Assignment and by alicejenny


									Chapter 02 Assignment … Highlight your answers

Use Microsoft WORD to fill in the answers. SAVE the document periodically in WORD.
BELOW the last question is the “personal portfolio” assignment. Submit both the “20 question
assignment” AND the “personal portfolio” as a single WORD document. Submit the combined
assignment / portfolio using the correct “Angel” drop box.

   1. Go to this link - What's it worth to reduce my spending
      Enter your age. Enter age of retirement of “67”. Enter a savings rate of 5%. Enter a tax
      rate of 30%. Click “next”. What amount you would have at retirement

   2. According to the text, a personal balance sheet has three parts Assets, Liabilities and Net
      Worth. Define EACH of the three terms.

   3. What is the difference between an asset and a liquid asset ?

   4. What is meant by the term “Insolvency” ?

   5. How would you define the term “equity” ?

   6. According to the text, what is the name of the financial statement that measures your
      financial performance over time is

   7. Use this link to determine your debt to income ratio (click the link and plug in your
      numbers) then scroll down the calculator page for “results”. Calculator: Debt Service
      Ratio ( Into which of the four categories
      do you fall?
8. What does the term discretionary income mean ?

9. On the Chapter 02 webpage that begins the assignment (and lists the Internet Readings)
   what is the amount that that will accumulate if 1 penny is compounded daily for the month
   of May (as detailed in the yellow box).

10. According to “10 Habits for Financial Stability and Success” what is the first habit that is

11. According to the Internet Reading “Top Ten Things” what is meant by #8?

12. According to “How to Stop Living Paycheck to Paycheck” describe a “debt snowball”.

13. According to “Personal Budgeting Concepts” describe the “envelope system”?

14. According to the article “Controlling your Spending” it is “not low income that is at the
    root of most financial problems”. What is it ?

15. According to “The -0- Dollar Emergency Fund” it “turns out that it’s not the cash you need
   so much as the _______________________________________?

16. According to “The Secret To Saving”, a goal that isn't written down is only a

17. According to “Simple Savings” the author realized that “five forms of savings were
    essential to addressing different parts of life”. What is the first fund that he lists
18. Read the Internet Reading “5 Things NOT to do During a Recession”. What is a “co-
    signer” AND why should you not be a “co-signor” (you may have to search the Internet for
    the answer).

19. Take a look at financial resolution #6 described in the article “Top Ten Financial
    Resolutions”. What could you do to implement it.

20. Could an individual have a strong positive net worth but be have a negative Cash Flow.
    Explain your answer.

  Prepare TWO Personal Financial Statements
  Part 1: Prepare a “Personal Balance Sheet using this form.

       Personal Assets                Value         Personal Liabilities         Value
 Cash & savings accts                             Mortgage amount
 Long-Term Investments                            Auto loans
 Retirement plan                                  Student loans
 Home and Real Estate                             Credit card balances
 Auto & personal property                         Other liabilities
 Other assets you have                            Other liabilities
                                                  Net Worth
 Total personal assets                            Liabilities + Net Worth

  Instructions and More BELOW
Input Your Assets:
1. Input your “liquid assets” (wine cellars do not count). These include savings and
checking accounts, CD’s, short-term Treasury Bills, emergency fund, vacation fund,
Christmas fund etc..
2. Input the amount in your retirement plan
3. Estimate, and input, the current market value of your long-term investments (stocks,
bonds, mutual funds etc) (Do NOT include the “payoff amount” of any life insurance
policy on yourself or others. Ex: if I have a 1 million dollar life insurance policy on my
own life I am NOT a millionaire. I do NOT include the million in my net worth …
since I am not DEAD therefore I do not collect it. (My family could include the million
in their net worth AFTER they “I’m gone” – note: there is no need to inform them of
this fact.)
4. Estimate, and input, your house’s current market price (do not pay attention to the
mortgages(s) yet. Be conservative. As appraisals or market values change, your personal
net worth does too (by an equal amount and in the same direction). Note: This is why
retiree’s, with all of their retirement money invested in the stock market, actually LOSE
MONEY when their stocks in the market go down.
5. Estimate, and input, the market value of your cars (as if you were selling as a private
party) Ignore any loans against the cars. Use Kelley Blue Book website to get an estimate.
6. Estimate, and input, the current market value of all of your other possessions – furniture,
computers, clothing, purses, shoes etc (do not use the amount you paid for them – use the
amount you think you could actually get for them on Craigslist … and be real.)
7. Input the market values of any other assets.

Input Your Liabilities:
1. Input your “mortgage amount(s)” (what you owe on the house – even 2nd or HELOC’s) .
2. Input the amount owed on your cars or other toys (boat, bikes, jet-ski etc).
3. Input the amounts owed on existing student loans (whether they are due now or not).
4. Input all of your credit card balances.
5. Input any other amount of debts or liabilities.

Also complete the Cash Flow Statement BELOW
Complete This Worksheet. Round amounts UP to nearest $10
            Cash INFLOW                     Monthly        Annually
 Salary or wage (gross)
 Tips or Commissions
 Interest/dividend income
 Other income (alimony)
 Any other funds received
 Total Cash Inflows

           Cash OUTFLOW                     Monthly        Annually
 P Income taxes deducted
 A FICA taxes deducted
 Y Union Dues deducted
 C Health insurance deducted
 H Life insurance deducted
 E Pension deductions
 C Other deductions (even savings)
 K Other deductions
 Mortgage or rent
 Property tax
 Insurance (Car, Life, disability)
 Maintenance and repairs
 Heating (Southwest gas)
 Water and sewer
 Cable / satellite / other
 Cell Phone
 Car loan payments
 Car maintenance and repairs
 Credit card payments (all)
 Other loan payments
 Other consumer goods
 Child-care expenses
 Recreations / entertainment
 Education (tuition / books)
 Vacations and travel
 Alimony / child support
 Charity (church) contributions
 Other payments or expense
 Other payments or expense
 Other payments or expense
 Total cash outflows
 Total Inflows – Total Outflows =
 Net Cash Flow … positive or

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