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Consumer Math (3rd ed.) Overview

This course prepares students to make wise financial decisions by discussing topics such as taxes, interest on loans, personal banking, insurance, and more.

Overview

Concepts

Chapter 01: Math Skills

This chapter reviews the use of proportions, the basic operations on integers, and all aspects of percent problems, solving them by using a formula. Algebraic expressions are evaluated, and linear equations in one variable are solved. The laws of exponents and the use of negative exponents are covered for future use. Some applications related to consumer math are included.

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Chapter 02: Measurement

The Customary System is introduced with appropriate conversion units. Dimensional analysis is introduced for conversions. The International System (SI) follows, with emphasis on the basic units of length, mass, and capacity. The advantages of SI are pointed out. Conversion factors linking the two systems are then applied. Linear measure is used to find the perimeter of rectangles and circumference of circles in both systems. Area is defined and applied to rectangles, parallelograms, triangles, and circles. Volume is defined and found
for rectangular prisms and cylinders. The relationship of volume to capacity in both systems is explored.

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Chapter 03: Income

Time records, calculation of hours worked, and gross pay, including overtime pay, are introduced in this chapter. This is followed by differentiation between gross pay and net pay. Payroll deductions are made for FICA tax, as are withholdings for federal and state income tax. Other types of pay introduced include tips, commissions, and piecework. Graduated pay scales are included for the latter two. Buying and selling of bonds, including brokerage fees, and discussions of laddering and diversification are covered. Buying and selling of stock with brokerage fees and the profit realized over time is found.

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Chapter 04: Budgeting

Disposable income is defined as gross pay minus the tithe and income taxes withheld. Basic budgets are introduced as well as line items calculated as a percent of disposable income. Annual budgets are made based on income and expenses, then scaled down to monthly budgets. Adjusting the budget for unexpected expenses and revising the budget for the coming year based on the previous year’s experience are included.

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Chapter 05: Personal Banking

In this chapter, students will learn how to write checks, fill out deposit slips, maintain a checkbook register, and reconcile a bank statement. Endorsements and overdraft protection are discussed. Simple and compound annual interest are calculated. The compound interest formula is then adjusted to shorter compounding periods. A formula for finding the effective interest rate is developed so that two compound rates can be compared. Savings account interest is calculated by the minimum-balance and daily-interest methods. The concept of a savings program is introduced, and formulas for the amount saved by regular monthly deposits and for the monthly payment required to meet a savings goal over time are developed.

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Chapter 06: Borrowing Money

In this chapter, simple interest is calculated for loans using exact and approximate time with exact and ordinary interest. Monthly payments for add-on loans are calculated, and the annual percentage rate (APR) is estimated by the constant-ratio formula. Discount loans are introduced and the proceeds calculated. Amortized loans are presented with amortization tables, and formulas are developed for finding the amount a person can borrow for a particular monthly payment and the payment required to borrow a specific amount. The workings of credit cards are explored. The process of bank underwriting is also explored with a look into the five areas that lenders review before issuing a loan.

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Chapter 07: Transportation

Costs of owning and operating a car and costs per mile by vehicle type are delineated in this chapter. Necessary budget amounts are found based on mileage and vehicle type. Comparison shopping, especially on the internet, is recommended. The advantages of saving in advance and paying cash are shown, and monthly payments are calculated for financing. Payments for different lengths of time for the same loan are compared. Accumulated depreciation and average annual depreciation are found. The cost of buying a used car with an independent mechanic’s inspection is determined. Leasing costs are calculated, and residual values and mileage penalties are found. The cost of liability, collision, and comprehensive insurance is calculated with age and accident surcharges and premium discounts. Gas mileage and the costs of gas, tires, and oil are calculated. Scheduled maintenance and repair costs, including labor charges by the hour, are calculated.

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Chapter 08: Food

In this chapter, budget amounts for food expenses are found, and the savings that are realized by buying store specials and using coupons are determined. Unit prices are calculated and used to determine the best buys by package size. Means of reducing food costs are discussed, and the payback period is calculated for buying and operating a freezer. The Consumer Price Index (CPI) is used to show the upward spiral of food prices over time, and CPI values are used to compare the spending power of food dollars in various years. Calories are counted for specific menus, and nutrition labels are examined for the recommended daily values of nutrients. Calories burned are calculated for specific activities, lengths of time, and body weights.

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Chapter 09: Clothing

Budget amounts are calculated from percentages for individual family members. Principles for saving are introduced, and discounts and multiple discounts are calculated on list prices. Online purchasing is discussed, mock online order forms are completed (with shipping costs included), and the cost of online purchases is compared to the cost of comparable items purchased from a department store to determine the savings.The cost of buying material and notions for making clothes is compared to the retail cost of a comparable item. Such items as profit, net sales, and gross profit margin are examined from the manufacturer’s viewpoint, and recommended selling prices are calculated. Such items as wholesale price, markup, and profit are calculated from the retailer’s viewpoint, and the breakeven point is found.

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Chapter 10: Acquiring Housing

The initial cost of renting an apartment is calculated, including security deposit and utility deposits. Refunds of utility deposits and saving to buy while renting are addressed. Buying a house is discussed, including the 2.5 rule of indebtedness, earnest money, and closing costs including paying points on a mortgage. Monthly mortgage payments are calculated and the impacts of monthly payments on a mortgage balance near the beginning and at the end are compared. Owner’s equity is calculated, and the issue of renting versus buying is addressed. Building a home is discussed as well as the need for scale drawings. Conversion of dimensions to a ¼" = 1' scale and vice versa is included, as is finding the acreage in a rectangular lot. The amount of roofing needed is calculated from the drawings, accounting for pitched roofs.

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Chapter 11: Maintaining a Home

Assessment methods used for real estate are discussed in this chapter. Tax rates are expressed in mills, and real-estate taxes are calculated for property. Premiums are calculated for homeowner’s insurance, and the question of who pays how much for damage is answered. Electric meters are read, monthly usage is calculated, and cost is determined. Cubic feet of natural gas are converted to therms, and monthly charges and daily costs for service are calculated. Water meters are read, monthly costs are determined, and sewer charges based on water usage are calculated to get a single bill. Landline phones are covered only briefly because every year fewer consumers have landlines. Cellphone charges are calculated based on package and per-use fees, comparing different companies’ costs. Costs for do-it-yourself home maintenance projects are figured and compared to professional rates. Home improvements are distinguished from home maintenance, and project costs are determined.

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Chapter 12: Life and Health Insurance

A mortality table is introduced, and various probabilities relating to living and dying are computed. Term insurance, including renewable term, is introduced, and premiums are calculated. The amount of insurance that can be bought for a specific budgeted amount is found. Whole-life is introduced, and premiums are calculated and compared to term rates. Cash values are estimated for particular time periods, as is the total amount spent in premiums. Universal-life is introduced as a combination of insurance and savings. Accumulated cash values are found over time. The portion of premiums going to investment is calculated, and term insurance plus an IRA is compared to a universal-life policy. Health insurance is examined, with a look at coverage and costs. Social Security earnings are indexed, monthly benefits determined, and adjustments made for early or late retirement.

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Chapter 13: Income Taxes

The chapter opens with two sections that discuss how taxes are determined—by finding the total income, taxable income, and tax liability from the tax table. Forms are introduced, with the student filling out the 1040 from the perspective of different filers. Other forms are then discussed, including the following: Schedule A (Itemized Deductions), Schedule B (Interest and Ordinary Dividends), Schedule C (Profit or Loss from Business [not included in exercises]), Schedule D (Capital Gains and Losses [not included in exercises]), and Form 2441 (Child and Dependent Care Expenses). State income tax is computed both as a flat tax and using graduated rates. Emphasis for state taxes is on an initial entry from the federal form.

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Chapter 14: Vacations

Hunting and fishing trips with resident and nonresident state licenses and Grand Canyon rafting rates are featured in the first section. The costs of food and lodging are then addressed, culminating in costs per person for each type of lodging and meals mentioned in the chapter. Transportation costs to reach the vacation spot are calculated by comparing bus, train, and plane rates along with the advantages and disadvantages of each. Local transportation alternatives are then evaluated in terms of rental vehicle rates. North American time zones are covered in considerable detail.

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Consumer Math (3rd ed.) Overview

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