Question

James has a yearly salary of $30,200. His employer withholds $4228 in state and federal taxes and $2990 in FICA taxes throughout the year. He has the following monthly costs: transportation is $200, cell phone bill is $75, student loans require $280 in repayment, and rent is $400. He is using the average monthly costs for each of the following in order to gain an idea of other monthly expenses: utilities are $220, internet is $70, health insurance is $357, and groceries are $270. How much money is left each month for discretionary spending after all necessities are accounted for? Round your answer to the nearest cent, if necessary.

Answer 1

First, calculate James' annual deductions:
State and federal taxes: $4228
FICA taxes: $2990
Total annual deductions: $4228 + $2990 = $7218

Next, calculate James' total annual costs:
Transportation: $200 * 12 = $2400
Cell phone bill: $75 * 12 = $900
Student loans: $280 * 12 = $3360
Rent: $400 * 12 = $4800
Utilities: $220 * 12 = $2640
Internet: $70 * 12 = $840
Health insurance: $357 * 12 = $4284
Groceries: $270 * 12 = $3240
Total annual costs: $2400 + $900 + $3360 + $4800 + $2640 + $840 + $4284 + $3240 = $21964

Now, calculate James' total annual earnings after deductions:
Yearly salary: $30,200
Total annual deductions: $7218
Total annual costs: $21964
Total annual discretionary income: $30,200 - $7218 - $21964 = $216

Finally, calculate James' monthly discretionary income:
Total annual discretionary income: $216
Monthly discretionary income: $216 / 12 = $18

Therefore, James has $18 left each month for discretionary spending after all necessities are accounted for.