Life after College Budget Project

This project will walk you through some post-college realities that you may or may not have pondered. For the calculations and work you need to show for solving for n, you may handwrite and then insert images of your work in the space provided for calculations or utilize the equation editor in word.


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FV = amount after t years PMT = monthly payment

i = rate per payment period PV = Present value of a loan or annuity

n = number of payments

1) College Loan (10 points)

You choose to attend college at _______________________, which costs $__________ per year for tuition, room, and board. You spend ____ years there for a total cost of $________________. You get a scholarship for $________________; you are also able to pay $_____________ outright. To pay for the remainder, you take out a loan for $_____________ ( use $2000 if your scholarship and ability to pay outright brings the cost below this) for ____ years at ____ % APR compounded monthly from ___________________________ (bank name). $____________ is your monthly college loan payment.



2) Car Loan (10 points)

Your car is nearing the end of its life. You must purchase another one – no leases – and it may be new or used. The cost of the car you want to purchase is: $_________________ Your present car, worth $______________ may be used as a trade-in. Therefore you will be financing $_____________ (minimum $1000 – assume you have some car debt if trade-in covers it) for _____ years (choose 2, 3, 4, 5, or 6 years) compounded monthly at ____ % APR from ______________________________ (bank name).

a) Monthly car loan payment = $__________


3) Salary (4 points)

Your job as a(n) ___________________ has a median starting salary of $_____________.

Monthly gross salary = $_____________

Taxes are deducted from your paycheck. Calculate each for your monthly salary.

i) 15% Federal income tax: $___________

ii) 7.6% FICA tax $___________ Total taxes: $____________

Monthly net salary (take-home pay) = salary – total taxes = $_____________

4) Retirement Savings (16 points)

You plan to start work at age _____ is the age at which you plan to start your career, and _____ is the age at which you hope to retire. You will try to save $______ per month in a mutual fund. Over time, this mutual fund earns 9.0% APR compounded monthly for _____ years (start of work to retirement age)

When you retire, your mutual fund is worth $__________________


Using your great-great grandparents’ and great-grandparents’ ages when they passed away (if you don’t know estimate), you estimate that you will live to age _______ . You will be living off your retirement savings for _____ years (retirement age to death) which continues earning interest but no added payments are made. Your income will be $______________ per year.


5) Mortgage (25 points)

You would also like to purchase a house in _____ years that costs $________________.

You need to save enough for a down payment, usually 10-20% of the purchase price, for this project use 20%: $______________________.

Savings per month to achieve this goal in ______ months: $______________ (use the number of years stated above converted to months and round up to the nearest cent as needed).

When purchasing the home, you would then finance $_____________ for ____ years (choose from either 15, 20, or 30) at ____% APR compounded monthly from ______________________ (bank name).

Monthly payment: $_____________


With this payment, how much will you eventually pay for your house? (monthly payment x months + down-payment) $________________


Suppose you could only afford to pay half the monthly payment you found above. How long would it take to pay off the mortgage? ________


6) Other Expenses (5 points)

a) What other expenses will you be responsible for when you graduate and live on your own?

Utilities ___________ Phone __________

Gasoline ___________ Food __________

Water/sewer/trash ___________ Auto insurance __________

Cable/Satellite ___________ Renter insurance __________

Internet ___________ Rent __________

TOTAL : $_________________

7) Monthly Balance (5 points)

Net monthly salary – (college pymt + car pymt + mutual fund pymt + down pymt svngs + mo. expenses)

___________ – (________ + ________ + ________ + _______ + _______) = $________

8) Credit Cards (20 points)

a) Will credit cards help? The average undergraduate student leaves college with a diploma and around $2750 in credit card debt (graduate students, $4800). Suppose you have a credit card with a balance of $2750 and an interest rate of 19.8% APR. The minimum payment is $45.00. The amount of interest due each month is figured as current balance , where r is the rate (decimal form) and n is 12. Fill in the table, making minimum payments.

Month Current balance Interest Payment Amount applied to principal
1 $2750.00 $45.38 $45.00 -$0.38
2 $2750.38   $45.00  
3     $45.00  
4     $45.00  
5     $45.00  
6     $45.00  
7     $45.00  
8     $45.00  
9     $45.00  
10     $45.00  
11     $45.00  
12     $45.00  


c) Will you ever be out of debt with the credit card company? Explain. (Hint: Use the Present value formula and solve for n).


d) Suppose you begin making a monthly payment of $75.00. Fill in the table.

Month Current balance Interest Payment Amount applied to principal
1 $2750.00 $45.38 $75.00 $29.62
2     $75.00  
3     $75.00  
4     $75.00  
5     $75.00  
6     $75.00  
7     $75.00  
8     $75.00  
9     $75.00  
10     $75.00  
11     $75.00  
12     $75.00  

e) Will you ever be out of debt? Explain.


f) How much must you pay per month to be out of debt in two years? __________