AY Honors/Household Budgeting/Answer Key

2. Make a list of your family's expenses and classify them as necessary, useful and superfluous.

The list will be accumulated while meeting Requirement #15. The lines between necessary, useful and superfluous are not always clear. While you definitely need a place to live, most people could live in a less expensive home. Your electric bill is necessary, but everyone can take steps to reduce their electric bill. Food is required to stay alive, but takeout and prepared food is more costly than simple home cooked food. You might think you can't live without your handphone but your parents or grandparents will remember seeing their first mobile devices. Discuss these concepts.

4. What is the best day and place to get vegetables, fruits and greens in your neighborhood?

In developing countries this may be a local vendor market. In the developed world the grocery stores are open daily. You may be able to buy direct from farmers in season. The answer is going to depend on where you live.

5. What can you and your family do to save on water, electricity and telephone?

Water should not be wasted. Ideas to save water include:

• Use a rain barrel to collect water for the garden\
• Put a brick, plastic bag full of water, or other device in the toilet tank
• Fix all leaks as they are detected. A leak will waste huge amounts of water over time
• Put flow reducers on shower heads
• Run dishwashers and washing machines only when full. This reduces the number of cycles, uses less water and power, and saves on wear and tear on the machines
• Turn off the water while brushing your teeth or soaping up in the shower
• Recycle water you boil pasta or corn in as dishwater or for soup.

Electricity use reduction can take many forms including:

• Turn off the lights when you leave a roo
• Install energy efficient bulbs. Incandesent bulbs are actually being banned in some places
• Don't go crazy on seasonal light displays
• Turn off lights before going to bed
• If you have a/c or electric heat, use windows to keep things cool or blankets and extra clothing to stay warm
• Use a programmable thermostat to turn off heat while you are normally out of the house
• Turn off and unplug electronics when you are not actively using them
• Replace non-energy efficient appliances and get rid of the extra fridge in the garage (its probably not energy efficient at all)

Telephone costs can be cut by:

• Use email or Skybe instead of long distance
• Get a better long distance calling plan
• Cut out calling features you don't use
• Do you need a landline? Many are using mobile phones and/or VOIP systems now

7. What taxes does your family have to pay?

This will depend on where you live, but the main types of taxes in the world levied on consumers include:

1. Income taxes, often deducted by the employer. Often a "progressive tax" that increases in percentage at higher levels of income
2. Payroll taxes depend on the country but can cover national pension plans, workers compensation plans, unemployment insurance, and similar programs.
3. Sales Taxes, Goods and Services Tax (GST) or Value Added Taxes (VAT) collected whenever you buy various products and services. Usually a fixed percentage of the transaction value
4. "Sin Taxes" collected at point of sale or buried in the price of cigarettes and alcohol.
5. Property taxes to fund municipal government, roads, schools, protection services, and hospitals. Usually based on the value of your real estate
6. Road taxes may be collected with automobile licensing or imbedded in the price of gasoline.
7. Poll taxes are levied on every adult regardless of income or ownership of property
8. Customs and Duties are charged when you import something into the country

11. What measures should be taken when the family is in debt?

Debt results from either spending more then you bring in until all your savings are exhausted (deficit spending), or from buying assets or investing on credit.

Deficit spending debt is very serious and must be remedied quickly. The best way out of deficit spending debt is to figure out how to run a budget surplus. You either need to increase the amount of money you earn above your spending, decrease the amount you spend below the amount you earn, or preferably tackle the problem from both sides. As you run a budget surplus you can use the surplus to reduce and eliminate the debt.

Another way to get out of debt is to sell assets off to raise cash. Selling investments, real estate, furniture etc may be the only alternative if you suffer some serious unfortunate circumstances, but eventually you will run out of things to sell so running a budget surplus is a much better plan.

Debt incurred to buy income producing assets is more acceptable. You might use debt to invest in a business or farm that makes a living for you.

Similarly, student debt is sometimes required to get a good education, investing in yourself to enable you to earn a better living. However student debt is often a huge trap that takes people many years to get out of.

Most people use debt to buy a home or a car. Used wisely, this kind of debt can ok. It is impossible to save enough money to buy a home for cash, while still paying rent out. Home prices will generally rise faster then the interest on your savings account. Buying a car on credit is a common way to spread out the cost of the car over much of its effective useful life. Usually you can resell the car and pay off the loan if you have to get rid of the payments.

Don't confuse buying a necessary asset like a home or a car with an unnecessary asset like a pleasure boat or fancy bike. Unnecessary assets are actually liabilities because they tend to cost you money to maintain, store and insure them while they do nothing to provide shelter, earn income, or get you to work or school.

17. Read Malachi 3:8-12 and write a minimum of 250 words about the meaning of being a faithful steward.

Malachi 3:8-12

Do Not Rob God 8 “Will a man rob God? Yet you have robbed Me! But you say, ‘In what way have we robbed You?’ In tithes and offerings. 9 You are cursed with a curse, For you have robbed Me, Even this whole nation. 10 Bring all the tithes into the storehouse, That there may be food in My house, And try Me now in this,” Says the Lord of hosts, “If I will not open for you the windows of heaven And pour out for you such blessing That there will not be room enough to receive it. 11 “And I will rebuke the devourer for your sakes, So that he will not destroy the fruit of your ground, Nor shall the vine fail to bear fruit for you in the field,” Says the Lord of hosts; 12 “And all nations will call you blessed, For you will be a delightful land,” Says the Lord of hosts.