1. MAJOR EXPENDITURES: HOUSING, TRANSPORTATION AND FOOD Advanced Level

2. © Take Charge Today – April 2014– Major Expenditures – Slide 2 Funded 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 2.6.7.G1 Food, Transportation and Housing: Over 60% of Average Spending Source: 2011 Consumer Expenditure Survey What influences spending choices?

3. © Take Charge Today – April 2014– Major Expenditures – Slide 3 Funded 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 2.6.7.G1 Your Present Self Impacts Your Future Self

4. (RENTING AND OWNING) Describe your dream house HOUSING

5. © Take Charge Today – April 2014– Major Expenditures – Slide 5 Funded 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 2.6.7.G1 Housing: Largest Expense for Most Choose housing that fits your personal needs and spending plan

6. © Take Charge Today – April 2014– Major Expenditures – Slide 6 Funded 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 2.6.7.G1 Renting a Home – Important Terms

7. © Take Charge Today – April 2014– Major Expenditures – Slide 7 Funded 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 2.6.7.G1 What are common rental expenses? Costs of housing: Rent Payment and…..

8. © Take Charge Today – April 2014– Major Expenditures – Slide 8 Funded 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 2.6.7.G1 Where can you find a place to rent?

9. © Take Charge Today – April 2014– Major Expenditures – Slide 9 Funded 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 2.6.7.G1 When Comparing Properties What are examples of essential vs. preferred features?

10. © Take Charge Today – April 2014– Major Expenditures – Slide 10 Funded 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 2.6.7.G1 What types of questions would you ask when comparing rental properties? Direct Costs

11. © Take Charge Today – April 2014– Major Expenditures – Slide 11 Funded 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 2.6.7.G1 What types of questions would you ask when comparing rental properties? Policies

12. © Take Charge Today – April 2014– Major Expenditures – Slide 12 Funded 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 2.6.7.G1 What types of questions does a landlord ask on a rental application? Helps a landlord evaluate if they will rent to you

13. © Take Charge Today – April 2014– Major Expenditures – Slide 13 Funded 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 2.6.7.G1 What are you looking for? Start with a list of preferences.  Location  Privacy

14. © Take Charge Today – April 2014– Major Expenditures – Slide 14 Funded 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 2.6.7.G1 Do you want a roommate?  Possible considerations:  Professional/School Schedule  Social Schedule  Cleaning Habits  Financial Situation  Common space issues

15. © Take Charge Today – April 2014– Major Expenditures – Slide 15 Funded 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 2.6.7.G1 Factors to consider when checking out the apartment  Is it close to your place of work?  Is the neighborhood safe?  Is it close to stores, banks, and other places you frequently visit?

16. © Take Charge Today – April 2014– Major Expenditures – Slide 16 Funded 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 2.6.7.G1 Viewing the Space  Make an appointment  Dress appropriately  Ask good questions  Take your checkbook  Begin your search early

17. © Take Charge Today – April 2014– Major Expenditures – Slide 17 Funded 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 2.6.7.G1 Viewing the Space  Safety features  Take a second look at the area  Check all major utilities/plumbing  Noise factors  Condition of the space

18. © Take Charge Today – April 2014– Major Expenditures – Slide 18 Funded 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 2.6.7.G1 Rental Agreement Don’t pay any deposits or rent payments without a rental agreement!

19. © Take Charge Today – April 2014– Major Expenditures – Slide 19 Funded 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 2.6.7.G1 What initial expenses may be required to rent a property? One or both expenses may be required:

20. © Take Charge Today – April 2014– Major Expenditures – Slide 20 Funded 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 2.6.7.G1 Purchasing a Home

21. © Take Charge Today – April 2014– Major Expenditures – Slide 21 Funded 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 2.6.7.G1 Home Loan Most use credit to purchase a home Lender determines the maximum amount that can be borrowed and the credit terms

22. © Take Charge Today – April 2014– Major Expenditures – Slide 22 Funded 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 2.6.7.G1 Two Significant Initial Expenses

23. © Take Charge Today – April 2014– Major Expenditures – Slide 23 Funded 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 2.6.7.G1 Mortgage Payment Mortgage: A payment to pay off the loan used to purchase housing

24. © Take Charge Today – April 2014– Major Expenditures – Slide 24 Funded 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 2.6.7.G1 What are typical home ownership expenses? Housing expenses: MORTGAGE

25. © Take Charge Today – April 2014– Major Expenditures – Slide 25 Funded 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 2.6.7.G1 Purchasing a $250,000 Home 20% Down Payment5% Down Payment Down Payment$50,000$12,500 Monthly Mortgage Payment$1,158.51$1,326.90 Total paid$417,062.18$477,683.21 Scenario 1: Down Payment 3.5% Interest Rate  30 Year Loan 780 Credit Score720 Credit Score Interest3.3%3.5% Monthly Mortgage Payment$1,136.33$1,158.51 Total paid$409,077.76$417,062.18 $8,708.33 paid for mortgage insurance! Scenario 2: Credit Score $50,000 Down Payment  30 Year Loan $7,924.42 Additional interest paid Source: mortgagecalculator.org

26. © Take Charge Today – April 2014– Major Expenditures – Slide 26 Funded 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 2.6.7.G1 Statement of Financial Position Equity – the monetary value of a property minus the amount owed

27. © Take Charge Today – April 2014– Major Expenditures – Slide 27 Funded 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 2.6.7.G1 Rent vs. Own Activity  Set-up: work in groups of 2-3  Supplies: piece of butcher paper and markers  Activity: For both renting and owning, brainstorm:  2 Pros  2 Cons RentOwn ProsConsProsCons

28. RentOwn ProsConsProsCons Lower move-in cost Subject to terms of the rental agreement Potential to gain equity May have significant negative effects on credit history is home loan is not paid according to the terms of the loan Easier to move May have restrictions such as no pets Tax benefits Large initial cost (down payment, closing costs) No (or little) maintenance and repairs Few or no opportunities for home improvements (appliances, paint, etc.) May improve credit history if the home loan is paid according to the terms of the loan Additional expenses Less responsibilityNo equity is gained Free to make home improvements More risky than renting Typically less expensive than home ownership No tax benefits No restrictions (unless restricted by the specific homeowner’s association) Usually requires additional resources (time, money) to maintain Utilities are sometimes included in rent payment Not as easy to move

29. TRANSPORTATION What are transportation options in your community?

30. © Take Charge Today – April 2014– Major Expenditures – Slide 30 Funded 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 2.6.7.G1 Public Transportation Examples include: taxi, subway, bus, etc.

31. © Take Charge Today – April 2014– Major Expenditures – Slide 31 Funded 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 2.6.7.G1 Purchasing an Automobile

32. © Take Charge Today – April 2014– Major Expenditures – Slide 32 Funded 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 2.6.7.G1 Do Your Research! You are responsible for yourself! Advance research will maximize your satisfaction with the purchase!

33. © Take Charge Today – April 2014– Major Expenditures – Slide 33 Funded 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 2.6.7.G1 What are typical automobile ownership expenses? Before purchasing a vehicle, be sure you can afford the total cost of ownership

34. © Take Charge Today – April 2014– Major Expenditures – Slide 34 Funded 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 2.6.7.G1 Marina’s Out-of-Pocket Expenses 5-Year Average Out-of-Pocket (15,000 miles driven per year) Fuel$9,852 Insurance$3,915 State fees (licensing)$1,932 Maintenance$1,945 Repairs$1,758 5 Year Total$19,402 Monthly Amount$323.37 Monthly Payment Purchase Price$21,548 Down Payment$2,154.80 Interest Rate2.84% Monthly Payment$347.09 Total Paid (down payment + loan) $22,980.20 Marina’s monthly loan is $347.09, but on average, the car will cost her, $670.46 per month to own! Marina purchased a 2013 Honda Accord Source: bankrate.comSource: kbb.com

35. © Take Charge Today – April 2014– Major Expenditures – Slide 35 Funded 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 2.6.7.G1 Depreciation

36. © Take Charge Today – April 2014– Major Expenditures – Slide 36 Funded 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 2.6.7.G1 What features would you look for in an automobile?

37. © Take Charge Today – April 2014– Major Expenditures – Slide 37 Funded 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 2.6.7.G1 Using Credit Loan rates vary significantly between lenders. Shop around before negotiating.

38. © Take Charge Today – April 2014– Major Expenditures – Slide 38 Funded 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 2.6.7.G1 Down Payment

39. © Take Charge Today – April 2014– Major Expenditures – Slide 39 Funded 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 2.6.7.G1 Leasing Leasing – renting a product while the ownership remains with the lease grantor

40. FOOD Which do you prefer, preparing food at home or eating out? Why?

41. © Take Charge Today – April 2014– Major Expenditures – Slide 41 Funded 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 2.6.7.G1 Two Primary Sources Prepare Food at Home Least Expensive Food Away from Home Most Expensive

42. © Take Charge Today – April 2014– Major Expenditures – Slide 42 Funded 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 2.6.7.G1 Burger Night - Family of Four Cost per person$6.29 Family of 4$25.16 Cost per person$5.84 Family of 4$23.36 Food Away From HomeFood Prepared at Home McDonalds Quarter Pounder with Cheese Combo Meal Burger with bun, condiments, 5lb bag of potatoes (for fries) and a 12 pack of Coke The meal prepared at home is less expensive and will result in left-overs What are ways to reduce the cost for either option?

43. © Take Charge Today – April 2014– Major Expenditures – Slide 43 Funded 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 2.6.7.G1 Nutrition Goal: Eat well-balanced meals high in nutrition Brainstorm 2-3 examples of food from each group

44. © Take Charge Today – April 2014– Major Expenditures – Slide 44 Funded 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 2.6.7.G1 Other Considerations

45. © Take Charge Today – April 2014– Major Expenditures – Slide 45 Funded 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 2.6.7.G1 Summary