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Financial Math Project - Student Loan Budgeting

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by

Myrissa Graham

on 15 December 2014

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Transcript of Financial Math Project - Student Loan Budgeting

Hypothesis
In this project, I will help a friend find a plan to payback their student loans in an efficient manner. I believe if they payback their loans faster, then they will save money in interest.
Annual Salary
The average starting salary for an accountant is between $47,047 - $65,080.
Monthly Budget
Food: $200
Principal
The total amount of money borrowed is called the principal. With five semesters with unsubsidized loans at $3,750 a semester. The principal amount of the loan is $18,750.
Monthly Payment Formula
It is important to pay off your loans so it looks good on your credit.
Financial Math Project - Student Loan Budgeting
By: Myrissa Graham

Beginning hourly wage: $23.00 - $30.55
Average gross pay: $44,007.20
Average monthly pay: $3,667.27
Rent: $400
Cell Phone: $80
Clothes: $50
Car Insurance: $180
Health Insurance: $200
Gas: $200
Total expenses
$1,310.00
Total of money after all expenses are taken out: $2,357.27
Student Loan Research
A benefit of paying your student loan back sooner, is you save money is interest.
You can pay your student loans back in different increments. For example, being weekly another being monthly or in a lump sum.
Some consequences of not paying your student loans are if you default on your loans, it could ruin your credit. Having good credit is important because it is like a report card you get better stuff for a better score. Another consequences of not paying your loan could garnish your wages.
$3750
x 5
-------
$18,750
M=P[ r (1+ r ) ]
nt
n
n
(1+ r )
nt
-1
n
n
Monthly payment: $188.59
Future Value: $22,630.74
Interest: $3,880.74
Standard 10 year plan
Desired Monthly Payment
For a 6 year plan
Monthly Payment: $292.15
Future Value: $21,035.02
Interest: $2,285.02
Desired Monthly Payment
For 8 year plan
Monthly Payment: $227.33
Future Value: $21,823.66
Interest: $3,073.66
Desired Monthly Payment
In the 10 year plan, you will pay $188.59 per month. The interest will be $3,880.74
In the 6 year plan, you will pay $292.15 per month. The interest will lower to $2,285.02
In the 8 year plan, you will pay $227.33 per month. The interest will be $3,073.66
Results
The desired payment plan for my friend will be the 6 year plan. Their monthly payment would be $292.15. This would leave them with $2,065.12 for personal use. They would save $1,595.72 in interest.

References
Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2014-15 Edition, Accountants and Auditors,
on the Internet at http://www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm (visited December 08, 2014).


http://www1.salary.com/Accountant-I-Salary.html
Jason Bramwell (May 1, 2013) Starting Salary for 2014 Accounting Grads is $52,900 : Report retrieved from: http://www.accountingweb.com/article/starting-salary-2014-accounting-grads-52900-report/223321
Cecilia Barr (12/8/14) Budgeting 101 for College Students. Retrieved from http://www.deb.org./students/college-budgeting-101/
Accountant salary (2014) retrieved from http://www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm (visited December 08, 2014).
Cecilia Barr (12/8/14) Budgeting 101 for College Students. Retrieved from http://www.deb.org./students/college-budgeting-101/
For the purpose of this project i will be using $55,009.00 as the average starting salary.
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