major expenditures: transportation and housing advanced level
TRANSCRIPT
MAJOR EXPENDITURES: TRANSPORTATION AND HOUSINGAdvanced Level
© Take Charge Today – August 2013– Major Expenditures – Slide 2Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
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Transportation and Housing:Over 50% of Average Spending
Food13%
Housing34%
Transpor-tation17%
Other37%
Consumer Spending
Source: 2011 Consumer Expenditure Survey
HOUSING (RENTING AND OWNING)
Describe your dream house
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Renting a Home – Important Terms
Landlord Tenant• Person who owns a property and chooses Person that rents the property.• to allow others to live there for rent
Rent• Price paid for the use of someone else’s property
Lease Security Deposit•A legally binding document that describes the terms Money paid up front to pay• that the landlord and the tenant have agreed upon. for any damages the tenant• may cause.
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Lease
Lease:A legally binding document that describes the terms that the
landlord and the tenant have agreed upon.
© Take Charge Today – August 2013– Major Expenditures – Slide 6Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
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What are common rental expenses?
Utilities (all or some may be
included in rent)
Household furnishings
(some may be furnished)
Renters Insurance – provides payment to renters to cover the damage and loss of property in addition
to liability losses
Communications(internet, television,
phone)
The cost of housing is more than rent!
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Home Loan
Lender evaluates
many factors including:
Credit history
Income
Net worthAssets-
Liabilities
Income and
expense statement
Most use credit to purchase a home
Lender determines the maximum amount that can be borrowed and the credit
terms
© Take Charge Today – August 2013– Major Expenditures – Slide 8Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
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Mortgage Payment
Mortgage payments
typically include:
Cost of the home Interest Funds to pay property taxes
Funds to pay homeowners
insurance
A payment to pay off the loan used to purchase housing
TRANSPORTATION
What are transportation options
in your community?
© Take Charge Today – August 2013– Major Expenditures – Slide 10Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
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Public Transportation
Pros Cons
May not be convenient or require more
travel time
Availability depends on the
location
Does not require extra cost of ownership expenses
Typically cost effective
Examples include: taxi, subway, bus, etc.
© Take Charge Today – August 2013– Major Expenditures – Slide 11Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
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What are typical automobile ownership expenses?
Automobile payment
(if credit is used)
Fuel Maintenance and Repairs
License and Registration (yearly fee)
Insurance Depreciation
Before purchasing a vehicle, be sure you can afford the total cost of ownership
© Take Charge Today – August 2013– Major Expenditures – Slide 12Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
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Getting a Loan
LoanThis allows you to
borrow with money with
interest.Length of Loan
The longer the loan the lower the payment, but
you’ll pay more in interest.
APRThis is the annual
percentage rate used to compute the finance charge. Is useful when
comparing loans.
Loan rates vary significantly between lenders.Shop around before negotiating.
Down PaymentThe percentage of the purchase price a car
buyer puts down toward the cost of the
car… usually 20%.
Finance Charges (Interest)
This includes all of the $ you will have to pay the lender beyond the cost
of the item.
© Take Charge Today – August 2013– Major Expenditures – Slide 13Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
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Depreciation
The value of most vehicles depreciates (lowers) over
time
One of the biggest costs of ownership.
Over the first two years, a new car loses at least 30%
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What features would you look for in an automobile?
Cost Size Usage
Gas mileage Safety Ratings Reliability
Environmental Impact Depreciation Upgraded
features
© Take Charge Today – August 2013– Major Expenditures – Slide 15Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
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Types of Cars-Coupe
Coupe: Usually has two doors, smaller backseat for occasional passengers, and good gas mileage.
© Take Charge Today – August 2013– Major Expenditures – Slide 16Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
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Sedan: Usually 4 doors, two rows of seats with a backseat that will seat adults comfortably.
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SUV (SPORTS UTILITY VEHICLE): Has multiple rows of seating, an increased hauling capacity, and can usually drive off-road.
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Leasing
You pay a specified amount of money (usually monthly) for a specific time
Once lease expires, vehicle returned to the lease grantor
Read the contract closely – look for
hidden costs
Leasing – This allows you to use a car for a specified period of time for a specified monthly payment.
© Take Charge Today – August 2013– Major Expenditures – Slide 19Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at the University of Arizona
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Insurance
LiabilityThis compensates an
injured party an ensures you will be able to pay for any
damages you cause.
CollisionThis covers the car
of the insured person and pays
for repairs after an accident or cash compensation.
No-FaultUnder this system, after an accident
both parties would be covered by their
own insurance.