1. The discussion of money issues is the first of a four-step process to help couples successfully manage their finances. The process might be summarized as (a) talk, (b) track, (c) plan and act, and (d) review and revise. Describe the steps and the objective of each.
2. Doug and Mindy, similar to many young couples, are combining two life events: getting started and getting married. Integrate the planning steps and create a new list to ensure that Doug and Mindy don't overlook anything.
3. Explain to Mindy why it is important that she become informed about and involved in her financial future—regardless of how well Doug fulfills the role he hopes to have of husband and provider.
4. Mindy and Doug's ideal is for Mindy to work for a few years and then be a "stay-at-home mom." If she invested $4,000 for 8 consecutive years in a Roth IRA that earned 9 percent annually, how much would she have after 35 years? The first 8 years are an annuity, after which the balance will continue to grow, without deposits, for the remaining 27 years.
5. Identify three essential actions that Mindy should take to ensure her financial future.
6. Help Mindy and Doug consider the issues of joint or separate checking accounts and credit cards. Why are these important issues to resolve prior to marriage?
7. What financial issues should Mindy and Doug review, and perhaps take action on, prior to the birth of a child?
8. Aside from the obvious pain and emotional turmoil to Mindy, Doug, and their extended family that would be caused by a divorce, why is it financially sound advice to stay married?
9. Doug is anxious to repay his student loan debt quickly, but he also wants to take advantage of the matching contribution on his employer-provided retirement account. Assuming his student loans are bank loans at a rate of 8.25 percent, determine his monthly loan payments over a 5-year term (60 monthly payments), using the time value of money tools you learned in Chapter 3.
10. If Mindy and Doug lose 30 percent of their gross salary to taxes and benefits, determine their debt limit ratio based on the student loan payment. How much additional debt repayment could they add and not exceed the 15 percent safety margin?
11. Advise Doug on the priorities of repaying student loans or other debts, as well as including retirement savings in their budget. Assuming he has a choice of equity and fixed-income investment products, which category would you recommend for his retirement savings? Defend your answers.
12. Why should insurance protection be a critical component of the financial plan developed by Mindy and Doug? What strategies can help keep insurance costs down?
13. Provide at least three tips for Mindy in helping her break her habit of buying a new necklace every time she goes to the mall.
Your sister Mindy and her boyfriend Doug recently announced plans to be married after graduation in May. Although you are fond of them both and want their relationship to succeed, you are concerned about their financial future. Neither Mindy nor Doug completed a personal finance course while in college. Mindy is a spender who has known few limits on her wants since she was a teenager. Doug, on the other hand, has worked, saved, and invested since he was a teenager to help provide for college costs. He will complete college with approximately $12,600 in student loans. Their income in their first year out of college will total $90,000, due in large part to Doug's choice of major and practical work experience during college. Mindy, who admits having no financial skill or interest, is content to let Doug handle all those matters, since he seems to be good at it and will likely earn more than she does.