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Unformatted text preview: Taking control of your finances Take Control • Know your bank balance. You should never bounce a check or have your debit card rejected. • Know what your spend; in particular, keep track of your debit and credit card spend- ing. • Don’t buy on impulse. Think first; then byt only if you are sure the purchase makes sense for you. • Make a budget and don’t overspend it. Example 1. Latte Money Suppose you spend $5 every weekday on a latte and your monthly grocery expense is $200. (a) Compute the annual cost of buying lattes. Solution There are 52 weeks in a year and 5 weekdays in each week. Therefore, the annual cost of buying lattes is 52 weeks year × 5 weekdays week × $5 weekday = $520 year (b) Complete the following sentence.On an annual basis, the cost of buying lattes is % of the cost groceries. Solution The annual cost of groceries is $200 month × 12 months year = $2 , 400 year . Therefore, the annual cost of buying lattes is $520 $2 , 400 = . 217 = 21 . 7% of the annual cost of groceries. 1 Example 2. Credit Card Interest Suppose your average monthly credit card balance is $1100 and that the annual interest rate in your credit card is 24%, which bills at 2% per month. Calculate the amount of money you spend on credit card interest. Solution Since interest is billed at 2% per month, each month you spend $1100 × . 02 = $22 on interest. Therefore, each year you pay $22 month × 12 months year = $264 year interest....
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This note was uploaded on 01/08/2012 for the course MGF 1107 taught by Professor Staff during the Spring '08 term at University of Florida.
- Spring '08