Question

1. Tanya is 25 and has the following income and expenses on a monthly basis.

Item Description	Amount
Income Retirement savings Housing Transportation Food Taxes Credit card payments Car payment Entertainment Surplus/Deficit	$4,400 400 800 250 400 900 300 330 900

1.a. What is Tanya’s income surplus or deficit?

4

Work:

1.b. What is Tanya’s Savings Ratio?

4

Work:

1.c. What is Tanya’s total Debt-to-Income Ratio (consider housing and car payments in this case and any other appropriate debt as a debt payment)?

4

Work:

Answer 1

1a) Tanya's Income surplus = $[4400-(400+800+250+400+900+300+330+900)]=$120.

it is to be noted that retirement savings are assumed to be fixed monthly payments towards social security.

1b)Tanya's savings= Surplus+ retirement savings=$(400+120)=$620.

Disposable Income= Income - taxes = $(4400-900)=$3500

hence, savings ratio = total savings/ diaposable income*100%=620/ 3500*100%=17.71%

1c) tany's debt obligations are:

i) credit card payments $300

ii) car payment $330

--------------------------------------------

Total $660

hence debt to income ratio = 660/4400*100=15%