APPENDIX—PERSONAL FINANCE WORKSHEETS
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Transcript of APPENDIX—PERSONAL FINANCE WORKSHEETS
APPENDIX—PERSONALFINANCE WORKSHEETS
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434 APPENDIX—PERSONAL FINANCE WORKSHEETS
Financial Record Specific Items SafeGeneral Category Within Category Filed Lockbox Deposit
Auto Insurance policyTitle informationRepairs/expensesAuto loan/lease information
Bank Checking statements and recordsSavings statements and records
Credit Records for each loan or credit accountCredit reportsApplications for credit
Home Mortgage documents and recordsHomeowner’s insuranceReceipts for repairs/capital improvementsRental contracts
Children Report cardsSchool photosSchool policies/procedures manualRecords of child-care expensesBirth/adoption certificates
Life /estate Life insurance policiesBilling recordsCopy of willsCopy of estate plan
Medical Billing and insurance recordsPrescription drug recordsHealth insurance policyHealth/immunization records
Employee benefits Periodic reports from retirement plansEmployer informationOther insurance and benefits
Taxes Tax statements from employer(s)Tax statements from investments and loansTax returnsReceipts for next tax year
Budget and bills Current bills payableBill receiptsBudget records
Investments Records of purchases and salesAccount activity statements
WORKSHEET 1 Organizing Your Financial Records
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APPENDIX—PERSONAL FINANCE WORKSHEETS 435
WORKSHEET 2 Personal Balance Sheet
Directions: 1. List the current values of your assets and your debts.2. Compute Net worth � Total assets � Total debts
�
Assets Debts
Checking accounts $Savings accountsMoney market accountsU.S. savings bondsCash value of life insuranceOther short-term
investments
Total liquid assets
CarsHome furnishingsJewelry/art/collectiblesClothing/personal assets
Total personal property
Market value ofinvestments (stocks,bonds, mutual funds)
Employer retirementplan(s)
Individual retirementaccount(s)
Other retirement savings
College savings plan
Other savings plans
Total investment assets
Market value of home
Market value of investmentreal estate
Total real property
Total assets
Current bills1. $
2.
3.
Total current bills
Credit card balances (list)1. 2. 3.
Alimony/child supportowed
Taxes owed (above with-holding)
Personal loans
Car loans
Total short-term debts
Home mortgage balance
Home equity loans
Other real estate loans
Student loans
Other investment loans
Other liabilities/debts
Total long-term debts
Total debts
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436 APPENDIX—PERSONAL FINANCE WORKSHEETS
WORKSHEET 3 Personal Cash Flow Statement
Directions: 1. List all your cash inflows and outflows.2. Compute Net cash flow � Total cash inflows � Total cash outflows
�
Cash Inflows Cash Outflows
January 1 toMonthly December 31
Salary/wageincome (gross)
Interest/dividendIncomeOther income
(self-employment)Rental income
(after expenses)Cash from sale
of assetsStudent loans
ScholarshipsOther incomeGiftsTotal CashInflows
January 1 toMonthly December 31
Income andpayroll taxes
GroceriesHousingMortgage or rentProperty taxInsuranceMaintenance/
repairsUtilities
HeatingElectricWater and sewerCable/phone/satellite
Car loanpayments
Car maintenance/gas
Credit cardpayments
Other loanpayments
Other taxesInsurance
LifeHealthAutoDisabilityOther insurance
ClothingGiftsOther consumer
goodsChild-care
expenses
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APPENDIX—PERSONAL FINANCE WORKSHEETS 437
WORKSHEET 3 Personal Cash Flow Statement (cont.)
Sports-relatedexpenses
Health club duesUninsured
medical expensesEducationVacations and
travelEntertainmentAlimony/child
supportCharitable
contributionsRequired pension
contributionsMagazine sub-
scriptions/booksOther payments/
expensesTotal cashoutflows
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438 APPENDIX—PERSONAL FINANCE WORKSHEETS
WORKSHEET 4 Spending Log
Directions: Copy this worksheet and use it to keep careful track of all your expendituresfor one or more weeks.
Monday Tuesday Wednesday
Description $ Description $ Description $
Thursday Friday Saturday/Sunday
Description $ Description $ Description $
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APPENDIX—PERSONAL FINANCE WORKSHEETS 439
WORKSHEET 5 Personal Financial Ratios
Directions: Use your personal financial statements to calculate your personal financialratios. Record them on this worksheet, critically evaluate your current financialsituation, identify areas to work on, and reevaluate periodically to track your progress.
Personal Financial Criteria __/__/__ __/__/__ __/__/__
Net worth
Net cash flow
Liquidity ratioLiquid assets
� Monthly expenses
Debt ratioTotal debt
� Total assets
Debt payment ratioTotal monthly debt payments
� After-tax monthly income
Mortgage debt service ratioMonthly mortgage debt service
� Gross monthly income
Savings ratioMonthly savings
� After-tax income
Overall evaluation of current finances:
Specific areas that I need to work on:
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WORKSHEET 6 Household Credit Summary
Most RecentInterest Annual Minimum Finance Balance
Type of Debt Rate (APR) Fees Payment Charge Still Owed
Credit cards
Student loans
Auto loans
Other consumer loans
Home equity loans
Mortgage loans
Totals
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APPENDIX—PERSONAL FINANCE WORKSHEETS 441
WORKSHEET 7 Assessing Your Creditworthiness Using the Five C’s of Credit
Directions:1. Complete a consumer credit application.2. Using this information, rate yourself on each of the five c’s of credit, using the
following scale:4 � excellent; 3 � good; 2 � needs work; 1 � unacceptable.
3. Based on your assessment, identify goals for improving your creditworthiness.
Score Notes:
CapacityWage, salary, and other income sufficient to
make paymentsAffordable current monthly payment obligations
CapitalPositive net worth, appropriate for life-cycle stage
CollateralValuable assets in addition to income
(checking, savings, investment accounts)Adequate collateral for loan (if applicable)
CharacterPrevious experience with creditPast credit history indicates a good attitude
toward repaying debtsNo history of bankruptcyStable employment and residency
ConditionsJob and employer securityGeneral economic conditions favorable
Plan for improving creditworthiness:
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442 APPENDIX—PERSONAL FINANCE WORKSHEETS
WORKSHEET 8 Automobile Costs Log Sheet
Lease/ Tolls Repairs Loan Auto and and Registration Monthly
Date Payment Fuel Insurance Parking Maintenance and License TotalJanuary
February
March
April
May
June
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APPENDIX—PERSONAL FINANCE WORKSHEETS 443
WORKSHEET 8 Automobile Costs Log Sheet (cont.)
Lease/ Tolls Repairs Loan Auto and and Registration Monthly
Date Payment Fuel Insurance Parking Maintenance and License TotalJuly
August
September
October
November
December
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444 APPENDIX—PERSONAL FINANCE WORKSHEETS
WORKSHEET 9 Automobile Options Checklist
Before shopping for a car, evaluate your needs and wants.
Must Have Would Like
Automatic transmission
All-wheel drive
Dual front airbags
Side curtain airbags
Air conditioning
Antilock brakes
Power seats
Power windows and doors
Sunroof
Upgraded music system
Computer navigation system
Extra-sized gas tank
Split rear seat
Leather interior
Driver seat lumbar adjustment
Third row seats
Cruise control
Other
Other
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APPENDIX—PERSONAL FINANCE WORKSHEETS 445
WORKSHEET 10 Lease Versus Buy—Automobile
Cost of Leasing
Capitalized cost reduction and security deposit
Foregone interest on capitalized costreduction and security deposit
Total lease payments (� monthly payment � months)
Expected end-of-lease charges
Less return of security deposit
Total cost of leasing
Cost of Buying
Down payment
Foregone interest on down payment
Total loan payments (� monthly payment � months)
Less expected end-of-loan value
Total cost of buying
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WORKSHEET 11 Lease Versus Buy—Housing
Cost of Renting 1 year 5 years
Total rent payments (� monthly � 12�year)
Renter’s insurance (� $ �year)
After-tax interest lost on security deposit
(� months rent @ %�year)
Total cost of renting
Cost of Buying 1 year 5 years
Total mortgage payments (� monthly
principal and interest � 12�year)
Property tax
Homeowner’s insurance
Private mortgage insurance
(if � 20% down � 1�2% of mortgage�year)
Repair and maintenance expenses
Down payment
Closing costs
Lost after-tax interest on down payment and
closing costs (@ %�year)
Subtotal: costs
Less savings from repaying principal
Less appreciation of home (@ %�year)
Less tax savings from interest deduction
Less tax savings from property tax deduction
Less tax savings from points deduction
Subtotal: savings
Total cost of buying � (costs � savings)
446 APPENDIX—PERSONAL FINANCE WORKSHEETS
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APPENDIX—PERSONAL FINANCE WORKSHEETS 447
WORKSHEET 12 Calculating Affordable Home Price
STEP 1.Monthly amount you can allocate to total housing costs
STEP 2.a. Expected cost of property taxesb. Expected cost of homeowner’s insurancec. Expected cost of repairs and maintenanced. Expected cost of association duese. Total nonfinancing housing costs (� a � b � c � d)
Total available for financing costs (principal and interest)(� Step 1 � 2e)
STEP 3.a. Mortgage factor,i,n (Exhibit A-6, 6%, 360 months)b. Total available for financing costs (from Step 2)c. Maximum affordable mortgage amount (� 3a � 3b)
STEP 4.a. Down payment availableb. Gifts from parents or othersc. Expected closing costsd. Maximum house you can afford (� 3c � 4a � 4b � 4c)
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448 APPENDIX—PERSONAL FINANCE WORKSHEETS
WORKSHEET 13 Evaluating Mutual Fund Alternatives
Directions:Identify an investment objective for which mutual fund investments would be appropriate.Based on your objectives, time horizon, and risk tolerance, identify the fund classification(s)you wish to consider. Evaluate alternative funds by completing this worksheet.
1. Investment Objective
2. Appropriate type of fund
Mutual Fund AlternativesA B C
Company nameFund objectivePrice per shareNet asset valueMinimum initial purchaseMinimum additional purchase
Past performance1-year3-year5-year
ExpensesFront-end loadBack-end loadExpense ratio
Fund manager tenureServices
Auto deductionAuto reinvestmentTransfer between fundsIRAsOnline access
RatingsAgencyAgency
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APPENDIX—PERSONAL FINANCE WORKSHEETS 449
WORKSHEET 14 Mutual Fund Tracker
Mutual Mutual Mutual Mutual Mutual Mutual TotalFund 1 Fund 2 Fund 3 Fund 4 Fund 5 Fund 6 Portfolio
Fund name
Fund family
Investmentobjectives
Portfoliocomposition
Industry orsector
Net assetvalue
Price pershare
Numberpurchased
Front-endload paid
Total initialinvestment
Date Market or Net Asset Values
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450 APPENDIX—PERSONAL FINANCE WORKSHEETS
WORKSHEET 15 Retirement Goals
Directions:For each of the following retirement goals, indicate its importance to you by checkingthe appropriate box.
Very Somewhat Not At AllRetirement Goal Important Important Important
Economic securityMaintain standard of livingImprove standard of livingFinancial independenceAfford to keep home
FamilyBequests to heirsCollege costsSupport children or parentsContinue family business
MedicalCover health-care costs
ExtrasBetter/more vacationsIncreased hobby costsContributions to charity
Other
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APPENDIX—PERSONAL FINANCE WORKSHEETS 451
WORKSHEET 16 Retirement Planning
STEP 1. Estimate before-tax income needs.a. Enter current household expenses.b. Adjust for changes in expenses in retirement.
Possible reductions: Employment expensesRetirement savingsHousing expenses
Total reductionsPossible increases: Health care�insurance
Leisure activitiesGifts�donations
Total increasesc. Adjusted expenses in current dollars (1a � 1b � 1c)d. Adjust for inflation to future dollars(i � expected inflation; n � years to retirement).Aftertax income needs � Adjusted expenses in current dollars � (1�i)n �e. Calculate before-tax total income needs.
$ Before tax � $ After-tax�(1 � average tax rate) �
STEP 2. Estimate annual retirement income from defined benefitretirement plan(s).Use most recent statement from your pension sponsoror estimate based on known benefit formula.
Plan 1Plan 2
Total income from defined benefit plans �
STEP 3. Estimate annual retirement income from Social Security.Use calculator at www.ssa.gov to estimate in future dollars. �
STEP 4. Calculate retirement income shortfall. (1e � 2 � 3) �
STEP 5. Estimate total retirement wealth needed.a. Retirement wealth factor: (from Figure 14-2, assuming years in retirement and
% average investment return)b. Retirement income shortfall � Retirement wealth factor �
STEP 6. Estimate retirement savings goala. Value of current retirement savings accounts �b. Future value of current accounts (� 6a � FVIFi,n) �c. Retirement savings goal (5b�6b) �
STEP 7. Estimate monthly savings required to meet savings goal. �(Use time value of money calculation for payment.)
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452 APPENDIX—PERSONAL FINANCE WORKSHEETS
WORKSHEET 17 Life Insurance Needs Analysis
Yourself Your SpouseA. Costs at Death
1. Uninsured medical expenses (deductible and copay)2. Funeral expense (average $10,000, but less for cremation)3. Settlement of estate (estimate 4% of assets)4. State inheritance taxes (if any)5. Counseling costs for adjustment to loss
Total costs at death 1 � 2 � 3 � 4 � 5
B. Lump Sums6. Outstanding debts
a. Mortgageb. Car loan(s)c. Credit cards and other loansd. Total outstanding debt to repay 6a � 6b � 6c
7. Education costs for children or spouse (see Chapter 15)8. Spouse retirement fund9. Household emergency fund
Monthly household expenses � 3Total lump sum needs 6d � 7 � 8 � 9
C. Cost of Household Maintenance10. Deceased annual after-tax income11. Annual cost of lost support services
(child/eldercare, housekeeping)12. Reduction in family expenses
due to death (estimated 20–25%)13. Annual Social Security survivor benefits14. Net income shortfall 10 � 11 � 12 � 13Total household maintenance fund needs
14 x Number of years to replace years
15. Total fund needed (sum double-underlined values)
D. Available Resources to Meet Needs16. Total savings and investments17. Group life insurance18. Social Security lump sum benefit19. Total resources to meet needs 16 � 17 � 18
Total life insurance needs 15 � 19
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APPENDIX—PERSONAL FINANCE WORKSHEETS 453
WORKSHEET 18 Estate Tax Calculation
1. Calculate gross estate:Net worthLess assets excluded because oftype of ownership or beneficiarydesignation:Assets transferred through family limited partnershipsLife insurance held in irrevocable trustsOther irrevocable trust assets
Gross estate
2. Calculate adjusted gross estate:Funeral expensesExecutor’s feeLegal feesCourt feesEstate administration feesTotal estate expenses
Adjusted gross estate � Gross estate � Estate expenses
3. Calculate taxable estate:Amount to spouseAmount to charityTotal unlimited deductions
Taxable estate � Adjusted gross estate � Unlimited deductions
4. Unified exemption ($1.5 million in 2005)Amount subject to tax � Taxable estate � Exemption
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454 APPENDIX—PERSONAL FINANCE WORKSHEETS
WORKSHEET 19 Comparison Shopping for Auto Insurance
In comparison shopping for property and liability insurance, it’s important to providethe same information to each potential insurer so that your quotes will be comparable.
AutomobileVehicle characteristics (year, make, model)Insured characteristics (age, sex, driving record, full-time or occasional driver)
Potential discounts (good student, driver education)
Company Name
Agent’s nameAddressPhone
Policy term (6 or 12 months)
Total premium
Liability coveragePer personPer accident Property
DeductiblesCollisionComprehensive
Medical paymentsPer person
Uninsured motoristPer personPer accident
Other coverage
Other factors toconsider (e.g., multiplepolicy discounts, insurerreputation)
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