Chapter 13, Problem 2CC

Summary Introduction

Case summary:

J and R are both 38 years old and their triplets are three and half years old. Now, they are little bit more self-sufficient. They left their children on R’s parent’s home and left for dinner. While on dinner, they started discussing about their futures and future of their children as well. They are thinking that they are going to need $100,000 for college expenses and good amount for their retirement too. The beach house amount may be around $350,000 from thirty years from now which they want to purchase. They decided to talk to investment counselor.

Character in this case: J and R.

Adequate information: Checking account: $4,500
Savings account: $20,000
Emergency fund savings account: $21,000
IRA balance: $32,000
Car: $8,500 (Jamie Lee) and $14,000 (Ross)
Student loan balance: $0
Credit card balance: $4,000
Car loans: $2,000
Jamie Lee: $45,000 gross income ($31,500 net income after taxes)
Ross: $80,000 gross income ($64,500 net income after taxes)
Mortgage: $1,225
Property taxes: $400
Homeowner’s insurance: $200
IRA contribution $300
Utilities: $250
Food: $600
Baby essentials: $200
Gas/maintenance: $275
Credit card payment: $400
Car loan payment: $289
Entertainment: $125

To determine: Specific and measurable short term and long term financial goals they should implement at this stage.