COA4131 Exam 2 Review Study power points and look at info in front pages Art is appraised every 3 5 years o Also appraised is jewelry and any kind of collection o Protection from theft fire loss Obama administration is doing a real evaluation in coins o Nickels and pennies take more money to make them then they re worth 70 of Americans considered middle class o Can be divided in to upper middle class and lower middle class o Top 5 have assets for than 5 million Depreciation is a big cost of owning a car Housing House down payment used to be 10 now want 20 Conventional mortgage fixed rate 30 years Mortgage rate runs 3 5 to 4 5 in last years o Housing and mortgage rates are low good to buy If you didn t do a fixed mortgage you could do adjustable 3 10 or consumable 1st time home buyer is 40 of the market Before you buy a house you need o Income information Know the 2 5 times rule Multiply income by 2 5 and that s how much you can pay for a house Is a conservative estimate Most will say 3 4 times rather than 2 5 Buying a house is a process o Down payment o Get everything in order o Turn over keys transferring Called closing o Usually go back to 1 2 or 3 Realtor asks for about 6 of a sale Selling a house Average person looks at 17 houses before buying a house o People usually try to do it themselves first but it generally doesn t work and they hire a realtor o Problem doing it yourself is you can t prescreen people who see the house For expensive houses you want a realtor for protection Average wedding 30 000 o Most expensive part is the reception Destination wedding drives up cost but are becoming more and more popular Weddings Children Mother stays in hospital for 24 hours average o Can be kept for 2 3 days If you raise child from age 0 18 it will cost an average of 300 000 o Girls are more expensive than boys o Urban is more expensive than rural o Subsequent children are less costly o Housing is the most expensive part Age of maturity for kids is 18 21 o Considered financially independent Can be kepts on parents taxes and insurance until age 24 if they re a student At age 14 children are no longer taxed at parent s rate o Can be taxed different if making a lot of money One way parents can protect children is by custodial account trust fund o Gives substantial money gifts to kids Marriage and families Pre nuptials about what happens if marriage doesn t last o Are a good financial idea especially if there are children from a previous marriage or business ownership o Lasts 10 15 years Age of first divorce o Men 30 34 o Women 25 29 o Second is transportation Paying for a house o Know PITI in book Usually is a 2 year age difference between men and women in marriage Main expense for family budget is housing Makes up your monthly house payment P principle i interest rate t taxes and i insurance o Property taxes are paid once a year Some people will try to sale their house before property taxes are due Insurance Definitions in book important Biggest expense in owning a car is insurance o More accidents age vehicle etc all affect amount you pay for insurance o Some people lease rent instead of owning a car Rent for 3 years and have to drive under 12 000 miles a year Expensive but always have a new car Property insurance and liability insurance o Auto insurance is most useful o Liability someone is hurt on your property or accident Trying to protect assets of you and your business Someone might have umbrella policy over all other insurance plans Most expensive insurance is health insurance o Want to get it through an employer o Different types of plans HMO most popular PPO POS stands for point of service All are good Deductable amount you pay up front before insurance kicks in o Higher deductable means you pay more up front before insurance will pay but you usually have lower insurance rates Life insurance o Are different types but the main one is term life insurance 5 10 years Want it to protect people after you re gone o 25 of life insurance is uncollected people forget about it o If you suspect someone had life insurance you can contact company and trace it o Person who gets benefits of life insurance is called the beneficiary Must be paid right away insurance can t hold on to money Long term care insurance o Set up to take care of people in old age o Middle class product o Usually bought by singles Steps of insurance o 1 Awareness do I need insurance o 2 Action o 3 Announces Questions Assumable mortgage assume from previous owner o If you move and person has lower mortgage this can happen Study differences between cooperatives single family homes and condos o Multi unit apartment units o Condo own individual unit o Co ops only own share in building All vote who gets to move in
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