In a 2-3 page paper, students will conduct a comprehensive analysis of a provided case study. Students will use models to evaluate the financial circumstances of a household experiencing some financial distress. Students will evaluate the options available using models and tools from class, and reflect on the limitations and implications of the options available.

Essay Requirements:

1. The essay should be 2-3 pages in length (dobule-spaced, 12 pt. Times New Roman, 1” margins) not including any tables or figures.
2. The essay should offer a clear, articulate thesis with several main arguments or points. Each argument or point should be supported by quality evidence. The essay should be written in clear and correct language.
3. The essay should cite/reference the text at least two distinct times. You may also reference other materials from the course as appropriate, but they cannot be used as a substitute for this requirement.
4. You are encouraged to cite/reference at least one additional credible source from outside our course readings and materials.
5. The essay should use APA format for your in-text citations and reference page.
6. The essay assignments should be submitted electronically to moodle by the posted due date/time. No late papers will be accepted except in extenuating circumstances.

Case Study #1 Instructions:

Presented on the next page is a narrative description of a person’s financial circumstances. In this case study you will prepare and analyze financial statements for the person and provide recommendations. These recommendations will be supported by updated versions of the financial statements.

Essential aspects of this analysis:

• Develop budgets reflecting actual spending in each of the past two months and compare them to the provided projected budget
• Develop a balance sheet with the information provided
• Analyze the projected budget, actual budgets, and balance sheets to identify concerns
• Develop recommendations for the person
• Demonstrate how the recommendations would improve the financial health of the person

Broader questions to consider:

• What budgeting theory supports your recommendations?
• Do you observe any biases or errors in the person’s thinking?
• What are some goals you would propose for the person?
• What are some short run goals you would establish for her?

Case Study 1 Narrative

Terri is beginning to get a little concerned about her financial circumstances. At the start of the year she bought a house and made an effort to get her finances in order. She even set up a budget that balanced every month! However, she never looked at the budget again but instead tried to keep the amounts in mind each month. Over the year she realized that she rarely had enough money left over to put into her savings. In fact, in several months she had been forced to use her credit card to finance some purchases.

At the end of the year Terri has decided it is time she got her finances in order. Looking back over the past two months she has been able to collect the following information about how her income and expenses differ from her budget established at the beginning of the year. Her wages and 401k contributions haven’t changed but in the past two months she hasn’t been able to drive for Stuber as much and November and December fares have only been $50 and $75 respectively. She has been going out to eat more and has spent $300 in November and $320 in December. She loves to exercise and collect sports memorabilia and in the past months she spent $275 and $300 on them. She knows the memorabilia loses value sometimes but she is sure the value will increase in time and likes to think of her collection as an investment. In each month she wasn’t able to save her planned $75 and her utilities have been higher than usual coming in at $135 in both November and December.

She also tried to figure out the value of the things she owns and what she owes to others. She has $350 and $ 1,100 in her checking and savings accounts. She has accumulated $9,000 in her 401k. Her home is currently valued at $130,000 and her car is worth $1,750. She has furniture worth $1,200, clothes worth $2,100, and $900 in other household items. She spent $2,500 on exercise and sports equipment in the past few years but sees similar equipment on an on-line marketplace for $1,500. She also saw her memorabilia selling for $750, which is ridiculous! Some people just don’t know what it’s worth! She spent over $1,900 on her collection in the past couple years. She figures the prices have to return to that value eventually. As noted above, she has been accumulating some debt, too. She still owes $110,000 on her mortgage. She has paid her student loan down to $25,900 and her car loan down to $3,000. She is making payments on the standing balance of her credit card but the total balance still stands at $1,500.

Terri is hoping you will be able to provide her some insights into her financial situation. She wants to make changes that will make her and her family more stable in the future.

Budget
Sources of Income
Wages	$3,950
Employer 401k contribution	$ 150.00
Stuber Fares	$100
Interest	$90
TOTAL INCOME	$4,290
Sources of Expenses
Taxes	$1,483
Mortgage	$850
Vehicle Insurance	$100
Food & Eating Out	$200
Car Payment	$395
Student Loans	$272
Sports & Hobbies	$240
Utilities	$100
Personal savings	$75
Total 401k contribution	$300
Credit Cards (on existing balances)	$275
TOTAL EXPENSES	$4,290
SURPLUS/DEFICIT	$0

Projected Budget Established in the Start of the Year
Sources of Income
Wages	$3,950
Employer 401k contribution	$150.00
Stuber Fares	$100
Interest		$90
TOTAL INCOME	$4,290
Sources of Expenses
Taxes	$1,483
Mortgage	$850
Vehicle Insurance	$100
Food & Eating Out	$200
Car Payment	$395
Student Loans	$272
Sports & Collectibles	$240
Utilities	$100
Personal savings	$75
Total 401k contribution	$300
Credit Cards (on existing balances)	$275
TOTAL EXPENSES	$4,290
SURPLUS/DEFICIT

Answer rating: 100% (QA)

Assessing Terris Financial Situation and Making Recommendations Terri is a homeowner seeking advice to secure security for herself and her family after realizing the need to improve her financial stat... View the full answer