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The Process

 

Find a Job

Find a part-time job using on-line resources. Copy and paste a copy of the job you have selected into a Word document naming the internet or hard copy resource. Be sure the job you have selected indicates a wage per hour. Some potential resources (you are not limited to these) include: http://jobs.startribune.com/jobs/ and http://www.careerbuilder.com.

You may use other sites if you wish. Note: Most career sites will have features to help you narrow your search to part-time positions in the Mpls./St. Paul Metro area.

If you already have a part-time job. In Word, type of a job description and the hourly wage.

 

Determine Monthly Income

Assume you will work 20 hours per week, 4.3 weeks per month = 86 hours per month. In an Excel spreadsheet, calculate your monthly net pay. Assume 15% of your gross wage will be deducted for federal tax and 8% for state tax. You should remember the percent deducted for FICA!
 
Use the format below add titles and formatting as you find appropriate:
 
MONTHLY INCOME
Hourly
Wage
Hours
Worked
Gross
Pay
Fed.Tax
15%
State Tax
8%
FICA
Net
Pay
6.75%
       
 
             
 

 

On the same spreadsheet,below this table, create a new table to show how many months it will take you to accumulate your downpayment of $2,000.00. (HINT: $2,000/net pay)

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Locate Potential Vehicles to Purchase

Find three vehicles that interest you with a purchase price of $15,000.00 or less. Utilize the following resources: http://www.keepitlocal.com, http://www.carsoup.com, http://www.autobytel.com, http://www.autoweb.com, http://www.carsdirect.com.
 
Print the information about each of your three vehicles, or copy and paste the information you find about into a new Word document. Be sure to include the source for each vehicle with the information. (Car make, year, price, options,picture optional)
 

Do Your Research

Are you getting the best deal? How do you determine if the seller is asking a fair price? Use the following sites to determine the vehicle's value. Be sure you thoroughly investigate the sites locating a base price and retail and/or private party price by selecting your vehicle and adding all the options and features you know about. The following sites can provide a wealth of information: http://www.kbb.com, http://www.edmunds.com , http:www.autoweb.com.
 

Now, either print your research for each vehicle or add the vehicle value information to the Word documents you already created. Be sure the asking price and the value you just located is labled clearly and completely along with the source for your research..

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Narrow your Options

Create a new Word document titled "Vehicle Purchase Pros and Cons". Based on the information you have found, list at least three pros and three cons for each vehicle. This is your opinion - what matters to you, the purchaser!
Review your pros and cons and eliminate one vehicle from your list of potential purchases. In a paragraph below your "pro's and con's", state which vehicle you eliminated and why. Also provide your reasons for keeping the vehicles you did.
 

Calculate Monthly Payment and Insurance

For the two cars remaining, use two Excel spreadsheets to document the MONTHLY cost of financing and insuring the these vehicles. See sample spreadsheet below.

 
          Total         TOTAL
    Title Total Down- Financed Interest Monthly Mthly Mthly Mthly
Price Tax Fee Cost Payment (cost-down) Rate Paymnt Tabs Insur Cost
                     
                     
 

Assume you will pay the asking price, thus enter the seller's price as your price for the vehicles.

Sales tax in MN is 6.875%.

 

There is also a fee to transfer the title of the vehicle from one owner to another. Locate this cost on the following link (click on DVS home (top of page, then Fees, then Title Fee):

http://www.dps.state.mn.us/dvs/index.html

 

Remember the $2000.00 you saved? This is the downpayment for your vehicle so you do not have to borrow as much from the bank. So, the Total Financed on your spreadsheet is Total Cost (price + tax + title) - $2000.

 

Assume that you will obtain a three-year loan for what you need to finance or borrow. (36 months)

 

Use the following resources to find an average interest rate for your loan and then use an on-line loan calculator to determine a monthly payment. The following sites will provide all the necessary information: http://www.bankrate.com/, http://www.autobytel.com, or http://www.interest.com/

 

Use the following link to determine the registration (tab) fee. (Click on Division - Driver and Vehicle Services, Fees, Registration Tax)

You must first add the filing, technology and wheeling fees together. These are standard rates that everyone pays.

Then go to the section "Passenger Class Vehicle Registraiton Tax" and click on the "Base Value Guides for 2013" and retrieve the annual fee for your car based on the value and year.

Don't forget to add the filing,technology and wheeling fee to this amount.

This is an annual (yearly) amount, to find out how much this costs you each month, divide by 12.

http://www.dps.state.mn.us/dvs/index.html

 

Insurance quotes can be obtained on-line if you are over 18. For this project we will assume that insurance will cost $800.00 per year. Divide by 12 to get your monthly insurance cost.

To obtain your total monthly cost, add your monthly payment, monthly tabs and monthly insurance.

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Make a Decision

Using all the facts and figures you have collected, choose one car to purchase. Document your final selection in a new word document titled "Final Decision" along with your reasoning.
 

Maintenance and Running Costs

Your monthly cost is not complete without adding the price of regular maintenance fees and fuel. In another Excel spreadsheet, calculate a total for these expenditures. See sample spreadsheet below.

Assume you will change the oil once every three months. Use a spreadsheet to calculate a monthly cost. We will assume and oil change will cost you $19.95 per service.

Assume you will need one tank of gasoline every other week (hint: 52 weeks in a year/2). Use a spreadsheet to calculate a monthly cost.

Assume you will save $50.00 per month for repairs, just in case.

 

 
Find current fuel prices at: SuperAmerica. Multiply the current price by the tank size of your vehicle to get the cost of one tank of gas. If tank size is not in the information you have already found, check the manufacturer's web site or talk to your teacher, we can make an educated guess.
 
  Cost per Service/Tank Services per Year Annual Cost Monthly Cost
Oil Change        
Fuel        
Repair        
Total Monthly Cost
 
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Create Your Monthly Budget

Your final Excel spreadsheet will help determine if you can afford the car you have selected. Create the spreadsheet below to determine your discretionary income (income-less expenses). Don't forget to put at least $100/month toward investing or saving!

     
Income    
  Wages (monthly wage from part-time job in step one)  
  Other Income (allowance from parents)  
  Total Income  
     
Expenses    
  AutoPayment Including Tabs, Insurance  
  Auto Maintenance, Running and Repair  
  Other Expenses (cell phone, entertainment, etc.)  
  Money to Invest/Save $100.00
  Total Expenses  
     
Discretionary Income    
     
 

Conclusion

Can you afford this car? Is it a good purchase for you? In short report format explain your journey, what you learned in each step of the process, what surprised you, etc. Conclude with your final decision and appropriate reasoning.

 

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Last Updated: May 18, 2012 1:07 PM
Questions or Comments Welcome! Please contact Leah Lencowski
   
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