Case Study Data $$Scotty & Casey Young

FINP $435$ Fall $2024$

Client Data$$Scotty & Casey Young

You recently met with your new clients, Scotty & Casey Young. It was your first formal meeting;

however, they requested that you combine the initial meeting with a data gathering session.

The Youngs were referred to you by a long$-$time client, and they are interested in a fairly

comprehensive review of their finances to include a financial $$checkup$$; a review of their cash

management including saving, credit management, and housing; and college education planning

for their son. They would like you to start the engagement with an analysis of their current

financial situation so that they can move forward to accomplish their goals.

You learned that Scotty is $40,$ Casey is $32,$ and that they have an eight$-$year$-$old son, Dak. Scotty

earns $$95,000$ per year as a comic book artist, while Casey is a nurse at a local hospital and earns

$$104,000$ annually.

They each contribute to their pre$-$tax retirement accounts. Scotty has a $401($k$)$ plan with a

dollar$-$for$-$dollar match on the first $6\%$ of income contributed. Casey$$s plan is a $403($b$)$ with a

$$0\mathrm{.}50$ on the $$1\mathrm{.}00$ match on the first $8\%$ contributed. They are both currently contributing $6\%$

of their salaries to their retirement plan. Both are fully vested in these plans, and they have had

good success with the returns from their mutual funds in their tax$-$deferred accounts with an

average annual rate of return of about $6\mathrm{.}5\%.$ In addition to retirement contributions, other

payroll deductions include Social Security & Medicare $($FICA$)$ and federal income tax. The Social

Security tax rate is $6\mathrm{.}2\%$ on the first $$168,600$ for $2024,$ and the Medicare tax rate is $1\mathrm{.}45\%$ on all

earnings. Their federal income tax withholding is $15\%$ of their gross salaries, and this has

historically been very close to equaling their tax liability. Scotty, Casey, and Dak are all covered

under Casey$$s employer sponsored health, as it is superior to Scotty$$s employer provided plan.

Casey$$s monthly payroll deduction for health insurance is $$1071.$

By way of assets, the Young$$s have a joint checking account with a balance of $$3,571,$ their

respective $401($k$)($Scotty$)$ and $403($b$)($Casey$)$ balances are $$33,226$ and $$56,468.$ Neither owns

stocks outside of their retirement accounts. Casey has a $$rainy day$$ savings account with

$$8,000$ in it$,$ while Scotty has a money market account with a balance of $$2,200.$ Six months ago,

Casey$$s favorite aunt passed away and she received a life insurance settlement of $$72,100$ in

late June $2024.$ Casey put this money in a money market mutual fund as she and Scotty would

like your help in deciding how to best use it to meet their goals. The current balance is $$74,200.$

Scotty has a baseball card collection he inherited from his father valued at $$13,000.$ Casey owns

a modest amount of jewelry which cost a total of $$10,000$ and was recently appraised for

property insurance purposes at $$6,750.$ She believes she could sell it for $$6,500$ if she had to sell

it today. Casey also owns a life insurance policy on Scotty with a face value of $$150,000,$ a

current cash value of $$8,400,$ and an annual premium of $$2,200.$ He also has term$-$life insurance

with a face value of $3$ times his salary paid for by his employer.

Scotty and Casey own their home in Lubbock, Texas, currently assessed for property taxes at

$$320,000,$ and aggregate property taxes run $2\mathrm{.}22\%$ of taxable value annually. Their original

mortgage, taken out five years ago, was for $$310,000$ financed for $30$ years at $2\mathrm{.}75\%.$ Their

monthly mortgage payment for principle and interest is $$\_\_\_\_,$ and after making $59$ monthly

payments their current mortgage balance is $$\_\_\_\_\_\_.$ The annual cost of their homeowner$$s

insurance is $$4,220.$ In their home, they estimate that their home furnishings are currently

worth $$83,000.$

Scotty drives a $2020$ Infiniti with a blue book value of $$18,000($fully paid for$),$ while Casey just

bought a $2024$ Toyota $($January $28,2024)$ that cost her $$43,500.$ She was miserable when she $$

at the urging of her husband $$ checked her new car$$s blue book value and saw that her car$$s

value had depreciated to $$39,500$ in the short time she had the vehicle. Her original loan was

for $$42,000,$ financed for $5$ years at $5\mathrm{.}5\%.$ Her monthly payment is $$\_\_\_\_.$ Scotty also owns a

$2018$ Honda Gold Wing motorcycle, which he thinks is worth $$8,000.$ He bought it about two

years ago for $$9,480,$ financed it for four years at $6\mathrm{.}8\%.$ He still owes $$\_\_\_\_\_\_$ on the bike after

$24$ payments, and his payments are $$\_\_\_\_\_\_$ month. Scotty$$s combined vehicle insurance for

both his car and motorcycle is $$230/$month$,$ while Casey$$s auto coverage is $$155$ monthly.

The Youngs typically spend $$2,800$ a month for food $(60\%$ for groceries$/40\%$ eating out$),$ $$675$ a

month for childcare, $$250$ a month for personal care, $$300$ a month for kid$$s activities, $$700$ a

month on entertainment, $$9,200$ each year for vacations, and $