Antonio is ready to move out of his parent's house and live on his own. He found a great apartment that has all utilities included. His job as an assistant plumber requires him to have a car, but his hours are flexible enough to give him time on the weekends to have fun with his friends. What is the best way Antonio's budget can be modified to help him save enough for the $200 down payment and make the $500 monthly rental payment?

Question

Monthly Budget
Old Budget
New Budget
Income
Wages
$1500
$1500
Expenses
Food
Cell Phone
Savings
Entertainment
Car Expenses
.
$250
$175
$200
$200
$300
.
$____
$____
$____
$____
$____
Net Income
$375
$____

a.
Antonio could keep his budget the same and hope he gets a raise at work.
b.
Antonio could reduce his monthly entertainment expenses by $100 to help pay the monthly rent. He could take $200 out of savings once for the deposit.
c.
Antonio could live at his parent’s house for one more month and save his net income. After one month of living at home, he would have enough additional money for the deposit and one year’s rent at the apartment.
d.
Antonio could reduce his monthly entertainment expenses by $75 and his food expenses by $50 to pay the monthly rent. He could take $200 out of savings once for the deposit.

Answer 1

To determine the best way for Antonio to modify his budget, we first need to analyze his current financial situation with respect to the apartment's down payment and monthly rent.

Current Monthly Budget Overview:

Old Budget:

• Income: $1,500
• Expenses:
  • Food: $250
  • Cell Phone: $175
  • Savings: $200
  • Entertainment: $200
  • Car Expenses: $300
• Net Income: $375

Financial Goals:

• $200 Down Payment (one-time)
• $500 Monthly Rent

New Budget Considerations:

1. Down Payment: Antonio can take $200 out of savings for the down payment. So, he will need to adjust his monthly expenses to cover the new rent of $500.
2. Monthly Rent: Since the total available for expenses based on income is:
   • Income: $1,500
   • Expenses (without rent): Total = $250 + $175 + $200 + $200 + $300 = $1,125
   • Current Net Income: $375
   • New Total Expenses (including rent) = $1,125 + $500 = $1,625 (which exceeds income)

Given this situation, Antonio needs to reduce expenses. Let's evaluate the options:

Option Evaluation:

• Option a: "Antonio could keep his budget the same and hope he gets a raise at work."

  • This is not financially viable as it does not address the immediate issue of covering rent.

• Option b: "Antonio could reduce his monthly entertainment expenses by $100 to help pay the monthly rent. He could take $200 out of savings once for the deposit."

  • This would adjust the entertainment expense to $100. The total expenses would then be:
    • Food: $250
    • Cell Phone: $175
    • Savings: $200
    • Entertainment: $100
    • Car Expenses: $300
    • Total: $1,025
    • Net after rent: $1,500 - $1,025 = $475, which is enough to cover the rent and helps pay the down payment. This option works.

• Option c: "Antonio could live at his parent’s house for one more month and save his net income."

  • This would not give him a longer-term solution once he moves out. It would also delay his independence.

• Option d: "Antonio could reduce his monthly entertainment expenses by $75 and his food expenses by $50 to pay the monthly rent. He could take $200 out of savings once for the deposit."

  • This adjustment would result in:
    • Food: $200
    • Cell Phone: $175
    • Savings: $200
    • Entertainment: $125
    • Car Expenses: $300
    • Total: $1,000
    • Net after rent: $1,500 - $1,000 = $500, which allows Antonio to cover expenses but only works if he reduces food and entertainment properly.

Conclusion:

Best Choice: Option b is the most practical way for Antonio to modify his budget to achieve both his down payment and meet his monthly rental obligation, while still allowing him to maintain a balance in his financial obligations.