Major Expenditures: Transportation and housing Advanced Level

Transportation and Housing: Over 50% of Average Spending Source: 2011 Consumer Expenditure Survey

Housing (Renting and Owning) Describe your dream house Housing (Renting and Owning)

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.

Lease Lease: A legally binding document that describes the terms that the landlord and the tenant have agreed upon.

What are common rental expenses? The cost of housing is more than rent! 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)

Home Loan Most use credit to purchase a home Lender evaluates many factors including: Credit history Income Assets-Liabilities Net worth Income and expense statement Most use credit to purchase a home Lender determines the maximum amount that can be borrowed and the credit terms

Mortgage Payment A payment to pay off the loan used to purchase housing Mortgage payments typically include: Cost of the home Interest Funds to pay property taxes Funds to pay homeowners insurance

What are transportation options in your community?

Public Transportation Examples include: taxi, subway, bus, etc. 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

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

Finance Charges (Interest) Getting a Loan Loan This 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. APR This is the annual percentage rate used to compute the finance charge. Is useful when comparing loans. Down Payment The 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. . Loan rates vary significantly between lenders. Shop around before negotiating.

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%

What features would you look for in an automobile? Cost Size Usage Gas mileage Safety Ratings Reliability Environmental Impact Depreciation Upgraded features

Types of Cars-Coupe Coupe: Usually has two doors, smaller backseat for occasional passengers, and good gas mileage.

Sedan: Usually 4 doors, two rows of seats with a backseat that will seat adults comfortably.

SUV (SPORTS UTILITY VEHICLE): Has multiple rows of seating, an increased hauling capacity, and can usually drive off-road.

Leasing Leasing – This allows you to use a car for a specified period of time for a specified monthly payment. 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

Insurance Liability This compensates an injured party an ensures you will be able to pay for any damages you cause. Collision This covers the car of the insured person and pays for repairs after an accident or cash compensation. No-Fault Under this system, after an accident both parties would be covered by their own insurance.