11. Your realized income is $3,167.89/Month, and your fixed expenses are $954.32/every 2 weeks. If you save 50% of your discretionary monies each month, how much are you saving?
12. You have a credit card with a balance of $2,856.74 at a 14.75% APR. instead of saving the amount in question #11 in a savings account, you put the amount toward reducing your debt. How much interest do you save in 1 full month?
Please help me understand how to do this.
11. Your realized income is $3,167.89/Month, and your fixed expenses are $954.32/every 2 weeks. If you save 50% of your discretionary monies each month, you are saving $1,583.94/month.
12. You have a credit card with a balance of $2,856.74 at a 14.75% APR. Instead of saving the amount in question #11 in a savings account, you put the amount toward reducing your debt. The interest you save in 1 full month is $37.45.
To calculate how much you are saving each month, you need to subtract your fixed expenses from your realized income and then multiply it by 50%.
Step 1: Calculate your total fixed expenses per month.
If your fixed expenses are $954.32 every 2 weeks, multiply this amount by 26 (the number of pay periods in a year) and divide by 12 (the number of months in a year):
$954.32 * 26 / 12 = $2,066.27
Step 2: Calculate the discretionary income per month.
Subtract the fixed expenses from your monthly income:
$3,167.89 - $2,066.27 = $1,101.62
Step 3: Calculate the amount you are saving.
Multiply the discretionary income by 50% (or 0.5):
$1,101.62 * 0.5 = $550.81
Therefore, you are saving $550.81 each month.
Moving on to the second question, we need to determine how much interest you save in one full month by putting the savings amount toward reducing your debt.
Step 1: Calculate the daily interest rate on your credit card balance.
Divide the annual APR by 365 (the number of days in a year):
14.75% / 365 = 0.0404% (per day)
Step 2: Calculate the daily interest charge.
Multiply your credit card balance by the daily interest rate:
$2,856.74 * 0.0404% = $1.16 (rounded to two decimal places)
Step 3: Calculate the interest saved in one full month.
Multiply the daily interest charge by 30 (the number of days in a month):
$1.16 * 30 = $34.80
Therefore, by putting the savings amount toward reducing your debt, you save approximately $34.80 in interest in one full month.
To answer question #11, we first need to calculate your discretionary income. Discretionary income is the amount left after deducting fixed expenses from your realized income (income after taxes and deductions).
1. Convert your fixed expenses from a bi-weekly basis to a monthly basis. Since there are approximately 4.33 weeks in a month, you can calculate it as follows:
Fixed expenses per month = fixed expenses per 2 weeks * (52 weeks / 12 months) / (2 weeks)
Fixed expenses per month = $954.32 * (52 / 12) / 2 = $2,067.14
2. Calculate your discretionary income by subtracting your fixed expenses from your realized income:
Discretionary income = Realized income - Fixed expenses
Discretionary income = $3,167.89 - $2,067.14 = $1,100.75
3. Calculate your savings by multiplying your discretionary income by the savings rate (50% or 0.5):
Savings = Discretionary income * Savings rate
Savings = $1,100.75 * 0.5 = $550.38
Therefore, you are saving $550.38 each month.
Moving on to question #12, to calculate the interest you save by putting your savings toward reducing your debt, we need to determine the monthly interest paid on the credit card balance:
1. Convert the annual percentage rate (APR) to a monthly interest rate:
Monthly interest rate = APR / 12
Monthly interest rate = 14.75% / 12 = 0.0123 or 0.123%
2. Calculate the interest saved by applying the savings toward reducing the debt for one month:
Interest saved = Credit card balance * Monthly interest rate
Interest saved = $2,856.74 * 0.123% = $3.52
Therefore, by putting your savings towards reducing your credit card debt, you will save approximately $3.52 in interest for one full month.