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Financial

Spending Habits. Financial. List Expenses. His Income $_______ Her Income $_______ Other Income $_______ Total Monthly Income = $________. Bills: -Rent $_______ -Utilities $_______ -Cell Phone $_______ -Car Payment $_______ -Insurance $_______ -Loan Payment $_______

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Financial

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  1. Spending Habits Financial

  2. List Expenses His Income $_______ Her Income $_______ Other Income $_______ Total Monthly Income = $________ Bills: -Rent $_______ -Utilities $_______ -Cell Phone $_______ -Car Payment $_______ -Insurance $_______ -Loan Payment $_______ Budgeted Items: -Gas $_______ -Groceries $_______ -Dining/Entertainment $_______ Total Monthly Expenses= $________ List Income Creating a budget

  3. List Expenses His Income $_______ Her Income $_______ Other Income $_______ Total Monthly Income = $________ Bills: -Rent $_______ -Utilities $_______ -Cell Phone $_______ -Car Payment $_______ -Insurance $_______ -Loan Payment $_______ Budgeted Items: -Gas $_______ -Groceries $_______ -Dining/Entertainment $_______ Total Monthly Expenses= $________ List Income Creating a budget Step #1 – Have more income than expenses

  4. List Expenses His Income $_______ Her Income $_______ Other Income $_______ Total Monthly Income = $________ Bills: -Rent $_______ -Utilities $_______ -Cell Phone $_______ -Car Payment $_______ -Insurance $_______ -Loan Payment $_______ Budgeted Items: -Gas $_______ -Groceries $_______ -Dining/Entertainment $_______ Total Monthly Expenses= $________ List Income Creating a budget Step #1 – have more income than expenses Step#2 – The Goal is savings, not balance

  5. List Expenses His Income $_______ Her Income $_______ Other Income $_______ Total Monthly Income = $________ Bills: -Rent $_______ -Utilities $_______ -Cell Phone $_______ -Car Payment $_______ -Insurance $_______ -Loan Payment $_______ Budgeted Items: -Gas $_______ -Groceries $_______ -Dining/Entertainment $_______ Total Monthly Expenses= $________ List Income Creating a budget Step #1 – have more income than expenses Step#2 – The Goal is savings, not balance Step#3 – easy system to stick to your budget

  6. Spending Habits Financial

  7. The Way To Save Typical Spending Left Over

  8. Ideal World

  9. Typical Spending MoneyTrickles Out Money Trickles In Nothing Left Over

  10. Ideal World

  11. The Way To Save

  12. The Way To Save $2,573Feb Budget (Bills, Gas, Food, Entertainment) $580 $400 $590 $370 $570 $440 $550 ----------- $3,500 – Feb Total $3,500Feb Total $927Feb Overage

  13. The Way To Save $2,573Feb Budget (Bills, Gas, Food, Entertainment) $2,000 $580 $400 $590 $370 $570 $440 $550 ----------- $3,500 – Feb Total $3,500Feb Total $4,000 $927Feb Overage $10,000 Everything Else

  14. Spending Habits Financial

  15. New Car Math $25,000 Chevy Malibu w/ Tax 5 Year Loan = $471.78 Trade In Value After Three Years = $10,500 You Owe After Three Years =$10,326 You Paid = $14,500 to drive that car + $2,782.64 in interest = $17,282.64 You Made = $174 towards your next car Actual Cost $17,108.64 – you are left with…. nothing

  16. Used Car Math Vehicles take their largest hits at: New = $25,000 1 Mile / This Years Model = $15,025 (60%) 30K Miles / Last Years Model = $13,860 (55%) 50K Miles / 2-3 Model Years old = $10,326 (41%) 100K Miles / 5-7 Model Years old = $4,500 (18%) Big Drops: 1 Mile, 30K Miles, 50K Miles, 100K Miles

  17. Used Car Purchase BUY: 2010 Malibu, all options 16K Miles = $14,250 (or $25,000 New) SELL: Drive for two years - $10,750 Two Year Cost - $3,500 ($145.83/Month) New Two Year Cost – $11,405.76 ($471.78/Month) Savings: $7,905.76 over two years Big Drops: 1 Mile, 30K Miles, 50K Miles, 100K Miles

  18. Used Car Buy “Up” BUY: Used Car $3,500 SAVE: $400/month payment x 18 months = $7,200 SELL: $2,000 (old car) HAVE: $2,000 + $7,200 = $9,200 BUY: Used Car $9,200 SAVE: $300/month payment x 24 months = $7,200 SELL: $7,000 (old car) HAVE: $7,000 + $7,200 = $14,200 BUY: Used Car $14,200 SAVE: $250/month payment x 24 months = $6,000 SELL: $11,000 (old car) HAVE: $11,000 + $6,000 = $17,000 Big Drops: 1 Mile, 30K Miles, 50K Miles, 100K Miles

  19. Cost of Paying Cash • Lost InterestInterest on $10K over two years is about $150 • Loss of Tax DeductionYou get back 1/10th of 1% of the interest you paid. On a $100K home loan you will pay $115K in interest, and get to about $1,100 in true benefit in tax deduction. • Cost of DepreciationBuying a Car in a good mileage tier will minimize this. Buying a vehicle at the low end of a tier, and selling before the next tier will result in only minimal depreciation. (47% - 52% example). New to 18 months loss: 48%, 18 months after that only loses 5%. Big Drops: 1 Mile, 30K Miles, 50K Miles, 100K Miles

  20. House Math Realtor will tell you: $100K House Purchase = $599.55 Cheaper then renting, and your not “throwing your money away”

  21. House MathThey Forgot A Few Things $100K House Purchase 12% Closing Cost (6% Realtor, 3% Bank/Closing, 3% Pre Payments). 3% Closing Cost paid by Seller $109K Financed = $653.51/ Month? Plus Taxes, Insurance, and PMI

  22. AMORTIZATION SCHEDULE

  23. Owning Rent $700 Utilities $80 Insurance $25 Total Monthly = $805 Five Year = $48,300 Mortgage $653 Insurance $125 Taxes $183 PMI $47 Consumers $275 Water/Sewer $130 Maintenance $30 (low) Total Monthly Expenses= $1,443 Five Year $86,580 ($46,857 difference) Renting Renting vs Owning (5 years)

  24. House Math In Five Years: You will have paid $86,580 to live there You will still owe: $101,429 ($7,571 has been paid on principle) You will have paid: $46,857 More than renting $46,857 + $101,429 = $148,286 to break even (plus taxes and sellers closing cost) You would have to sell closer to $170K to break even Your house would need to increase in value by 70% for you to “make” money. The average person just looks at that they sold the house for $106K, and only owed $101K, so you “made” $5K. That $5K (and at least $50K more was YOUR money that you over paid, that you could have been putting in savings.

  25. Owning Five Year Savings = $46,857 Walk away at closing breaking even after closing cost Renting 2nd Home Renting vs Owning (5 years) Walk in with $46,857 in purchasing Power Avoid PMI Gain Lower Interest Rate and open up Loan program options Gain Stronger purchase position with Faster close time, larger down payment With offer (money talks) Enter 2nd home the same way you Entered first home. Will take about 13 years before you are In a positive position in that home.

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