Assignment 1 Finn's Vacation
Part 1: Finn’s Vacation
Your cousin, Finn decided he deserved a vacation. He did not have cash on hand to cover the expenses and expected to pay off the trip the following month with his tax return. The week after his vacation Finn’s car broke down. He spent his tax return money to repair his car and no longer has funds to pay off the credit cards. For his vacation Finn used 2 credit cards and charged a total of $1600.
1. Use the Debt Repayment Calculator in the weekly module to calculate how long it will take Finn to pay off each card if he only pays the minimum payment. Also calculate the total paid in interest charges.
Mastercard
Visa
APR
19.9%
11.9%
Balance
$1095
$505
Minimum Payment
$35
$25
Credit Card
Monthly payment
Months …show more content…
If Finn makes just the minimum payments what is the final cost of his vacation and how long will it take him to fully pay it off.
It will take Finn 45 month to pay off his MasterCard and 23 months to pay off his Visa. His total cost for his vacation would be $2,126.17 that’s $526.17 more.
3. Finn determines he is able to pay $100 a month towards his credit card debt. That will allow his to make more than the combined minimum payments of $60 a month. He asks you for advice on how much per month to pay on each card. Give your recommendation and explain your reasoning. List your proposed monthly payment below and recalculate the months to repay and total interest paid based on your proposed payment amounts.
Credit Card
Monthly payment
Months to Repay
Total Interest Paid
Mastercard
$75
17
$166.07
Visa
$25
23
$63.78
My recommendation would be that Finn pay more towards his Master Card because it has the highest APR of 19.9% compared to his Visa at 11.9%. If he pays $75 towards his master card he will be done paying it off with in 17 month. By then he will only owe $136.32 on his Visa he can use the $75 towards Visa payment pay off his Visa with in 18 or 19 month compare to 23 month. He would average paid total of $250 in APR rate compared to $526.17 that’s a saving of $276.17 if he only made his minimal …show more content…
Save money before spending it decide what to do with the extra money. Set specific goals, such as building an emergency fund. Transfer some of her pay and open a saving account. Remember, she not going to save money unless she focus her spending on things she need, not just things she wants.
2. Track her spending.
Track her out-of-pocket spending for a week. Keep track of all the money she spend for a week on groceries, gas, meals, clothes, entertainment, personal items, and even sodas and snacks, which can all add up. Keeping track of every expensive this can offer her insight into unnecessary wastes, from restaurant meals to others. She can use free online tools, such as Mint.com or those offered by your financial institution
3. Cut her
Your cousin, Finn decided he deserved a vacation. He did not have cash on hand to cover the expenses and expected to pay off the trip the following month with his tax return. The week after his vacation Finn’s car broke down. He spent his tax return money to repair his car and no longer has funds to pay off the credit cards. For his vacation Finn used 2 credit cards and charged a total of $1600.
1. Use the Debt Repayment Calculator in the weekly module to calculate how long it will take Finn to pay off each card if he only pays the minimum payment. Also calculate the total paid in interest charges.
Mastercard
Visa
APR
19.9%
11.9%
Balance
$1095
$505
Minimum Payment
$35
$25
Credit Card
Monthly payment
Months …show more content…
If Finn makes just the minimum payments what is the final cost of his vacation and how long will it take him to fully pay it off.
It will take Finn 45 month to pay off his MasterCard and 23 months to pay off his Visa. His total cost for his vacation would be $2,126.17 that’s $526.17 more.
3. Finn determines he is able to pay $100 a month towards his credit card debt. That will allow his to make more than the combined minimum payments of $60 a month. He asks you for advice on how much per month to pay on each card. Give your recommendation and explain your reasoning. List your proposed monthly payment below and recalculate the months to repay and total interest paid based on your proposed payment amounts.
Credit Card
Monthly payment
Months to Repay
Total Interest Paid
Mastercard
$75
17
$166.07
Visa
$25
23
$63.78
My recommendation would be that Finn pay more towards his Master Card because it has the highest APR of 19.9% compared to his Visa at 11.9%. If he pays $75 towards his master card he will be done paying it off with in 17 month. By then he will only owe $136.32 on his Visa he can use the $75 towards Visa payment pay off his Visa with in 18 or 19 month compare to 23 month. He would average paid total of $250 in APR rate compared to $526.17 that’s a saving of $276.17 if he only made his minimal …show more content…
Save money before spending it decide what to do with the extra money. Set specific goals, such as building an emergency fund. Transfer some of her pay and open a saving account. Remember, she not going to save money unless she focus her spending on things she need, not just things she wants.
2. Track her spending.
Track her out-of-pocket spending for a week. Keep track of all the money she spend for a week on groceries, gas, meals, clothes, entertainment, personal items, and even sodas and snacks, which can all add up. Keeping track of every expensive this can offer her insight into unnecessary wastes, from restaurant meals to others. She can use free online tools, such as Mint.com or those offered by your financial institution
3. Cut her