Exercises: Budgets, saving and credit

Jordan is calculating his net worth. He has $\$450$ in his savings account and owns a bicycle worth $\$250$. However, he owes his older brother $\$50$ for a video game. Calculate Jordan's total net worth.

A monthly budget includes both fixed and variable expenses. Look at the following list of Maya's monthly expenses:

• Rent: $\$1,200$

• Groceries: $\$350$

• Car Insurance: $\$100$

• Entertainment: $\$150$

Identify which expenses are fixed, and calculate the total amount of Maya's fixed expenses for the month.

Marcus has a total monthly income of $\$3,200$ from his job. His total monthly expenses (both fixed and variable) add up to $\$2,850$. If he puts all of the remaining money into a savings account, how much money will he save this month?

Sarah deposits $\$800$ into a savings account that earns $5\%$ simple interest per year. If she leaves the money in the account for $3$ years and makes no other deposits or withdrawals, how much total interest will she earn?

Liam wants to buy a new video game that costs $\$50$. He only has $\$40$ in his checking account. If he uses his debit card to buy the game, his bank will charge him a $\$35$ overdraft fee. What will be the total cost of the game if he chooses to use his debit card and incur the fee?

Chloe has a credit card balance of $\$500$. Her credit card company requires a minimum monthly payment of either $\$25$ or $4\%$ of the total balance, whichever is greater. Calculate $4\%$ of her balance and determine the minimum payment she must make this month.

A family's total assets are valued at $\$5,000$. If their calculated net worth is $\$3,500$, what is the total value of their liabilities?

David deposits $\$1,000$ into an account that earns $10\%$ interest compounded annually. Calculate his account balance at the end of the first year, and then use that new balance to find how much money he will have at the end of the second year.

Review the financial information for the Smith family below:

• House value: $\$300,000$

• Checking account: $\$3,000$

• Investment account: $\$12,000$

• Mortgage owed: $\$240,000$

• Student loan debt: $\$25,000$

Categorize each item as an asset or a liability, and calculate the Smith family's total net worth.

Ethan works a part-time job earning $\$18$ per hour. He works $25$ hours a week. Assume there are exactly $4$ weeks in a month for his budget. If he allocates $40\%$ of his monthly income to fixed expenses and $35\%$ to variable expenses, how much money does he have left over for savings each month?

Isabella is comparing two different savings accounts for a $\$5,000$ deposit over $2$ years.

• Account A offers $4\%$ simple interest per year.

• Account B offers $4\%$ interest compounded annually.

Calculate the total amount of money in each account after $2$ years. How much more money will Isabella have if she chooses the compound interest account?

Jackson has a credit card with a balance of $\$1,200$ and an Annual Percentage Rate (APR) of $18\%$. To find the monthly interest rate, divide the APR by $12$. If Jackson makes no new purchases and pays off exactly the interest charged for the first month, how much money will he pay in interest?

Mia wants to buy a new laptop priced at $\$900$. The electronics store offers her their store credit card, which gives a $10\%$ discount on the laptop but charges a one-time $\$50$ activation fee. Alternatively, she can pay with cash for the full price. Which payment method is cheaper, and by how much?

Noah is reviewing his monthly budget because he currently has a deficit of $\$100$. His expenses are:

• Rent: $\$1,000$ (Fixed)

• Car Payment: $\$300$ (Fixed)

• Groceries: $\$400$ (Variable)

• Dining Out: $\$150$ (Variable)

• Subscriptions: $\$40$ (Variable)

He decides to completely cancel all his subscriptions. What percentage of his "Dining Out" budget must he also cut to exactly balance his budget and eliminate the remaining deficit?

Olivia wants to buy a used car that costs $\$15,000$. She currently has $\$3,000$ saved in her bank account. If she is able to save $\$400$ each month from her budget, how many months will it take her to save enough money to buy the car in cash?

William has a net worth of $\$2,500$. He has $\$800$ in his checking account and a credit card debt of $\$300$. If he uses $\$300$ from his checking account to completely pay off his credit card debt, what will his new net worth be? Explain how this transaction affects his total assets and total liabilities.

The diagram above shows a personal balance sheet. The individual has a target net worth of $\$60,000$. Based on the given assets and the known liabilities, calculate the exact amount owed on the Mortgage to achieve this target net worth.

Sophia has a credit card balance of $\$2,000$ with an APR of $24\%$. Her credit card company requires a minimum payment of $\$60$ this month.

First, calculate the monthly interest rate, and find out how much of her $\$60$ payment will go toward paying interest. Then, calculate how much will actually go toward reducing the principal balance, and determine her new balance after making the minimum payment.

The graphs above compare the growth of a $\$1,000$ deposit over time. Panel A shows simple interest, and Panel B shows compound interest. Based on the data projected on the graphs for Year 5, what is the exact difference in the account balance between the compound interest account and the simple interest account at year 5?

James follows the 50/30/20 budgeting rule, which means $50\%$ of his income should go to "Needs" (fixed expenses), $30\%$ to "Wants" (variable expenses), and $20\%$ to "Savings". His total monthly income is $\$5,000$. Currently, his total "Needs" amount to $\$2,800$. How much money must he cut from his "Needs" category to strictly meet the $50\%$ target of his budgeting rule?

Lucas needs to finance a $\$20,000$ car. He is comparing two loan options:

• Option A: $5\%$ simple interest per year for $4$ years.

• Option B: $7\%$ simple interest per year for $3$ years.

Calculate the total cost of the car (principal plus interest) for each option. Which option is cheaper overall, and by how much?

Evelyn has an emergency fund of $\$12,000$. Her normal monthly take-home pay is $\$4,000$. Her current monthly expenses are: Rent $\$1,500$, Utilities $\$300$, Food $\$600$, Car Payment $\$400$, and Entertainment $\$200$.

Suddenly, Evelyn loses her job. To stretch her savings, she cuts her Entertainment budget to $\$0$ and reduces her Food budget to $\$400$. Under this new strict budget, how many full months can she pay all of her living expenses using only her emergency fund?

Daniel needs $\$500$ immediately for a car repair. He has two choices to borrow the money for one month:

• Choice 1: A payday loan that charges a flat fee of $\$75$.

• Choice 2: A credit card cash advance that charges a $3\%$ upfront fee on the amount borrowed, plus an APR of $24\%$ (which equals $2\%$ monthly interest applied to the original borrowed amount).

Calculate the total cost of borrowing the money for one month using each choice. Which option is cheaper, and by how much?

At the beginning of the month, Harper's net worth is $\$10,000$. During the month, she earns $\$4,000$ in income and spends $\$3,200$ on normal living expenses. She uses all of her remaining cash surplus to buy a new television for $\$800$. However, the television is a depreciating asset and immediately loses $20\%$ of its value the moment she buys it. Calculate Harper's exact new net worth at the end of the month.