What do we pay?

How do we use ratios to plan or budget? What ratios are important to us?

Ready...

In this lesson you will complete the financial statements workbook. You will create the taxes and other expense for your 'Consumer'.

Set...

To find the monthly rental rate you will use a rent to monthly salary ratio of 1:4. Compare that rate to the rates listed in the bay area ApartmentGuide.Com.

If you like you could purchase a home. Use ZipRealty.Com Guide Real Estate page to find a home in the San Diego area.

If your interested, you may look for properties outside  of San Diego. Make sure that the job your looking for exists where you want to live.

The next step is to research purchasing a car. You will use a ratio to calculate your monthly car payment.

Do NOT sign-up, or register, with a realtor or a car dealership.

Go...

Debt Ratio

As you progress through this exercise you need to monitor changes in the total debt to income.

The debt to income ratio must remain at 1:2. Total debt includes all expenses plus taxes.

Tax Rate

In the last lesson you calculated your monthly salary. Now we want to figure the tax rate.

Hourly Rate Tax Ratio
Hourly Rate > 20 1:3
Hourly Rate between 10 and 20 1:4
Hourly Rate < 10 1:10

Rent v. Mortgage

Rent a house or appartment.  The ratio of rent to monthly salary is 1:4

Or --

You can choose to purchase a house. The payment on the house will have a ratio of 1:100 (Payment to purchase price less a 15% down payment).

Buy a car

Use the price of the car you found above to determine your monthly payment. The down payment will have a ratio of 1:10.

The monthly auto payment will be calculated using a ratio of loan amount to payment of 40 to 1.

Submit your workbook

Finish adding the expenses. Subtract expense from the income. Subtract taxes and finish the net income calculation.

Make sure to check your math before submitting your workbook?

Done Early?

If you are done early complete a report on how buying a house or car financing works? 

Include your description of the differences between real and personal property.

The report will be 1 page double spaced in 12 point Arial font.

Pictures of Monopoly game , Retrieved February 17, 2006, from Hasbro.com. http://www.hasbro.com/monopoly/

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