# Question: Dan and Sarah Kula earn 108 000 after tax They have

Dan and Sarah Kula earn \$108,000 after tax. They have a mortgage on their home that has four years left until it must be paid off (they would arrange a new mortgage at that time). The monthly mortgage payment is \$2,000 per month. In addition, the Kulas have a car lease on which they pay \$600 per month. The lease has three more years left until the Kulas must buy the car or arrange a new lease. It costs the Kulas \$5,200 per month to operate their household. (Dan and Sarah have three children. Their household costs include childcare.) Dan and Sarah spend about \$8,000 a year on vacations and they try to save \$10,000 per year for retirement, the kidsâ€™ educations, and any emergencies that might arise. Currently, they have \$35,000 in savings, including cash of \$7,000. The Kulas currently have a \$5,000 balance on their credit cards, which carry an interest rate of 15 percent per year. Dan and Sarah recently learned that they are going to have another child. Their house is too small for another child so they are looking to sell the existing house and buying a new one in the same neighbourhood. The Kulas estimate that it will cost them \$10,000 in cash to move and cause their mortgage payments increase to \$2,400 per month. The new baby will add about \$500 a month to household expenses.

Required:
Assess the Kulasâ€™ financial situation. Do you think they can afford to move? What steps could they take to make moving a reasonable step?

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