MATH201 - Portfolio Project - Felice White (1)
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School
Bryant and Stratton College, Buffalo *
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Course
201
Subject
Mathematics
Date
Jun 2, 2024
Type
docx
Pages
12
Uploaded by DoctorWaterAlpaca37
1
Felice White
Portfolio Project
MATH201 College Mathematics: Quantitative Reasoning
Instructor N. Ayoub
9/16/2023
2
Introduction
The main objective of this portfolio project is to showcase my skills and knowledge in budgeting my finances. By working on this project, I aim to gain experience in applying theoretical concepts to real-world scenarios and demonstrate my ability to use different tools and techniques to analyze and present data effectively with the given income, expenses, and savings. This project will help me refine my problem-solving skills and enhance my ability to communicate my findings that predict if I am ready to apply for a mortgage. Some of the calculations that the reader can expect to see in this project include statistical analysis, data modeling, and financial forecasting.
Part 1 - Budget Basics
Budget Basics
a)
Monthly Net Pay
3
Table 1: Income
Profession:
Accountant
Annual Salary:
$78,320
Gross Monthly Pay (
rounded to the
cent
):
Annual salary divided by 12 Show your work!
$6,527
78,320/ 12=6,526.66
Monthly Net (take-home) Pay (
rounded to the cent
):
Gross monthly pay minus 20% for
income taxes, FICA taxes, and health
insurance deductions
Show your work!
$5,222
6,527-20%=5,221.6
b)
Monthly Expenses
Table 2: Monthly Expenses
Table 2: Monthly Expenses
Budgeted Category
Category Details
Total Budgeted Amount
Percent of Total Take Home Pay (Rounded to Nearest Whole Percent) – Show work
Housing
(Need)
Rent or mortgage payment = $1,185
$1,185
23%
Work:1,185/ 5,222=0.226
Food
(Need)
Groceries = $200
going out to eat = $150
$350
7%
Work:350/ 5,222=0.067
Insurance
(Need)
Life =$24 every three months=$8 a month
Medical =$ 79.95
Auto = $327
$414.95
8%
Work:414.95/ 5,222=0.079
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4
Transportati
on
(Need)
Car payment = $437
Fuel = $80
Oil change =$21 each month
Car Wash=$12 $550
11%
Work:550/ 5,222=0.105 Utilities
(Need)
Water = $13.14
Electricity = $165.46
Internet = $183.24
Gas = $10.42
Phone = $156.32
$528.58
10%
Work:528.58/ 5,222=0.101
Personal care
(Want)
Clothing = $50
Eyebrow wax=$20
Pedicure=$60 Massage=$50
$180
3%
Work:180/ 5,222=0.034
Entertainme
nt
(Want)
Netflix = $15.49
Amazon=$12.46
Vacation = $100
Birthday/Holiday gifts = $40
$165.95
3%
Work:165.95/ 5,222=0.031
Miscellaneo
us
(Want)
Credit Card Payment =$119
Student Loan Payment = $220
$339
6%
Work:339/ 5,222=0.064
Savings
(Savings)
Retirement / Savings =$50
Emergency Fund (leftover income) =$1,458.52
$1,508.52
29%
Work:1,508.52/ 5,222=0.288
TOTAL
$5,222
100%
c)
Create a Monthly Expenses Pie Chart
$3,028.53
58%
$684.95
13%
$1,508.52
29%
5
$0.58 $0.13 $0.29 Felice's Monthly Expenses
Needs
Wants
Savings
d)
Compare your Monthly Expense Ratios to the 50-30-20 Rule
My take-home is $5,222 a month. Applying the 50/30/20 rule would give me a monthly budget of:
50% on needs=$2,611
30% on wants=$1,567
20% on savings=$1,044
Currently, I am successful in prioritizing my needs over my wants. However, I can further improve by allocating more money towards my savings, so that my savings can accumulate to an amount that exceeds my emergency fund requirements. This will provide me with a greater sense of security and ensure that I am well-prepared for any unexpected situations.
6
Part 2 - Debt and Expenses
Debt and Expenses
a)
Calculate your Debt-to-Income Ratio
I.
Car payments $437, housing payments $1,185, credit card payments $119, student loan payments $220, (437+1,185+119+220=$1,961). My monthly debt payments are $1,961. My gross monthly income is $6,527. Divide my monthly debt payments by my gross monthly income (1,961/6,527=0.30). My debt-to-income Ratio is 30% ($1,961 is 30% of $6,527). II.
I believe that my debt-to-income ratio meets the required percentage for being approved for a loan. The recommended debt-
to-income ratio to qualify for a loan is to not exceed 43%, and after performing the calculation, I am pleased to see that I meet the standard with a ratio of 30%.
b)
Calculate your Life Insurance Policy
I.
10X my gross annual income (10* $78,320=$783.200). My Life Insurance Policy amount is $783,200.
II.
Dependents refer to individuals who rely on others for financial support. This includes children and relatives. Younger people with dependents need more life insurance to ensure that their dependents are financially stable in case of an unfortunate event. On the other hand, older people with few or no dependents do not
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7
necessarily require life insurance for dependents. Instead, they may
be the ones in need of care, especially due to health reasons.
c)
Calculate your Retirement Savings I.
My retirement savings by the time I am 65 is $16,200. I am 38 and I have 27 more years before I am 65. In Table 2 my savings are $50, so I am saving $50 a month times 12 months is $600 a year times 27 years (50*12=$600*27=$16,200). My retirement savings by the time I am 70 is $19,200. In 32 more years, I will be 70 years old (50*12=600*32=$19,200).
II.
I need to save more money if I want to achieve my life goal of having at least $100,000 saved. Currently, I have saved up $16,200, which is not enough. By the time I reach 65 or 70, I will have saved up to $19,200, which is still not enough. To increase my
savings, I need to save more than $50 and use $1,000 of my emergency funds.
d)
Calculate your Emergency Fund I.
6 times my monthly expenses (6*5,222=31,332). II.
My savings in $50 a month (50*12=600*8.7years=5,220) It will take me about 9 years equal to 108 months to save 6 months of expenses.
8
Part 3 – Mortgage, Monthly Payments, and Analysis
Mortgage, Monthly Payments, and Analysis
a)
Determine Documents for Mortgage Pre-Approval
When applying for a mortgage, some documents you may be required to submit include proof of income and employment, bank statements, tax returns, credit reports, and other financial documentation. It is important to carefully review the specific requirements of the mortgage company you are working with and ensure you have all the necessary paperwork to avoid delays in the approval process.
b)
Research Houses of Interest
Address, City, State
List Price
Number of Bedrooms
Number of Bathrooms
Square Footage
9
7751 Lipscomb Dr, Memphis, TN 38125
$158,000 For sale
Zestimate: $148,200
Est.:
$1,028/mo
3
bd
2
ba
3,049
sqft
3611 Dandridge Ter, Southaven, MS 38672
$345,000
For sale: Zestimate $344,000
Est.:
$2,245/mo
4
bd
2
ba
2,179
sqft
4763 Rosepetal Cv, Southaven, MS 38672
$398,900
For sale
Zestimate: $387,000
Est.:
$2,568/mo
4
bd
3
ba
2,380
sqft
621 Masters Way, Mount Juliet, TN 37122
For sale
$599,800
3bed
2.5+bath
2,956 square feet
1304 Avery Park Ln, Mount Juliet, TN 37122
For sale
$659,000
4bed
3.5+bath
3,668sqft
c)
Calculate Monthly Payment
House Address
Monthly Payment
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10
7751 Lipscomb Dr, Memphis, TN 38125
Monthly Payment: $821.34
3611 Dandridge Ter, Southaven, MS 38672
Monthly Payment: $1,825.19
4763 Rosepetal Cv, Southaven, MS 38672
Monthly Payment: $2,114.54
621 Masters Way, Mount Juliet, TN 37122
Monthly Payment: $3,193.02
1304 Avery Park Ln, Mount Juliet, TN 37122
Monthly Payment: $3,725.54
d)
Calculate Housing Ratio
I.
Monthly cost/ Monthly take-home= Housing Ratio
House Address
Housing Ratio
(Show all work)
11
7751 Lipscomb Dr, Memphis, TN 38125
821.34/5,222=0.157
House Ratio 16%
3611 Dandridge Ter, Southaven, MS 38672
1,825.19/5,222=0.349
House Ratio 35%
4763 Rosepetal Cv, Southaven, MS 38672
2,114.54/5,222=0.404
House Ratio 40%
621 Masters Way, Mount Juliet, TN 37122
3,193.02/5,222=0.611
House Ratio 61%
1304 Avery Park Ln, Mount Juliet, TN 37122
3,725.54/5,222=0.713
House Ratio 71%
I.
Upon reviewing the list of houses that I have shortlisted, only one house fits in
my budget. I have noticed that the lowest housing ratio I have come across is 16%, which indicates that I am trying to live beyond my means with the other houses. II.
Calculate Total Amount Paid and Interest
I.
Total amount paid for my house over 30 years: Monthly payment: 821.34 * 12
months = 9,856.08 * 30 years = 295,682.40 Total amount paid $295,682.40
II.
Total amount paid for my house $295,682.40 over 30 years = Total interest paid: 295,682.40/ 30= $9,856.08 Total interest paid: $9,856.08
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III.
Calculate Closing Costs
Price of House $158,000 * Closing cost fee of 5%: 158,000*0.05=$7,900. My closing cost is $7,900. IV.
Financial Analysis
As someone who works in accounting, I've been reviewing my monthly expenses to determine if I am financially prepared to obtain a mortgage. After careful consideration, I have determined that I will be able to purchase a house in two years. This time frame will provide me with sufficient opportunity to save for any additional expenses, such as closing costs, that may be associated with buying a home.
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