeting 1 Monthly...

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E 18–15 Personal Budgeting 1. Monthly Budget: Salary (monthly) ........................................................... $ 4,500 Withholdings: Income taxes (federal and state) ............................ $1,125 FICA taxes (7.65%) .................................................. 344 (1,469) Net take-home pay ............................................. $ 3,031 Fixed expenses: Boat payment expense ........................................... $ 425 Rent expense ........................................................... 600 Car payment expense ............................................. 350 (1,375) Net disposable income ...................................... $ 1,656 Other expenses: Food ......................................................................... $ 250 Clothing .................................................................... 125 Entertainment .......................................................... 250 Insurance ................................................................. 150 Gas and other—car ................................................. 200 Utilities ..................................................................... 130 (1,105) Available for savings ......................................... $ 551 2. At the present rate, it will take him 36.3 months, or just over 3 years, to save the down payment. $20,000 ÷ $551 = 36.3 months and 36.3 months ÷ 12 = 3+ years Remember that these calculations assume that no interest is earned on the savings. The time would be somewhat shorter with interest.
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P 18–26 Personal Budgeting 1. Salary ............................................................................. $ 55,000 Plus 10% overtime ........................................................ 5,500 Total income .................................................................. $ 60,500 Less withholding (60,500 – 1750 * .35) .................................. (20,563) Net take-home pay ........................................................ $ 39,937 Fixed expenses: Rent .......................................................................... $6,000 Car payment ............................................................. 2,520 IRA ............................................................................ 1,750 Retirement savings (4% of net take-home pay) .... 1,597 (11,867) Net disposable income ....................................... $ 28,070 Other expenses: Utilities .....................................................................
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