MG-310 Spring 2016 Personal Wealth Management Team Assignment Part Three Remember, each team is really one imaginary person so your decision as a team is for this one person. Also, everyone needs to participate. If they do not, leave their name off your final paper. Love is in the air…dum dum dee dum! You have met the perfect man/woman…the peas to your carrots, the chocolate to your peanut butter, and the ice cream to your apple pie. Garsh, I am starving suddenly. Ok so here goes, you and your beloved met at work so you guys have the same benefit package (health insurance, 401K, etc.) BUT he/she earns $1,000 MORE per month than you do. Score one for the gold diggers, what, what! You first need to adjust your budget to reflect the additional income. Now, assume that your new spouse has a student loan payment of $400 per month, an automobile payment of $250 each month, and a car insurance payment of $75 per month. Since you have added him/her to your insurance plan, the agent is offering a 5% discount off YOUR premium for multi-policies and will give an additional 5% discount if you pay your premium and your spouse’s premium FOR THE YEAR, to be billed in December. This is totally up to your team if you want to take advantage of the 5% discount... paying a yearly lump sum may prove too difficult for your budgets. Here’s what you need to do: Figure out your spouse’s take-home pay like you did for yourself in assignment #1 Increase your overall household budget to feed/support both of you Determine how much money you have for discretionary spending. Work on the car insurance scenario now that you have two vehicles to insure NEXT: Your spouse absolutely loves shoes. Kicks, boots, sandals, you name it, they are everywhere! You guys need MUCH more closet space to accommodate this obsession, so you have decided to purchase a home. Your parents have been kind enough to offer to put down 5% of the purchase price. You have a credit score of 700 (thanks to making on-time payments on that car!), and your spouse has a score of 770. (KEEP READING) Requirements: • Research homes available for sale in your zip code, your city, or in a surrounding area • Research all of the costs involved in purchasing a home (homeowners insurance, PMI, credit life insurance, umbrella policy, setting up utilities, moving cable, etc.) • Research what type of loan you want (how many years, fixed rate, ARM loan, etc.) Find out what your monthly payments are based on your credit score…also who’s score will they use? Yours? Your spouse’s? • Submit to me a new budget with your new home expenses included, and the aforementioned changes that have come with being married and having a household of TWO now, then show the increase in your overall expenses. • Calculate the percentage of your take home pay that is used to totally operate your home including the house note (this is a somewhat scary number at times). Remember with homeownership comes responsibility. Are you going to cut the grass or hire someone? What about a monthly allowance for repairs? The report should be submitted via the dropbox found under the “Lessons” tab and only one report is needed per team. Please put the names of all team members who actively participated and contributed to this assignment. Running head: TEAM ASSIGNMENT PART 1 Cost of Living Allowance: Washington State (DRS) has a cost of living Adjustments (COLA) from July 2, 2016 – July 1, 2017 is 0.00%. Background information: The net pay calculations based on the salary assumption of $36,000, health insurance package of $200 monthly, 401K-match program, contributions and tax rates in association with Washington State. 1 TEAM ASSIGNMENT PART 1 2 Federal Insurance Contributions Act (FICA) Calculations FICA is social security and Medicare taxes. The rate is 5.65% combined with 4.20% going to social security and 1.45% going to Medicare. If you use the 36,000 salary ($3,000 per month) then tax deductions would be $126.00 for social security and $43.50 for Medicare. Social Security ($3,000) * (3.00%) = $90.00 per month Medicare ($3,000) * (1.5%) = $45.00 per month State Tax Withholdings There are no state taxes for Washington State and there are no deductions taken from this paycheck. Taxable Income The taxable income will exclude your employee 401K deposits ($75.00 per month based off of $900.00 per year) and insurance which is $200.00 per month. Therefore, the taxable income based off $36,000 per year or $3,000 per month is $32,700 yearly or $2311.75 per month. Yearly ($36,000) – ($2,400 health) – ($900 401k) = $32,700.00 annual Monthly ($3,000) – ($200 health) – ($75 401k) = $2311.75 per month Federal Taxes: Tax bracket to $36,000 in Washington State is 1.5% over 18,650-71,000. Net Pay Calculations: Gross pay ($36,000/ 12) = $3,000 401 K ($900.00/ 12) = $75.00 Health insurance = $200.00 Social Security @ 3.0% ($3,000 x 3.0%) = $90.00 Medicare @ 1.5% = ($3,000 x 1.5%) = $45.00 Federal Taxes =1865*0.15=$279.75 State Taxes = 0 there are no state taxes for the State of Washington Net pay = ($3,000 gross) - ($75.00 401K) - ($200.00 Health) - ($90.00 SS) - ($45.00 med.) - ($279.75 fed.) Net Pay = $ 2311.75 per month TEAM ASSIGNMENT PART 1 3 Running head: CAR SHOPPING Make & Model: Chevrolet Silverado 5.3L V8 DIR OHV 16V (Motorsports) New or Used & This vehicle: The Chevrolet Silverado 5.3L V8 DIR OHV 16V has 11,216 miles, classifying this vehicle as new. The Chevrolet Silverado 1500HD is suited for the Washington state 2 environment, a cost effective 2015 purchase within budgeting ranges while reducing additional cost or risk associated with used vehicle purchases. Car Insurance: 2015 CHEVROLET SILVERADO HD 2500 4WD - HIGH COUNTRY CREW CAB DSL Liability Bodily Injury Property Damage $77.13 Personal Injury Protection (PIP) $16.87 Comprehensive Deductible $18.25 Collision Deductible $84.17 Underinsured Motor Vehicle - Bodily Injury $7.33 Underinsured Motor Vehicle - Property Damage $0.47 Emergency Road Service $0.81 Car Rental and Travel Expenses Vehicle Premium Totals (1 month) $205.02 (Farm) Insurance Loan: Yes, loan protection provides coverage when unexpected life situations arise in which covering the cost of the loan or loan payments is reduced or eliminated, depending on the loan holders situational circumstances. The loan would amount to $22,000 with a 3% annual interest 3 rate. The total cost of the loan, interest and insurance payment equals $23,736.35, with monthly payment at $23,736.35 / five = $4,747.27 / 12 = $395.60 monthly. . Total cost of the vehicle: Vehicle Sales/Leases Effective dates 4/1/17 - 6/30/17 Location code (view map) 3453 City......................................... Olympia County....................................... Thurston State Sales and Use Tax .065 Local City/County Sales and Use Tax .022 State Vehicle Sales Tax .003 Total tax rate .090 $23,736.35 * 0.09 = $2,136.27 + $23,736.35 = $25,872.62 The total cost of purchasing the chosen vehicle including taxes, insurance and fees is $25,872. Works Cited Farm, State. Quote. 15th April 2017. Web. 15th April 2017. Motorsports, Northwest. LIFTED 2015 CHEVROLET SILVERADO 1500 LTZ 4X4. 15th April 2017. Web. 15th April 2017.
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