Dream Home Mathematics

Dennis W. Montgomery           Lyman Trumbull Academy
                               5200 N. Ashland
                               Chicago IL 60640
                               (312) 534-2430

Objectives:

This lesson-game is designed for grade levels 5-12.
Students should be able to:

* Use basic math to determine affordability of a home based on a given income.  
* Add, subtract, multiply, and divide, as required.                                  
* Calculate decimal placement for currency, percentages and interest.
* Use a calculator. 
* Estimate affordability based on income, prior to computation.
* Investigate different careers and their salary ranges.
* Understand and calculate percentage, interest rates.
* Understand gross income.
* Calculate and understand taxes, withholdings and deductions.
* Calculate net income.
* Understand and compute the expense and cost concept.

Materials:
 
* Careers catalog/magazine with salaries
* Copies of newspaper classified section  
* Calculators
* Pencil/pen
* Construction paper (approx. 11 X 12)
* Play money (optional for variation with banker)
* House plans with price (magazine's with house plans or create your own)
* Glue
* Scissors
* 3" x 5" index cards

Recommended Strategy:

* Review lessons on computing percentages, interest, decimals and division.
* Review a range of home prices and designs.
* Review/teach the use of a calculator to compute interest, percentages, add, 
   multiply, divide and subtract taxes, deductions, and expenses.
* Skipping one space, number ten 3 x 5 cards 1 to 3.  Head the card "CAREERS.  Use 
   the following format:   |            CAREERS               |     
                           |                                  |
                           |1. Career:  Doctor                |
                           |                                  |  3 x 5 card
                           |2. Annual Salary:  $250,000.00    |
                           |                                  |
                           |3. Added Expenses: Child support  |                             
                           | $1,000 or Child's College payment|
                           | $2,700 per month (add to F)      |
   Career card info may be obtained from a "Careers" catalog/magazine or create 
   your own (keep it realistic).  Create real life "added expenses" =< $5,000 
   per month.    
* Using any magazine, newspaper or both, the teacher or students cut out various 
   home plans (preferably with a picture) and glue each one to a sheet of 
   construction paper, numbering each and giving it a bold heading of "DREAM 
   HOME".  Use the price listed in the newspaper, magazines or create your own.  
   In bold numbers, at the bottom of the construction paper, place the price of 
   the home.  If you create your own, be realistic. 
* Collect the career cards and the dream home sheets (in 2 stacks).
* Distribute one career card and one dream home sheet to each group.
* Create a data collection sheet in the following manner and order:
        DREAM HOME MATH DATA COLLECTION: Can I afford to buy this home?

     What is your occupation and annual salary?______________________________
     Compute your monthly income (x/12)                      A.______________ 
     What is the cost of your home on "DREAM HOME CARD"? (y) B.______________
     Compute tax & payroll deductions (33% of A.)            C.______________
     Compute loan payment (mortgage) & interest (9% of y)/12 D.______________
     Compute monthly property tax (10% of y)/12              E.______________
     Utilities, car payment, food & one child is your fixed monthly expense of
     $1,000 plus (+) the added expense from your career card F.______________
     Compute total debt by adding lines C. and F.            G.______________
     Subtract line G. from line A. for net income            H.______________
     Add lines D. and E. for total home/mortgage cost        I.______________
     Subtract line I. from line H. for cash remainder (+/-)  J.______________
          If line J. has a positive(+) cash remainder, congratulations, you can 
     afford to buy the home, go to the banker or loan officer for amount shown on 
     line B.  Each month you must pay the bank/loan company amount shown on line I.  

     If line J. has a negative(-) cash remainder, I'm sorry, the home you have
     selected cost too much for the amount of net income you have after 
     subtracting your total debt on line G.  You don't make enough money to buy 
     this particular home and have such large debts.  Try a less expensive home.

     / = Divide/Division
     x = Annual Gross Salary/Income
     y = Cost of Dream Home
* Compare and graph home cost to net income/salaries, expenses/debt between 
   students.
* Explore various careers and their salary ranges to teach affordability.
* Explore difference between rentals and home purchases and how basic math is 
   used to provide an answer for; "Can I Afford to buy this home?"

Performance Assessment:

Students should compare the cost of buying a home and renting.  Math calculations
on data collection sheet will be checked for accuracy.  Students at a later 
lesson, use their parents income and rent/mortgage to determine homes they can 
afford.

Note:

Any variations to "DREAM HOME MATH" should consider age and grade level.
and pictures if possible.  This exercise reinforces five (5) primary math 
functions and introduces the student to one of the most valuable lessons of 
life, simplicity of math in buying a home.