Académique Documents
Professionnel Documents
Culture Documents
The purpose of this assignment is to provide a "hands on" experience that uses the personal finance concepts, you
already understand, by applying them to a "real life" individual or family. You'll also have an opportunity to work with
fellow class members and "pick each other's brains" as you discuss the case and present the results.
Here's what you need to do:
1. Organize your group of 3 or 4 (these are the students at your seating group). Choose a leader,
recorder, reporter, and time keeper.
2. Read the case and write down your best financial analysis, of each paragraph, of the following
items:
A discussion of the strengths and weaknesses of the individual or family's financial situation
Correction of any misinformation that the individual or family has about financial topics
Comments about the individual or family's cash flow (how money is earned and spent)
Comments about emotional issues related to the individual or family's financial situation
3 to 5 recommended action steps to improve the individual or family's financial situation (in other
words, what should be done to make things better)
Any other information that you feel is useful to the case (like what do you think Dave Ramseys or
Mr. Lukes advice might be)
Concerns about financial security are not unfounded. Janis currently has a negative net worth. This means that her
debts exceed her assets, which include $800 in a checking account, $8,331 in a 403(b) retirement savings account, a
$1,500 car, and $2,000 of personal property. She owes $19,000 on a credit card charging 19% interest and is a selfconfessed "shopaholic."
Janis says she spends only $1,800 of her $2,363 monthly income, including $700 for rent. She doesn't have a car loan
and puts nothing aside for savings. She doesn't own disability or renters insurance and has only the minimum state
liability limits on her automobile policy. She works for county government and her employer provides health benefits
for herself and the children. She and her ex-husband each have $50,000 of term life insurance.
Janis does not have a will. She is also living day to day and is most concerned with meeting current expenses rather
than saving for the future. Her anticipated retirement date is when she would be age 65. To date, she has not started
an individual retirement account but is contributing to a mandatory employer pension plan.
Foxe earns $29,300 annually, plus another $200 in interest. Her $11,000 net worth includes $550 in a checking
account, $3,000 in passbook savings, $3,950 in an S&P 500 stock index mutual fund, $2,500 in U.S. savings bonds, a
two-year old car worth $7,500, and a $1,000 computer. Her home furnishings from her previous married household,
worth $4,500, are presently in a rented storage locker.
Short-term, Foxe would like to increase her savings to $10,000, pay off her credit cards, and be able to afford her own
apartment. She is also planning to advance in her career and is taking advanced computer courses at a local college.
In 3 to 10 years, Foxe would like to own a new car and a condo or house of her own. She says "I hope to be remarried
with kids and earning a good salary with money in the bank."
Foxe's monthly expenses total $1,550. This includes $150 a month "rent" to her parents, a $250 car loan payment
with 36 months remaining, $200 toward credit card debt and the attorney's fees, $100 for tuition, $100 for gas and
car expenses, and $500 for items such as food, clothing, auto insurance, entertainment, and the storage locker rental
fee. She also saves $250 a month in a stock index fund and U.S. savings bonds. Her father is a certified financial
planner and recommended investing in the index mutual fund for long-term growth.
Foxe has group term life insurance paying 2 times her salary and employer-paid health insurance with a $1 million
lifetime limit. Her car has 100/300/50 liability coverage and collision and comprehensive coverage with a $100
deductible.
Foxe admits that she has done absolutely no planning or saving for retirement. She wants to retire no later than age
65 and move to a state that has lower living costs and warm weather year-round. Her hope for her retirement years
time is to "have money to do fun things and not become a bag lady." Her employer provides a 401(k) plan but, so far,
Foxe has not signed up, even though her employer matches contributions up to 6% of workers' salaries. She also does
not have an IRA.
There is no disability insurance to cover the loss of Dan's income should he be unable to work due to accident or
illness.