A.P. Economics Consumer Finance Project
Students are required to put together a household unit. They will be given an occupation and a pay scale. They will be given/draw/choose the number of people in their household. Based on this information they will be responsible for setting up the household and for putting together the budget. You can not go bankrupt.
This project is worth a 100 point test grade. It will be graded on the how well you meet the requirements in this document. You will not be able to complete this is class. You and your partner will need to meet outside of class. The due date for the project is Friday April 1, 2008. No late projects will be accepted.
I am looking for a realistic approach to a somewhat unrealistic problem you are presented with. I want you to take the information (numbers) you are stuck with and to apply a budget to them. If you make lots of money you are required to spend lots of money. Make sure you do.
All work must be presented to me in a three ring binder. Dividers are fine but NO plastic inserts. No projects will be returned.
Students have three partner options.
Option 1: Single: Students may choose, up front, to act as a single person in completing the portfolio assignment.
Option 2: Couples: Students will choose their marriage partner. They will then draw a number (0-5) that represents the number of children they have. The family then continues the project assuming they are now a unit. They must have shared decision-making and each partner must be in agreement as to the path the couple should pursue. Close attention should be paid to the housing, transportation, daycare, and food costs associated with a family.
Option 3: Single: living with roommate. If the students decide to live with a roommate to defer expenses, they must include automobile expenses as single. They must have two cars. Roommates submit separate projects. Include copies of everything.
Family:
You must include a description of your family and a picture of them. It serves as a summary of your project. Be sure to include such things as occupation, salary, tax situation, child’s education, housing information, car information. Also include how much you save each month and your projected age of retirement. With this include how much you expect to have when you expect to retire.
Occupation:
You must provide me a job description from an actual job in your field. Be sure to include the amount of education, special training and pay scales. This should be in your words, not cut and pasted from the internet.
Home:
Each student (couple) will be required to purchase a house. In so doing, they must choose a house in the price range they can afford. (2-3 times your gross combined salary) You are not allowed to choose a house that is below your price range. The reason for this is that most people actually purchase above their price range. Once a house is chosen you must submit it to me for loan approval. Be sure to include this in the project. The interest rate you get is one you find. Just show me current published information on rates. You will use these to calculate your payments. Of course, you will have to pay all of the closing costs. Once you have this you will need to include an amortization table. Pictures of your house must be included. When you turn in the final project you must have a write up of what you looked at when choosing your house. (Size, cost, location, school district….) You must also include proof of insurance quote or explanation of why you do not have one.
Car:
Each student must own a car of some sort. You must do research on what type of car you are going to buy. This has to be one you can physically go and see. Do not pick one off the Internet! You must provide a write up on why you chose the car you chose. Like the house, your payments will be based on the best current rate that you can find. Once again, you must submit car to me with interest rate so I can approve it. Be sure to include this with the project. Make sure you include an amortization table. You must also provide proof of insurance quote or explanation of why you do not have one. Each individual is responsible for their own car.
Insurance:
You must have your house, cars, life and health insured. Life and health may be included in your job. You will need to research this information. Use the homowners insurance information provided below. For the rest of the information you will need to call or go see and insurance agent. Tell them you are working on a project and need quotes. Be sure to have all the information on hand to tell them. Be sure to tell me what your deductible is for each.
* Comparison Grocery Shopping:
You must complete the comparison grocery-shopping sheet.
* Banking
Select a local bank. Visit the branch and collect a schedule of fees for the services and types of accounts that they offer. Prepare a report recommending the type of accounts and services that they offer.
* Appliance Purchase
Prepare a report on a major home purchase (refrigerator, TV, stereo, home theater). Compare three different brands of this item. Select an item you want to purchase. Choose three stores that carry that item. Look up the item and purchase suggestions in Consumer Reports. List prices, credit costs and extended contract agreements and a picture of the item. Include all research. At least 2 stores must be brick and morter stores.
* Vacation
Plan a three to seven day family vacation. Be sure to plan the costs for lodging, food, and travel. Include the cost of activities along with money for any souvenirs. You may want to use the Internet or a travel agent to get information. You need to include brochures and pictures. Describe your vacation and show your budget.
* Credit
Gather at least two blank credit applications from merchants such as Macy’s or Rich’s and one revolving credit card from a bank. Prepare a report comparing the cards by interest rate, grace period and number of merchants who accept the card.
* Clark Howard Report
Listen to one hour of a Clark Howard program on AM 750 WSB. Clark Howard airs daily from 1:00 until 4:00pm. Write a summary of the personal financial information learned from the broadcast. (Each person must do this on their own).
* Not included in the budget.
Budget:
Each household must prepare a budget (based on one month) in spreadsheet form. Be sure to show all of your calculations so I can see what you have left over after expenses. The following items must be included in your budget. If you do not include some of the optional stuff make sure you have an explanation why. (things like cell phone, vacation….) The following are the categories you must have.
§ Gross and net pay
§ Taxes (These must be taken out of gross pay first thing.)
Federal, state (both based on income tax tables), FICA (7% of gross)
Your W2 form is used to for your tax form.
§ Housing: mortgage, utilities (gas, water, electricity, garbage collection, sewage, phone, cable), maintenance of property, real estate taxes, homeowners insurance
§ Transportation: car payment, gas and oil, maintenance, car insurance
§ Food: groceries, lunches at work, eating out (show these separately in budget)
§ Clothing: New purchases, dry cleaning, (Show these separately in budget)
§ Medical: Insurance (medical, life and dental)
§ Education: child care
§ Personal: allowance for kids, entertainment, vacation, recreation (they must all be addressed)
§ Savings: retirement, kids education (if you have kids this must be budgeted or talked about.)
§ Miscellaneous: Break this down!
At the end of your budget each person must include a write up about each major section of your budget. Tell me why you used the numbers you used. Also tell me what you expected about that item before you started the project. I want this to be reflective (think about your thoughts).
Tax Returns:
Each student must complete a tax return form. Make sure you include your W2 form.
On the back of the tax return you must have both yearly and monthly figures for federal taxes, state taxes, FICA, and Property taxes. We will go over how to calculate each of these in class.
Once you have completed the project each person is expected to take the project grade sheet that I gave you and grade your project. This needs to be the last page in your project.
Finally, I will be looking at the overall appearance of the project. I want to see that you have put lots of time and effort into the project. For example tabs, color, extra thought on some things….
Useful Websites:
Eloan.com, Fed-Tax.com, Allstate.com, progressive.com, calcbuilder.com, hughchou.org, bankrate.com
Order of Events
Week 1
Hand or Consumer Finance Project
Choose partner/number of children
Choose occupation
Research Occupation
What, how, how much…
Week 2
Search for a job
Search for a house
Submit house for approval with interest rate by end of week 3
Complete one of the * items.
Week 3
Submit house for approval with interest rate
Find a job
Complete write up on occupation
Complete a 2nd * item
Week 4
Complete Tax returns in class and find net yearly and net monthly salary
Print out amortization schedule for house
Complete a 3rd * item
Week 5
Complete property taxes in class
Submit car for approval with interest rate by end of week 6 (Talk to your parents about this for a hint!)
Start calculating the utility costs for the budget
Complete a 4th * item
Week 6
Submit car for approval with interest rate
Complete utility costs for house
Complete a 5th * item
Week 7
Research insurance for House, Car, Life and Health
Complete write up for car
Complete remaining budget items
Complete 6th * item
Week 8
Complete write up on family
Complete write up on your budget
Week 9
Organize project and turn it in.
Use the following cost guidelines
Utilities
Gas and electricity combined: $110 (+ $10 for every $20,000 that your house is over $100,000)
Water: $25 (+$5 for every $25,000 that your house is over $100,000)
You must double your water bill if you are on sewage rather than septic tank. If you are on septic then you need to add extra money to home maintenance for future septic tank problems. Be sure to tell me about this in your budget write up.
Garbage collection: research!
Phone: must research local, long distance and cell costs.
Cell Phones: If you have one now you will have one when you are on your own.
Cable: research
Homeowners insurance:
House Cost Insurance Amount
Under $100,000 $360 per year
$100,000 - $200,000 $480 per year
$200,000 - $300,000 $540 per year
$300,000 and above $540 plus $5 per $100,000 above $300,000
Food:
Household: $170 per person per month combined incomes less than $100,000. $200 for incomes over $100,000.
Lunches: Minimum of $30/week per adult and $10/week for children
Eating out: Minimum of $25 per month
Clothes:
Purchases: $35 per month plus $75 per month per person
Dry Cleaning: $25 per month for people with professional jobs.
Transportation Costs:
Gas and Oil: $70 per month per car + $15 for houses over $150,000
Child Care Costs
Must research costs.
Personal Costs:
You can determine this but it must be realistic.
Saving:
None are required but this is something you should shoot for.