Question

Greg makes $16.50 per hour and works 36 hours a week. He pays 22% of his gross earnings in federal and state taxes. He also saves 10% of his monthly gross income to put into savings. He is considering renting an
apartment that will cost $1,400 per month. Based on his expenses, can he make the monthly payments?

Answer 1

To determine if Greg can make the monthly payments for the apartment, let's calculate his monthly income and expenses:

1. Monthly Income:
- Greg's hourly wage: $16.50/hour
- Hours worked per week: 36 hours
- Weekly income: $16.50/hour * 36 hours/week = $594/week
- Monthly income: $594/week * 4 weeks/month = $2,376/month

2. Taxes:
- Greg pays 22% of his gross earnings in federal and state taxes.
- Tax deduction: 22% of $2,376 = $522.72
- After taxes, Greg's monthly income is: $2,376 - $522.72 = $1,853.28

3. Savings:
- Greg saves 10% of his monthly gross income.
- Monthly savings: 10% of $2,376 = $237.60

4. Rent:
- Monthly rent for the apartment: $1,400

Now, let's calculate Greg's total monthly expenses:
- Total expenses = Taxes + Savings + Rent
- Total expenses = $522.72 (taxes) + $237.60 (savings) + $1,400 (rent)
- Total expenses = $522.72 + $237.60 + $1,400
- Total expenses = $2,160.32

Since Greg's total monthly expenses ($2,160.32) are less than his monthly income after taxes ($1,853.28), he can afford to make the monthly payments for the apartment.