Question

Please please help me with this question

Profile: John John is a 35 year old, divorced man with one child (who lives with his mom). His take home pay is $4123 per month. He pays $1200 per month in child support to his ex-wife. He owns a 2-storey home and his monthly mortgage payments are $475 every 2 weeks. His car expenses total $145 monthly and his car insurance costs him $113 every month. His house insurance is $47.36 monthly. John also has an outstanding credit line of $8500. The only amount due on this account is the interest of about $55 monthly. However John is trying to pay off the credit line within the next 2 years, so he pays off as much of this loan as he can afford each month.

1.Use one highlighter to identify all sources of income. Total the income for each month.

2.Use a different highlighter to identify all sources of expense. Total the expenses for each month.

3. Subtract the Total Expenses from the Total Income for each

month. A Surplus is when your Income minus Expenses = a positive number.

A Shortage is when your Income minus Expenses = a negative number. Does he have a surplus or a shortage?

Answer 1

1. Income highlight: $4123 of take home pay. That's it.

Total monthly income: $4123

------------------------------------

2. Expense highlight:

$1200 child support

$475 every 2 weeks

$145 car payment

$113 car insurance

$47.36 house insurance

$55 loan payment

Total monthly expense: $2510.36

(1200 + 2(475) + 145 + 113 + 47.36 + 55 = $2510.36

---------------------------------------------

3. $4123 - 2510.36 = 1612.64 surplus

--------------------------------------------

The only question remaining is what if they want him paying more on his credit line...it's kind of a variable expense at this point.

John also has an outstanding credit line of $8500. The only amount due on this account is the interest of about $55 monthly. However John is trying to pay off the credit line within the next 2 years, so he pays off as much of this loan as he can afford each month.