Question: Once the Garners realized they had a $220 surplus each month, they began to replace the $1,200 they
Once the Garners realized they had a $220 surplus each month, they began to replace the $1,200 they had taken from their savings account to pay for repairing the air conditioner. Now it was lime to take the next step. Questions
Income (cash inflow)
Joe’s take-home salary $3,500
Mary’s take-home salary $1,020
Total income $4,520
Monthly fixed expenses:
Home mortgage payment, $890 Including taxes and insurance
Automobile loan 315
Automobile insurance 130
Life insurance premium 50
Total fixed expenses $1,385
Monthly variable expenses:
Food and household necessities $ 680
Natural gas 175
Family clothing allowance 230
Gasoline and automobile repairs 195
Personal and health care 150
Recreation and entertainment 700
Gifts and donations 350
Minimum payment on credit cards 80
Total variable expenses $2,915
Total monthly expenses $4,300
Surplus for savings or investments $ 220
- How would you rate the financial status of the Garners before the air conditioner broke down?
- The Garners’ take-home pay is over $4,500 a month. Yet. After all expenses are paid. There is only a $220 surplus each month. Based on the information presented in this case. What expenses, if any, seem out of line and could be reduced to increase the surplus at the end of each month?
- Given that both Joe and Mary Garner are in their mid-30s and want to retire when they reach age 65, what type of investment goals would he most appropriate for them?
- How does the time value of money and the asset allocation concept affect the types of long-term goals and the investment that a couple like the Garners might use to build their financial nest egg?
- Based on the different investments described in this chapter. What specific types of investments (stocks, mutual funds, real estate. etc.) would you recommend for the Garners? Why?
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