Budgeting for a Car Purchase Project: Finance Report - Harry Hunter

This report details a personal finance project focused on budgeting for a car purchase. It begins with an introduction outlining the author's background and the context for the project, including the need for a personal vehicle and the limitations of public transport. The methodology involves online research from governmental and private sources, along with consultations with colleagues. The report compares two car models, Hyundai Accent and Nissan Versa Note, and selects the Hyundai Accent based on price and features. It then compares car insurance policies from different companies, choosing Ozicare. A detailed project financing strategy is presented, including a loan from SoFi, with calculations for annual budgeting, including tax calculations. The budgeting section outlines monthly expenses, income, and savings. The project cost is calculated, including loan interest, and mathematical processes such as addition, subtraction, multiplication, division, and percentage calculations are demonstrated. Finally, the reflective statement discusses the success of the investigation, difficulties encountered, and lessons learned, emphasizing the importance of budgeting and financial planning for a significant purchase. References are also provided.

Budgeting for a project to purchase a car
Institution Name
Student Name
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Table of Contents
Table of Contents..................................................................................................................................2
1. A Contextual statement..................................................................................................................3
Introduction.......................................................................................................................................3
How the investigation will be conducted...........................................................................................3
Comparison of the various options....................................................................................................3
Project financing strategies................................................................................................................4
Annual budgeting strategy.................................................................................................................5
2. The Budgeting Section..................................................................................................................6
Project cost........................................................................................................................................7
Examples of mathematical processes and calculations applied during the investigation...................7
3. The Reflective Statement.............................................................................................................10
Investigation results.........................................................................................................................10
Difficulties encountered during the investigation and their solutions..............................................11
Lesson learned from the investigation.............................................................................................11
References...........................................................................................................................................12
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1. A Contextual statement
Introduction
My name is Harry Hunter. Am a qualified teacher who has completed a bachelor’s
degree in teaching from Macquarie University. In addition to the bachelor’s degree I
have gone ahead to attain a Master of teaching degree from the University of New
South Wales. The above processes have equipped me with relevant skills needed to
deliver quality teaching services to all the students. Currently employed as a primary
school teacher in Sydney city which is in the New South Wales state. My current level
is a first-year teacher which attract an annual salary of $ 67248. This translates into a
gross fortnight pay of $2586.46 (SCHOOLS – SALARIES AND RATES OF PAY
(2017-2019), 2017).
I live 3 kilometers from the school I work. To reach the school from my residential I
can either use public transport which entails taxis or buses.
Am a trendy person who adores fashion. On my free time I value leisure and is
occasionally traveling across the state for site seeing and picnics with friends.
Currently I rely primarily on public means of transport and in need of a private car.
The choice of this topic was triggered by the need to gain more insight on budgeting.
The use of public transport is often inconveniencing as it does not offer door to door
services which I need. In addition, I travel a lot and occasionally to places that I find
hard to reach using the buses. Considering that I have several expenses that need to be
catered for, this topic is to help me factor in all my financial constraints. Thereafter,
all come up with an economic decision that will see me ease the transport burden
while at the same time managing to sustain my daily demands.
How the investigation will be conducted
The data that will be used on this topic will be obtained online from the websites of
various relevant organizations. The websites will be both for government
organizations as well as private firms. In addition, all consider the input from friends
and colleagues who have models of vehicles which I may be interested in.
Afterwards, all evaluate the data obtained and make a choice based on personal
interest and financial constraint.
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Comparison of the various options
Car model comparison
Hyundai Accent Nissan Versa Note
Has a distinctive design with a fuel-
sipping engine.
Has 130-hp 1.6-liter inline -four pairs
with a standard perky sluggish six-speed
automatic.
Has a 10 year per 100000-mile
powertrain warranty
The car cost approximately $ 15580
Top speed is 120 mph
Has a styling roomy back seat with an
astronomical fuel economy.
The car is weak with 1.6- liyer-fouir
cylinder makes. In addition, it has a
sloppy-five-speed manual.
The car has a soft suspension and a grip
free tires giving it a bland road behavior.
The car cost approximately $ 16365
Top speed is 114mph
The two models of cars were my preferred choice and from comparing their qualities
Hyundai Accent offered the best qualities at an economical price. All therefore select
it as the car to purchase.
Moreover, I compared the rate of car insurance in 3 companies to help decide the
preferable choice (Ryan, CANSTAR, 2018).
Company Annual rate ($)
Budget direct 1250
Ozicare Insurance 1140
Virgin Money 1250
Based on the cost of the insurance policies I selected Ozicare as my car Insurer.
Project financing strategies
To finance my project of purchasing a car I will need to obtain a loan from a financial
institution in New South Wales. I have identified the SoFi personal loans as a
favorable source of the capital. They allow borrowing of up to $ 100,000 payable in a
maximum of 7 years. Their loan interest varies from 5.49% to 14.24% convertible
annually. Since am compensated for my teaching job on a fortnight basis all consider
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the monthly payment structure.as it will be convenient for me to settle the loan
amount whenever I have a surplus capital (Porter, 2018).
All thereby consider taking a loan of $15580 to be paid for a period of 2 years. The
interest on the loan is settled monthly while the capital is paid at the year-end. The
loan term consists of interest of 6.25% which is convertible annually.
Annual budgeting strategy
The strategy will entail highlighting all my revenues and expenses and evaluating the
surplus capital expected after venturing into the project.
Calculating the tax payable
Current Resident Tax Rates 2017-2018 (Exfin International Pty Ltd, 2018).
$0 – $18,200 Nil
$18,201– $37,000 19c for each $1 over $18,200
$37,001 - $87,000 $3,572 plus 32.5c for each $1 over
$37,000
$87,001 - $180,000 $19,822 plus 37c for each $1 over
$87,000
$180,001 and over $54,232 plus 45c for every $1 over
$180,000
My salary falls in the $37,001 - $87,000 tax bracket. So, to calculate my tax I get $3572
plus
32.5c* ($67248-$37000)
= 32.5c*30248=983060c which is equivalent to $9830.6
In total my tax for the year will be $9830.6 + $3572 = $13402.6
The annual salary is $ 67248 – amount payable as tax $13402.6 which leaves a net
pay of $53845.4
Annual net income $ 53845.4
Expenses
Home
Vehicle
Utilities
Food
Personal
$20722
$6630
$3120
$6240
$2860
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Others $2860 $42432
Annual savings $11413.4
Less loan capital
repayment
$7790
Surplus cash available $3623.4
2. The Budgeting Section
My current expenses are mainly categorized into the home, vehicle, utilities, food,
personal and others. L normally do prefer cooking at home more frequently than
visiting the hotels and it is economical. Also, most of my clothes are purchased from
the local shops in Sydney town as they sell at a lower cost compared to imports from
Dubai.
Gross Income per fortnight is $ 2586 this deduct the $ 516 payable as taxation leaves
a net of $ 2070 (Australian Taxation Office, 2017). The tax per fortnight is obtained
by taking the annual tax income divide by 26 (13402.6/26=516)
Expenses in one month Cost ($) Total ($) Reference
Home
 Home insurance
 Rent
37
760 797
(Ryan, CANSTAR,
2016)
Vehicle
 Car insurance
 Gas
 Repairs
 Loan interest
44
100
70
41 255
Utilities
 Telephone
 Water
 Electricity
 Internet
30
20
25
45 120
Food
 Serials
 Hotel
150
90 240
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Personal
 Clothing
 Medical
70
40 110
Others
 Leisure
 Presents
60
40 110
Total 1632
From the net income of $ 2070 if I deduct the $1632 for expenses then all be able to
save $ 438 in a single fortnight. This transforms into a saving of $ 11388 per annum.
Project cost
The project is expected to cost $ 15580 plus the addition of (15580*0.0625*2=1947)
$1947 in the form of interests. Since this amount cannot be raised from my savings
per fortnight all consider borrowing and have identified the SoFi for a personal loan.
The loan will be paid in a period of two years at an interest of 6.25% convertible
annually. In total the project will cost $7790 of capital in the first year plus $974 as
interest totaling $8764. Since the interest are paid monthly and have been budgeted in
the fortnight income only the $ 7790 will be settled at the end of the year. This will
leave me with surplus cash of ($ 11388 - $ 7790) =$3598 at the end of the year.
Examples of mathematical processes and calculations applied during the investigation
Calculation Method Working Algorithm
Addition (obtaining the
total cost of food
expenses)
Scratch 150
+90
240
First write the numbers in columns
with the units such that ones are
under ones and tens are under tense
etc.
Add the ones that is 0+0=0 write this
in the ones column
Then add the tens 5+9=14, write 4 in
the tens column and note 1
Add the 1 to the 1 in the hundreds
column 1+1=2 and write the 3 in the
hundreds column
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Lattice 1 5 0
+ 9 0
0
1
1
4
0
0
2 4 0
Subtraction
(calculating the
expected savings per
fortnight)
Scratch
method
2070
-1632
438
Arrange the values in a column
form with the ones in one column
tens in one column etc.
Solve them in the column form
starting from the left.
0-2 is not possible so I obtain one
from 7 in the tens column to make
it 10-2 which is 8.
In the tens column you have 6-
3=3
In the hundreds column you have
0-6 which is not possible, so you
obtain 1 from the thousands
column to make it 10-6=4
In the thousands column take 1-1
to get 0
Regrouping 2070
-1632
362
t h t 0
|| ,,,,,,,
| ………. ,,,,,, //////////
…. ,,,
Fist I wish to take away 2 from 0
which is not possible. So, I
borrow one from the tens column
to make it 10. Now 10-2=8
Now I go to the tens columns I
need to take away 3 from 6 which
gives me 3,
I then move to the hundreds
column and need to remove 6
from 0 which is not possible. So, I
borrow one from the thousands
column to have 10-6=4
In the thousands column I have
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one which when I remove 1
remains with zero
Multiplication
(obtaining the annual
savings)
Standard
multiplication
438
* 26
2628
876
11388
Write the number in columns
such that that ones are ones, tens
under tens etc
Starting from the right-hand side
multiply 6*8=48. Write 8 under
the ones column and note 4.
Now multiply 6*3=18 and add the
4 noted above 6*3=18+4=22.
Write 2 under the tens column
and note 2
Multiply 6*4=24 and add the 2 to
give 18+2=26. Write the 23 such
that 6 is under the hundreds
column and 2 the thousands
column.
Now go to the 2 in the bottom
row, multiply 2*8=16 and write
the 6 under the tens column and
note 1.
Again, multiply the 2*3=6 and
add the 1 notes above 6+1=7,
write 7 under the hundreds
column.
Multiply the 2*4=8
write the 8 under the thousands
column
Now perform addition
First drop 8 to the ones column.
Then add 2+6=8 write 8 in the
tens column
Add 6+7=13 write the 03in the
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hundreds column and note 1
Lastly add 8+2=10 plus the one
noted above to get 11
Lattice
multiplication
style
4 3 8
0/8 0/6 1/6 2
2/4 1/8 4/8 6
11 3 8 8
First, we set the lattice box
The multiplication is 3 digits by
2, the box will be a 3*2
The next step will be to add
Division (deriving the
interest amount to be
allocated to a fortnight
income)
standard 37.4 974/26 1
Ans is 37 to the nearest
whole number
Short division 974/26
37
26 974
78
194
182
12
Starting from the left check if
9/26 is a value greater than 1, if
no check 97/26=3. 3 is the whole
number obtained write it on top of
7.
Then multiply 26*3=78. Subtract
97-78=19, write the 19 and drop 4
to make it 194. Now I have
194/26=7 number. Write it on top
of 4
The value of the division is 37
Percentage (interest
rate)
Multiplication
and division
974/15580*100= 6.25
Fraction (interest rate) 974/15580= 487/7790 Simplify
3. The Reflective Statement
Investigation results
My research into the model of a car to purchase, the appropriate financial plan and
effective budgeting to cater for this plan was a success. By visiting several car dealers
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and consulting the people who had a car model like the one I had interest in, I
managed to gather adequate information. My informants educated me on the features
and qualities to look for in a car. In addition, I managed to source for reliable car
dealers who offer the best car prices on the internet.
From the internet sources I also obtained information on credit institutions and was
able to select a convenient source of a personal loan to assist me in funding the
project.
Was I to replan the project then I may shift my reliance on individual information
from friends and instead focus on visiting various agents for more precise
information.
Difficulties encountered during the investigation and their solutions
One of the major difficulty I endured during my planning was the time limit.
Occasionally I had to book a meeting with company agents and consultants to source
for information. Since I a dedicated school teacher I found it hard to share my work
time with the planned meeting considering that the working ours tend to collide.
Also, I found reliance on information from friends a bit misleading as some of the
information I obtained from them ended up varying from the actual data from
company agents. The difficulty was though resolved once I settled on the agency
information as a budgeting basis.
Lastly, prior to the investigation I had difficulties understanding the interest rates
computation. This was though made clear after I obtained clarification from the
financial institutions I visited.
Lesson learned from the investigation
From this investigation I have managed to have a grip on the art of personal
budgeting. In future all have an easy time understanding my expenses hence be able
to regulate unnecessary spending. Moreover, I have managed to acquire knowledge of
bank loans and their interests should I need financing in future I gauze my budgeting
plan will be much simpler.
References
Australian Taxation Office. (2017, July 1). Australian Government; Australian Taxation Office.
Retrieved from Pay as you go (PAYG) withholding:
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https://www.ato.gov.au/uploadedFiles/Content/MEI/downloads/Fortnightly-tax-table-2017-
18.pdf
Exfin International Pty Ltd. (2018). exfin. Retrieved from Current Australian IncomeTax Rates -
Resident and Non-Resident: https://www.exfin.com/australian-tax-rates
Porter, T. (2018, January 23). Banktracker. Retrieved from The Best Low-Interest Personal Loans for
2018: https://www.mybanktracker.com/personal-loans/reviews/low-interest-personal-
loans-273431
Ryan, T. ( 2018, January 11). CANSTAR. Retrieved from How Much Does Car Insurance Cost?:
https://www.canstar.com.au/car-insurance/what-does-car-insurance-cost/
Ryan, T. (2016, September 16). CANSTAR. Retrieved from What is Home & Contents Insurance and
how much does it cost?: https://www.canstar.com.au/home-insurance/home-and-contents-
insurance/a-beginners-guide-to-home-and-contents-insurance/
SCHOOLS – SALARIES AND RATES OF PAY (2017-2019). (2017). Retrieved from
https://www.nswtf.org.au/files/schools_-_salaries_and_rates_of_pay_2017-2019.pdf
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