Case A Mary Needs Wheels

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					                         Final Exam - Personal Financial Management
Background: You are a financial counselor. You will pick one of the two cases below and analyze the
financial data. You will incorporate what you have learned about financial goal setting, needs versus
wants, budgeting, debt, credit cards, savings and investing to develop a detailed, specific
recommendation. You will write a letter to Todd or Mary (depending on which case you selected) to
inform them of your recommendation. The letter must be typed. You must attach any documentation that
is necessary to support your recommendations. As a minimum, you must attach a current and revised
budget to your letter. This final is worth 50 points.

You will be assessed using the rubrics in this handout. Use specific data, charts, graphs, etc. to support
your position. Remember, you are trying to demonstrate the depth of knowledge you have acquired in
Personal Financial Management. You may find the financial calculators on my website (My links) to be

Case 1: Todd Sorensen
Todd’s monthly gross pay is $1920 and his monthly net income is $1,642
    He makes $12/hour and pays $278 in payroll taxes
    He works 40 hours per week (160 hrs/wk) at a bookstore. He works Mon – Fri.
    He is 22 years old and has finished two years of college. He is not sure if he will go back to
       complete his 4 year degree program to become a Computer Programmer

His monthly fixed expenses include:
    $550 for rent (lives on his own)
    A school loan payment of $232/month. (He stills owes $2000 total)
    A car payment of $152/month. (He still owes $3000 total)
    An insurance premium payment of $112/month

His flexible (variable) monthly expenses include:
    Utilities and telephone bills, which average $125
    $250 for food
    $50 for personal and household items
    $50 for automobile gas
    $100 for entertainment
    $45 cellular phone
    $15 renters insurance
    $25 clothing

His current credit obligations are:
$850 on a major department store credit card. Must pay at least $42 per month.
$1,200 on his MasterCard credit card. Must pay at least $65 per month.

Todd keeps meaning to open a savings account and deposit a small portion of each paycheck, just in case
he has an emergency and needs extra cash. But he just hasn’t gotten around to it yet. Todd’s car breaks
down on the way home from work. His mechanic tells him that it will cost about $1,200 to get the car
running again. Todd needs his car to get to and from work. Todd gets the car fixed and agrees to pay the
mechanic at least $100 per month until the car repairs are paid off.

Todd feels like he is always short on money and it seems he has to use one of his credit cards to pay all of
his bills. He seeks you out for advice. What advice would you give Todd?
Case 2: Mary Delgado

Mary’s monthly net income is $1,550 (Mary works 40 hrs/wk, 160 hrs/month for $11/hr.)
      Payroll deductions ae $210/mo ($1760 – 210 = $1550)
      She works at ACE hardware on Mon, Tue, Thu, Fri and Sat (8 hrs each day)
      She is 19 and decided to work before attending college
      She moved out of her parent’s house 3 months ago and is having a hard time paying all of her bills

Her fixed monthly expenses include:
$600 for rent (she lives in an apartment by herself)
$262 for her car payment. (Her car is only 6 months old. She bought it new and still owes $25,000)
$210 for her car insurance. (Her rates are a little high because she has had 4 speeding tickets in the last 3

Her flexible (variable) monthly expenses include:
$20 for the telephone bill
$250 for food
$75 for personal and household items
$50 for car gas
$100 for entertainment

Her current credit obligations include:
$2000 on one of her American Express credit cards and she must pay a minimum of $120/mos
$1500 on another credit card, which she recently accrued from taking out a cash advance. (She needed it
because she didn’t have enough to pay rent last month, and she wanted to buy a new piece of stereo
equipment for her car.) Must pay $100/month on this card. She also plans to take a trip to Europe with
her friends. She has already paid a non-refundable deposit of $250. She has to start making payments of
$100/month in order to pay off the $1800 she still owes.

Mary does not have any savings.

What advice would you give Mary?

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