Putting It Together: General Problem Solving
Now that you have seen a number of general problem solving techniques and plenty of examples in this module, let’s try to put it all together. In real life, sometimes we have to make big decisions. A major career change or relocation can throw your life into disarray, but perhaps even more importantly, such a change can have lasting effects on your financial future.
Should you make the move and take the job offer?
This is a tough decision! Take some time to think this through. What do you need to know and what pathway(s) could get you there? Try it yourself first. for one possible approach.Answer: One approach is to calculate the annual discretionary budget [the annual net income for each job minus annual expenses] for each position. Bank Teller:
- To calculate the annual discretionary budget, we must find annual net income and the annual expenses.
- To find annual expenses, we simply multiple the monthly expenses by 12.
- To determine the annual net income for the bank teller job, we need to find the gross income and subtract the amount of taxes paid.
- To find the amount of taxes paid, we need to multiply the gross income by the tax rate (10% = .10).
- To find the annual gross income, we need to determine how many total hours you work in a year. Then we can multiply that by your hourly wage.
- To find out how many hours you work in a year, we multiply the number of hours you work each day by the number of days you work per year.
Step 5: Multiply by the hourly wage to determine your annual gross income:
Step 4: Calculate your taxes:
$22,880\times0.10=$2288
Step 3: Net income is found by subtracting your taxes from your gross income:$22,880-$2288=$20,592 Your annual net income as a bank teller is $20,592.
Step 2: Ok, so now let’s figure out the yearly expenses. If monthly expenses are $1500, then each year you will pay:12\times$1500=$18,000
Step 1: Finally, after the bills are paid, you can do what we want to with the remainder. This is our discretionary budget.The annual discretionary budget for the Bank Teller position is $2592. Next, let’s see what kind of discretionary budget you will have if you take the new job. Assistant Manager:
- To calculate the annual discretionary budget, we must find annual net income and the annual expenses.
- To find annual expenses, we simply multiple the monthly expenses by 12.
- To determine the annual net income for the bank teller job, we need to find the gross income and subtract the amount of taxes paid.
- To find the amount of taxes paid for this job, we need to multiply the amount of gross income OVER $25000 (i.e.: $32000-$25000 = $7000) by the tax rate (15% = .15) and add that to $2500.
$2500+($7000\times0.15)=$3550
Step 3: The annual net income for the assistant manager position would be:$32,000-$3550=$28,450
Step 2: It’s a higher net income than you are currently making, but how will it stack up against the higher cost-of-living expenses in the city? Let's find the annual expenses:12\times$2000=$24,000
Step 1: Finally, your new discretionary budget would be:$28,450-$24,000=$4450
That’s definitely an improvement over $2592! Maybe it’s time to move to the big city and start advancing your career. However, since it’s not that much more, you probably shouldn’t go out and buy a brand new car. Just wait until you get your first promotion to full manager.