THE PEREZ FAMILY CASE STUDY

Transcription

1 Page THE PEREZ FAMILY CASE STUDY RECEIVING AND PROTECTING UNIT ASSESSMENT ADVANCED LEVEL RECOMMENDED GRADE LEVELS AVERAGE TIME TO COMPLETE Facilitation: minutes Time does not include optional items listed. EACH LESSON PLAN IS DESIGNED AND CONTINUALLY EVALUATED BY EDUCATORS, FOR EDUCATORS. THANK YOU TO THE FOLLOWING EDUCATORS FOR DEVELOPING COMPONENTS OF THIS LESSON PLAN. None available NATIONAL STANDARDS The curriculum is aligned to the following national standards: National Standards for Financial Literacy American Association of Family and Consumer Sciences Council for Economic Education National Business Education National Jump$tart Coalition Common Core English Language Arts LESSON PLAN OBJECTIVES Upon completion of this lesson, participants will be able to: Assess how family, friends, non profit organizations and government programs provide support in times of economic hardship Identify government programs where individuals in need can receive income support Consider how many programs are designed to provide income safety nets for temporary situations Explain how employment benefits individuals and families who receive government benefits Assess how insurance helps prepare financially for an unexpected event MATERIALS PROVIDED MATERIALS MATERIALS SPECIFIC TO THIS LESSON PLAN BUT IN THIS LESSON PLAN AVAILABLE AS A SEPARATE DOWNLOAD The Perez Family Case Study A1 The Perez Family Case Study Answer Key C1 The Perez Family PowerPoint G1 The Perez Family Electronic Spending Plan E1 The Perez Family Spending Plan Answer Key C2 Receiving and Protecting Unit Multiple Choice Test Bank and Answer Key M1 & C1 MATERIALS TO ACQUIRE SEPARATELY DEPENDING ON OPTIONS TAUGHT Computer access Calculators RESOURCES August 2013 Perez Family Case Study Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona

2 Page EXTERNAL RESOURCES External resources referenced in this lesson plan: Information about government programs: TAKE CHARGE TODAY RESOURCES Similar lesson plan at a different level: None available Optional lesson plan resources: Receiving from Family, Friends, and Non profits Receiving from Government Programs Life in United States EDUCATOR MATERIALS Materials to support educators when preparing to teach this lesson plan are available on the Take Charge Today website. CONTENT PARTICIPANT READING The following reading materials prepare participants to complete this case study: Receiving from Family, Friends, and Non profits Information Sheet F1 Receiving from Government Programs Information Sheet F1 OPTIONAL ADVANCE INSTRUCTION This lesson is designed to be taught as a stand alone lesson. However, background content knowledge from the following lesson plans is directly related to this lesson and may be helpful for participants. This lesson has been designed to apply content from the Receiving (include protecting) Unit which includes the following lesson plans: Receiving from Family, Friends, and Non profits Receiving from Government Programs LESSON FACILITATION PREPARE Visual indicators to help prepare the lesson INSTRUCT Instructions to conduct the lesson facilitation ANTICIPATORY SET What sources of support would you use in a time of need? Approximate time: 5 minutes Materials to prepare: None CUSTOMIZE Potential modifications to lesson facilitation 1. Ask participants to imagine what their family would do if a parent or caregiver was injured in a car accident and unable to work for an extended period of time. 2. Ask participants to speculate the financial effects a loss of income and injury would have on their family. a. Would your family be able to pay typical expenses in addition to medical bills? 3. Ask participants to determine what sources of support they would turn to. Remind participants that the main sources of support are family, friends, non August 2013 Perez Family Case Study Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona

3 Page profit organizations, and government programs. 4. Tell participants that they will be completing a case study to help a family create a spending plan and survive an unexpected injury and loss of income. RECOMMENDED FACILITATION There are two facilitation options provided for this lesson. Option 1: Complete the Case Study Independently Option 2: Complete the Case Study in Small Groups Option 1: Complete the Case Study Independently Approximate time: 45 minutes Materials to prepare: 1 The Perez Family Case Study A1 per participant 1. Provide each participant with The Perez Family Case Study A1. 2. Describe the case study and what the participants are expected to complete. a. Step one Read the Perez family story and complete the reflection questions. b. Step two Consider the Perez family s values, needs, and wants to calculate their income, set a SMART goal, and make major expenditure decisions. c. Step three Create a spending plan for the Perez family in the before accident column using the information from pages 3 6. Ensure the spending plan has a net gain or zero balance. If not, modify expenditure choices. d. Step four Read about Camila s accident, calculate her income from working part time and receiving government benefits and consider changes which should be made to the spending plan. e. Step five Learn about the Perez family 2 years after the accident and complete the reflection questions. 3. Have participants complete the case study during or outside of class time. 4. When completing the case study a. Directions are embedded throughout in green bold/italic font. b. All reflection questions which must be answered are in yellow with a question mark. c. When calculating income and making expenditure decisions, everything in red must be included in the total expenditure for that item. d. Green, bold letters indicate a response should be provided for a section when calculating the income, setting a goal, and making expenditure decisions. If computer access is available use the electronic student workbook pages to complete the case study instead of printing. If computer access is available use The Perez Family Electronic Spending Plan E1 in replace of the spending plan on pages 7 and 8 of the case study. Option 2: Complete the Case Study in Small Groups Approximate time: 60 minutes Materials to prepare: 1 The Perez Family Case Study A1 per group of 2 3 The Perez Family Case Study PowerPoint G1 1. Break participants into groups of Provide each group with The Perez Family Case Study A1. 3. Use The Perez Family Case Study PowerPoint G1 to facilitate completion of August 2013 Perez Family Case Study Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona

4 Page the case study. Part One: Meet the Perez Family 4. Slide 2: Meet the Perez Family a. Identify that directions for each section are provided in green, bold/italic font. b. Discuss elements of the scenario that will impact the case study. i. Who are the family members? 1. Ricardo, Camila, three children and Camila s mom ii. What do they do for employment and how much do they earn? 1. Ricardo works as a truck driver earning $3,232 per month. 2. Camila works as a cashier at a hardware store earning $1,960 per month. iii. What are some of the Perez family s values? 1. Examples include: a. Family b. Outdoors c. Hard work iv. What did you learn about spending plan decisions the Perez family makes? 1. Ricardo s employer provides health insurance for the family 2. Watch movies and play video games together 3. Live in the city 4. Ricardo rides the bus to work 5. Ricardo packs his own lunch 6. Camila s mom cares for the children c. Have the groups answer questions one and two of the scenario reflection and then discuss as a group. d. Stress that participants should keep the families values, needs and wants in mind while making decisions for the case study. Rather than providing participants with the entire case study at the beginning distribute it as sections are discussed. Slide 2 with pages 1 2 Slides 3 10 with pages 3 8 Slides with pages 9 11 Part Two: Paychecks and Taxes 5. Slide 3: Paychecks and Taxes a. Throughout the case study, green letters indicate a calculation or decisions that should be made at that point. b. Have participants calculate Camila and Ricardo s net pay. Then, calculate the Perez family s net income. c. Discuss how Ricardo s employer provided 401K and health care benefits support the family. i. A $210 monthly health insurance premium for the entire Perez family is significantly lower than purchasing health insurance privately. ii. Because the 401K is a matching benefit, the Perez family is receiving a much higher retirement benefit than the $ they are investing monthly. Part Three: Expenses August 2013 Perez Family Case Study Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona

5 Page Slide 4: Typical Expenditure Amounts a. Calculate the typical expenditure amounts for each category using the Perez family s net income ($3,631.41). b. Discuss how the numbers can be used as a guideline when making spending plan decisions. i. The numbers represent typical amounts only. Some allocations may be higher or lower. 7. Slide 5: Financial or Education Goal a. Instruct each group to write a SMART financial or education goal. b. Have the groups share their goals and discuss why they set them. 8. Slide 6: Savings & Housing a. Savings i. Calculate the monthly savings allocation which is 5% of net income for the Perez family and record this amount ($181.57) in the table. ii. Stress that this is the minimum amount saved by the family. The family tries to save even more every month. b. Housing i. Determine which housing option is the best selection and place a check mark next to that selection. Then, record the applicable expenses (in red) in the table. ii. Discuss which house is the best selection for the Perez family and why. 1. Homes 2 or 3 should be selected because they are in the city, a short walk to the local bus stop for Ricardo, and have enough rooms for the Perez family. 9. Slide 7: Food & Transportation a. Food i. Determine which food option is the best selection and place a check mark next to that selection. Then, record the applicable expense (in red) in the table. ii. Discuss what food plan is best for the Perez family and why. 1. Food plans 1 (thrifty) or 2 (low cost) should be selected because Camila s savvy shopping and cooking skills allows the family to spend less on food while still having nutritious meals. b. Transportation i. Determine which transportation option is the best selection and place a check mark next to that selection. Then, record the applicable expenses (in red) in the table. ii. Remind participants to consider both Ricardo and Camila s needs. The family must have at least one family automobile for Camila to take to work. iii. Discuss which transportation options are the best for the Perez family and why. 1. Ricardo takes the bus to and from work ($75). 2. Options 1, 2, or 3 should be selected for Camila, because they have space for the entire family. However, option 3 is more expensive and will require August 2013 Perez Family Case Study Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona

6 Page the family to make cuts in other categories to be affordable. 10. Slide 8: Insurance a. Determine if the Perez family will purchase disability insurance for Ricardo. If so, calculate 2% of his net income and record the amount ($37.23) in the table. b. Determine if the Perez family will purchase life insurance for Camila and Ricardo. If so, determine the policy amount and record it in the table. c. Because disability and life insurance are optional expenses, discuss with the participants if they choose to purchase them or why not. i. Stress the importance of disability insurance to replace a portion of income if an individual cannot work. ii. Identify that life insurance is important since the Perez family has children that must be supported. 11. Slide 9: Other Expenditures a. Determine which other expenditures the Perez family will have. Then, record the applicable expenses in the table. b. Remind participants that most families have expenses in each category. c. Discuss what expenses each group selected and why. i. Because of the values stated in the scenario 1. Movies and video games should be selected because that is the family s entertainment. 2. Eating out should not be selected because the family cooks meals at home. Part Four: Spending Plan 12. Slide 10: Spending Plan a. Use the income and expenditure amounts determined for each category from pages 3 6 to develop a spending plan. b. Record the amounts in the before accident column. c. Ensure the Perez family spending plan has a net gain or zero balance (income less expenses). i. If the balance is negative, review the expenditure decisions and make the appropriate changes. Part Five: Camila s Accident 13. Slide 11: Camila s Accident a. Have the groups read about Camila s accident. b. As a result of the accident, calculate the Perez family s new income with SSDI benefits and Camila working part time. c. Have participants record the new income in the After Accident (working part time) column of the Perez family s spending plan on pages Slide 12: Modify the Spending Plan a. Instruct each group to determine what expenses they would reduce or cut to balance the spending plan. b. Have participants make a new spending plan for the Perez family in the After Accident column. c. Have participants answer question 8 to explain three expenses that August 2013 Perez Family Case Study Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona

7 Page were reduced in the family s spending plan and the impact eliminating or reducing each expense had on the family. d. As a class, discuss what changes each group made to their spending plan and the impact on the family of modifying this expense. Part 6: 2 Years Later 15. Slide 13: 2 Years Later a. Read about Camila s return to full time work CONCLUSION Reflection Approximate time: 15 minutes Materials to prepare: 1 The Perez Family Case Study A1 per participant 1. Complete the reflection questions and discuss as a class. a. Stress how the SSDI benefits Camila received were a short term benefit that helped the Perez family supplement their income while Camila was hurt. However, the family was ultimately better off once Camila returned to full time work. August 2013 Perez Family Case Study Funded by a grant from Take Charge America, Inc. to the Norton School of Family and Consumer Sciences Take Charge America Institute at The University of Arizona

8 2.5.4.A1 The Perez Family Case Study Name: Date: Class: Total points earned 90 Total points possible Percentage Direc ons: Complete the Perez Family Case Study by following the detailed instruc ons throughout the case study. Begin by reading the Perez Family story and comple ng the reflec on ques ons on page 2. Ricardo Perez was born into a large family in Mexico. A er his 8 th grade year, Ricardo found a job as a groundskeeper at a local hacienda. The job was perfect for Ricardo s personality and his need to quickly see results of his work. Observing how rapidly his income helped his family, Ricardo decided not to return to school the following year. He was happy with his job, his family deeply appreciated the income and Ricardo quickly earned a high level of respect and responsibility from his supervisors and co workers. Two years later Ricardo heard of an opportunity to work for a large farm just outside of town. He applied for the job, and because of his experience as a groundskeeper, he was hired on the spot. Ricardo had learned to drive a truck with his previous job, so the farm o en gave him the task of hauling produce from field to warehouse. Ricardo s employers were impressed with his a en on to detail and soon had him delivering produce all over the region and some mes up to the border with the United States. Ricardo was earning $20.20 per hour ($3,232 per month) as a truck driver with health care benefits for the en re family. At the age of 21 Ricardo decided to immigrate to the United States. The knowledge and experience Ricardo gained in his previous jobs proved invaluable. He was able to find another job on a large organic farm. Soon Ricardo was issued a U.S. Commercial Driver s License and began driving trucks and transpor ng produce to local U.S. markets. He became a naturalized ci zen at the age of 27. August 2013 The Perez Family Case Study Page 1

9 The Perez Family Story Case Study A1 Camila was raised in the United States in a family that she loved very much. However, what Camila did not love was school and at the age of 16 dropped out and entered the U.S. workforce. Camila felt that earning money and being out on her own was a good idea. Her family, friends, and teachers tried to convince her otherwise, but Camila loved having her own money. She worked a number of odd jobs she really did not like including clearing tables, selling newspaper subscrip ons, and cleaning hotel rooms. Ricardo and Camila met at a rodeo. The rela onship was slow to develop, but over me both Ricardo and Camila seemed inseparable. A year later they were married. Within the year Ricardo and Camila had their first child, a boy. Ricardo con nued to work at the organic farm. He enjoyed his job and was thankful that he didn t have to work evenings or weekends so he could spend more me with his family. Eventually their family grew to three healthy boys, and Camila enjoyed the role of a stay at home mom. The family enjoyed watching movies and playing video games together. Camila loved that they lived in the city and could easily walk to the nearest park or playground to let the children play. But, the bills began to mount. The family made adjustments to their expenses; Ricardo began riding the bus to and from work instead of driving the family s only automobile. He also began packing his own lunch rather than ea ng out. It wasn t quite enough though. Camila decided to go back to work full me as a cashier at a family owned hardware store. Camila felt fortunate to be hired on so quickly at the store when so many people were being laid off with the downturn in the economy. Camila was also thankful that her mother offered to take care of the children free of charge while she was working since the boys weren t old enough to stay home alone. The only downfall is that the hardware store was far enough away that Camila had to drive the family automobile. Camila eventually rose to the role of shi supervisor for all cashiers at the hardware store. Her hourly wages jumped from $10.00 to $14.50 ($2550 per month) with the promo on. With this new job came a shared sense of pride among the adults in Camila s family. The store owner was pleased to see how quickly Camila adapted to her new job. All was well with the family. Scenario Reflec on Direc ons: A er reading the scenario above, answer the following reflec on ques ons. 1. Do you agree or disagree with Camila s belief that dropping out of school at the age of 16 was a good idea? Why? (2 points) 2. Describe at least three of the family s values (stated or inferred) throughout the story that may have had an impact on their career and spending plan decisions. (3 points) August 2013 The Perez Family Case Study Page 2

10 The Perez Family Story A1 The Perez Family Spending Plan With the added income from Camila s new job, the Perez family needs help making spending decisions and adjus ng their spending plan to ensure they are living within their means. Paycheck and Taxes Calculate Camila and Ricardo s net income. Ricardo s employer provides a matching 401K and health care benefits. (8 points) What is Camila s net income? Camila s gross income $2,550 * 15% Federal tax rate + 6.2% Social Security % Medicare % State taxes = 30.6% Total Tax = A Total tax deduc ons: Camila s net pay: (Gross income deduc ons) B What is Ricardo s net income? What is the family s total net income? Ricardo s gross income $3,232 F * * 15% Federal tax rate + 6.2% Social Security % Medicare % State taxes = 30.6% Total Tax $210 Health Care Benefits 5.3% 401K Re rement Benefit = = Total tax deduc ons: $210 deduc on Total 401K deduc on: Perez family total household net income: (Camila + Ricardo s net pay) C D Ricardo s net pay: (Gross income deduc ons) E Typical Expenditure Amounts The following percentages represent typical amounts families allocate to each major expenditure area. Use the Perez families net income to calculate each amount in rows G L. Use these figures as guidelines when making decisions for the Perez family. However, remember that they are simply guidelines, and the actual amounts allocated may be higher or lower depending on many factors. (1/2 point each, 3 points total) Expenditure area Savings Insurance Housing Transporta on Food Other G H I J K L Perez family alloca on Financial or Educa on Goal Determine a financial or educa on goal for the Perez family. Make sure to consider the family s values, needs, and wants. This goal should be considered when making expenditure decisions throughout this simula on. Write your goal as a SMART goal (Specific, Measurable, A ainable, Realis c, and Time Bound). Include all five elements of goal se ng (2 points) Perez family goal: M August 2013 The Perez Family Case Study Page 3

11 The Perez Family Story Expenses A1 Savings The Perez family currently saves a minimum of 5% of their net income every month for Perez Family monthly net income * 5% = Monthly saving amount: Expenditure area Savings N Perez family alloca on emergencies. The family tries to save more money when possible. Calculate this amount and record it in N of the table. (1 point) Housing Place a next to the housing op on you would select for the Perez family. Record Expenditure area Perez family alloca on the applicable expenses for that housing op on (in red) in rows O Q of the table. Consider the family s values, needs, wants, goals, and spending plan when making your selec on. (3 points) Mortgage/Rent Insurance U li es O P Q 1. Rent: Cedarwood Located on a busy street that makes all needs easily accessible 950 square feet 1 Bedroom, 1 Bath Rent $910 Renters Insurance $30 U li es $ Rent: Belvedere Towers Short walk to the local public school and the bus stop; Camila s mom lives here 1190 square feet 2 Bedroom, 2 Bath Rent $1,280 Renters Insurance $30 U li es $ Own: Chase Street Remodeled home with a large back yard; short walk to the local bus stop and grocery store 1420 square feet 3 Bedroom, 1 Bath Mortgage (includes taxes) $1,410 Insurance $80 U li es $ Own: Jersey Street Located away from the noise of the city; excellent place to raise a family 2310 square feet 4 Bedroom, 2 Bath Mortgage (includes taxes) $2,250 Insurance $145 U li es $274 Food at Home Camila and Ricardo pack their lunches on days they work. Because Camila is an excellent Expenditure area Perez family alloca on cook and savvy shopper they rarely go out to eat. Place a next to the food op on you would select for the Perez family and record the applicable expense in row R of the table. Food at home R (1 point) 1. Thri y Plan (generic brands, canned fruits and vegetables, no junk food) $ Low cost Plan (generic brands, some fresh fruit and vegetables, chicken, hamburger, turkey, ham) $ Moderate cost (name brands, mostly fresh fruit and vegetables, variety of meats) $ Liberal Plan (organic, name brands, fresh fruit and vegetables, variety of meats including steak and lobster) $ August 2013 The Perez Family Case Study Page 4

12 The Perez Family Story Expenses A1 Transporta on Place a next to the transporta on op on(s) you would select for the Expenditure area Perez family alloca on Perez family and record the applicable expenses (in red) in rows S W of the table. Consider the family s values, needs, wants, goals, and spending plan when making your selec on. Keep both Ricardo and Camila s transporta on needs in mind when making your selec ons. The family must have at least one family automobile. (5 points) Monthly payment Insurance Fuel costs Repairs & Maintenance S T U V Public transporta on W 1. $9, Honda Accord Monthly Payment $ Insurance $90.50 Fuel Costs $120 Repairs & Maintenance $45 2. $15, Chevrolet Equinox Monthly Payment $ Insurance $ Fuel Costs $150 Repairs & Maintenance $68 3. Metro Subway Pass Monthly Unlimited Pass $125 per person 4. $19, Dodge Caravan Monthly Payment $ Insurance $ Fuel Costs $150 Repairs & Maintenance $55 5. $14, Toyota Tundra Monthly Payment $ Insurance $ Fuel Costs $210 Repairs & Maintenance $70 6. Howard County Bus Pass Monthly Unlimited Pass $75 per person Insurance Health: An important benefit of Ricardo s job is that he receives health insurance for his en re family for $210 per month. The $210 is deducted directly from his paycheck. Housing and Automobile: This expense was determined in the housing and transporta on sec ons. Disability: Disability insurance is highly recommended, yet op onal. Rates vary depending upon several factors including coverage, occupa on, age and gender. Typical consumers pay 2% of net income for disability insurance. The Perez family has decided not to purchase disability insurance for Camila. However, considering the Expenditure area Health insurance Housing & automobile Disability Life X Y Perez family alloca on Deducted from paycheck Included in housing & auto sec ons families needs, wants, values, goals, and spending plan, determine if they should purchase disability insurance for Ricardo. If so, calculate the amount and record the expense in row X of the table. (1 point) Ricardo s monthly net income * 2% = Monthly disability insurance amount: August 2013 The Perez Family Case Study Page 5

13 The Perez Family Story Expenses A1 Insurance Life: Life insurance is highly recommended, yet op onal. Considering the family s needs, wants, values, goals, and spending plan, should the Perez family purchase life insurance for Ricardo and/or Camila? If so, determine the policy amount and record the expense in row Y of the table on page 5. (1 point) Camila s Life Insurance Premiums $100,000 policy $22.67 per month $250,000 policy $44.41 per month $500,000 policy $82.91 per month Ricardo s Life Insurance Premiums $100,000 policy $28.09 per month $250,000 policy $57.75 per month $500,000 policy $ per month Other Expenditures The following expenses are what families spend on average in each category based upon household income. Considering the family s needs, wants, values, goals, and spending plan, place a next to the op ons you would select for the Perez family. Record the applicable expenses in rows Z GG of the table. Keep in mind that most families will have expenses in each category. Also, keep in mind that any extra money not spent on other expenses will be added to the family s savings fund. (8 points) Expenditure area Perez family alloca on Expenditure Area Communica on & Computers Z Health care DD Entertainment AA Food away from home EE Housing BB Gi s & charitable contribu ons FF Personal care CC Educa on and reading GG Perez family alloca on Communica on & Computers Telephone land line $35 per month Cell phone $60 for the first person, $10 for each addi onal phone per month Internet $40 per month Television $25 per month; basic plan (local channels) $85 per month; advanced package (movie channels) Entertainment Spor ng Events and Concerts $124 per month Movies and Video Games $108 per month Housing House care $83 per month Laundry, cleaning, lawn, etc. Household furnishings $123 per month Furniture, décor, etc. Personal Care Products and services $69 per month Soap, hair products, etc. Footwear $43 per month Shoes, slippers, boots, etc. Clothing $133 per month Coats, shirts, pants, etc. Health Care (not covered by insurance) Drugs/Medical Supplies $55 per month Vitamins, bandages, medica ons, etc. Food Away from Home Fast Food $100 per month Sit down Restaurants $322 per month Gi s & Charitable Contribu ons Gi s for others $50 per month Charitable Contribu ons $324 per month Educa on & Reading Educa on $181 per month Tui on, fees, textbooks, etc. Reading $15 per month Books, subscrip ons, etc. August 2013 The Perez Family Case Study Page 6

14 2.5.4.A1 The Perez Family Story Spending Plan The Perez Family Spending Plan Develop a spending plan for the Perez family using the income and expenditure amounts determined for each category from pages 3 6. Record the amounts in the Before Accident column. Ensure the Perez family spending plan has a net gain or zero balance (income less expenses). If the balance is nega ve, review the expenditure decisions and make the appropriate changes. Any addi onal money remaining should be added to savings and investments. (10 points for comple on and a net gain or zero balance) Time Period: Before Accident A er Accident (working part me) Earned Income Wages or salary before withholding (gross income), Ricardo Wages or salary before withholding (gross income) Camila Income Received from Other Sources SSDI benefits Total Income $ $ Expenses Deduc ons O en Taken from Paychecks Contribu on to a re rement program (401k, 403b) Paycheck deduc ons (Federal taxes, Social Security, Medicare, State taxes), Ricardo Paycheck deduc ons (Federal taxes, Social Security, Medicare, State taxes), Camila Saving and Inves ng (Pay Yourself First) Contribu on to savings and investments Insurance Premiums Health insurance Disability insurance Property insurance (renters or homeowners) Automobile insurance Life insurance Housing Costs Housing (rent, mortgage) U li es (gas, electricity, water, garbage) Household furnishings and appliances Household repairs, cleaning, and care (housekeeping) Transporta on Costs Monthly payment Fuel costs Repairs and Maintenance Public transporta on Food Costs Food at home Food away from home Con nued on the following page August 2013 The Perez Family Case Study Page 7

15 The Perez Family Story Spending Plan A1 Time Period: Before Accident A er accident, working part me Communica on and Computers Telephone land line Cell phone equipment and plan Television Internet monthly fee Health Care Not Covered by Insurance Drugs/Medical supplies Clothing and Personal Care Clothing Footwear Products and Services Educa on & Reading Educa on Reading Entertainment Spor ng events and concerts Movies and video games Gi s and Charitable Contribu ons Cash contribu ons Gi s for others Total Expenses $ $ Net Gain or Net Loss (Income less Expenses) $ $ August 2013 The Perez Family Case Study Page 8

16 The Perez Family Story Camila s Accident A1 Camila s Accident Read about Camila s accident and answer the following reflec on ques ons. With both Ricardo and Camila s incomes and their new spending plan the family was doing well. Then, a year a er Camila began working, she was involved in a serious car accident while driving to work that le her with a crushed sternum and two broken wrists. She was in the hospital two weeks and con nued her recupera on at home with the help of her mother and family. Because of her physical injuries, Camila lost her job at the store. Because they had met their goal to save money for emergencies, the family had $3000 in savings. However, their savings only replaced two months worth of Camilla s income. With the help of her local church Camila was counseled through the applica on process for Social Security Disability Insurance (SSDI) monthly cash benefits ($620 per month). Her children were also eligible for monthly cash benefits totaling $310 per month for all three children. Although the benefits were a big help, the family s income was s ll substan ally lower than what it was before Camila s accident. S ll weak from her injuries and not able to work an eight hour shi, Camila was rehired as a part me cashier by her former employer twelve months a er the accident. She works 25 hours per week and earns $9.75 per hour ($925 per month). Her wrist injuries require on going physical therapy sessions twice a week. Although the therapy is covered by her health insurance (she is covered by Ricardo s medical plan), she must pay co payments of $20 per session. Camila learns that SSDI rules do not limit her work income, and that allows her to con nue receiving SSDI checks for the first 12 months. Because of this, she gladly con nues to work part me for a year. At the end of that year, she learns that her earnings would exceed the SSDI income limit which would make her ineligible for SSDI and her children would lose their Social Security benefits. However, because Social Security deducts from her earnings the co payments she pays for physical therapy, her net income amount is low enough to allow Camila and her children to con nue receiving their Social Security benefits. Changes to the Perez family s income (5 points) 3. What was the Perez family s net income before the accident: 4. What is the total value of the SSDI monthly cash benefits that Camila and her children receive a er her accident? 5. Camila is working part me earning $925 gross income per month. If Camila has 30.6% in tax deduc ons, what is her net income? 6. What is the Perez family s net income a er the accident? (Ricardo s net income + SSDI benefits + Camila s net income when working part me) 7. What is the total reduc on in household net income a er the accident? The Perez Family Spending Plan Refer back to the Perez family s Spending Plan. Enter the family s new income in the A er Accident (working part me) column. Using the family s reduced income, determine what expenses the family will need to reduce. Make a new spending plan for the family in the A er Accident column that has a net gain or zero balance. (10 points for comple on and a net gain or zero balance) August 2013 The Perez Family Case Study Page 9

17 The Perez Family Story Camila s Accident A1 8. Explain three expenses that you changed in the Perez family s spending plan a er the accident. Iden fy the impact elimina ng/reducing each of these expenses will have on the family. What trade offs will the family have to make in order to reduce or eliminate each expense? (6 points) Two years later A er a second year on the job Camila is finally strong enough to resume her job full me. She is re hired as shi supervisor earning $14.50 ($2550 per month). Once Camila recovered and returned to full me employment she and her children lost their Social Security benefits, but, the benefits allowed the Perez family to bridge the income gap un l Camila recovered sufficiently to return to her full me job. 9. Camila returns to work part me a er her accident. She could have maintained all of her benefits without working. What do you think this says about Camila and her personal investment in her human capital? (2 points) 10. Thanks to the help of insurance, non profits, family and friends, and government, the Perez family was able to make it through their me of need. How did the family benefit (financially and emo onally) from each of these sources? (8 points) Insurance: Non profits: Family & Friends: Government: August 2013 The Perez Family Case Study Page 10

18 The Perez Family Story Camila s Accident A1 11. What would the family have done if they had opted out of paying the $210 monthly premium for health insurance? (2 points) 12. What challenges would the Perez family have encountered if the SSDI benefits were not available while Camila recovered? (2 points) 13. Accidents can happen to anyone at any me, and individuals must make financial choices to help protect them in case of unforeseen events. What elements were in the Perez family s financial plan before the accident that helped the Perez family prepare for their unexpected event (Camila s accident)? What could the family have done to be er prepare financially for an unexpected event? (3 points) 14. Is the family be er off financially now that Camila has returned to work full me than when they were receiving SSID benefits? Why or why not? (2 points) 15. It would have cost the family an addi onal $27.20 a month to purchase disability insurance for Camila. The family opted out of this expense. Assuming you had no knowledge of Camila s impending accident, would you have made the same decision to not purchase disability insurance? Explain. (2 points) August 2013 The Perez Family Case Study Page 11