Good or Bad Debt

​Necessity or Luxury

By Tandy Engle

Calculating Gross Income

Net Income - the amount you make before taxes.

You make $12/hour working at Taco Bell. How much would you make after working 30 hours in a week?

Gross Income - the amount you make after taxes.

Your deductions include FICA 7.65%, state withholdings 7%, and federal withholdings 13%. What is your gross pay per hour?
What is your gross pay working 30 hours?

Making Smart Shopping Choices

Now that we have our gross pay, let's go shopping!

Making $8.68 per hour, how many hours would you have to work to pay for these shoes? How much tax would you have to pay for these shoes?

$149 Nike Jordans

​​$28 Walmart

Making $8.68 per hour, how many hours would you have to work to pay for these shoes? How much tax would you have to pay for these shoes?

Making $8.68 per hour, how many hours would you have to work to pay for this jacket? How much tax would you have to pay for this jacket?

$128
Lululemon

Making $8.68 per hour, how many hours would you have to work to pay for this jacket? How much tax would you have to pay for this jacket?

$29.99
Curvy Waves

Now Let's Talk About Debt!

Good vs. Bad Debt

Debt is inevitable. You just need to decide which debt is better by looking at the APR (annual percentage rate) and term ( how long you have to pay off the debt).

Calculating Debt

Example 1: You carry a balance of $6,000 on your credit card with 12% APR for 3 months. How much is your accrued interest if you pay nothing?

Calculating Debt

Example 2: You carry a balance of $12,000 on your credit card with 16% APR for 5 months. How much is your accrued interest if you pay nothing?

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5% APR for 72 months

Loan 2:

6% APR for 60 months

Loan 1:

You are taking out a $10,000 loan for a car. Which option is better?

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