Introduction:

One paragraph

Your introduction should state your purpose in writing this paper and make the reader want to read it.

You should summarize Cindys current situation (without restating the entire case), pointing out flaws in the financial choices she is making and explaining why these choices are detrimental to her financial security. Also, give a high-level preview on how you will help correct her situation.

The last sentence should be your Thesis Statement, a sentence that states the purpose of your paper.

Conclusion:

One paragraph

Summarize the main points, circle back to your introduction, or use another format to create a sense of closure.

With the following information below I just need an Introduction and Conclusion.PLEASE

FIN 30

Case Study

Your friend, Cindy Brady, has come to you for financial advice. She graduated from college three years ago and was hired right out of college by a firm she had interned with the summer before her senior year. Her salary is $50,000/year. She has health and dental insurance through her employer (premiums are deducted from paycheck). They also offer a 401(k) that she is eligible for. During college, she had always planned to begin contributing to a 401(k) with her first paycheck, but she was not eligible with this employer until she worked there for one year. By the time she was eligible, she had purchased a new car, so still didnt begin contributing. Shortly after that, she moved to a nicer (and more expensive) apartment with some friends, so she still doesnt seem to have any of her paycheck left, and still has not started saving for retirement. She knows that the longer she waits to begin saving, the harder it will be, so she has come to you for advice on how she can get her budget under control and start saving.

Cindy had previously written out her budget and expected to have almost $300 left over each month that she would save, but her savings account never seems to grow. Also, about a year ago, Cindy found herself with rising credit card debt and she was beginning to have difficulty making even the minimum monthly payments. She made some spending changes and began making higher than minimum payments and has reduced the balances somewhat, but they are taking longer to pay off than she expected.

Cindy knows that because you took Finance 30 at Fresno State, you can help her to get her financial house in order. She has brought you her paycheck stub, her projected budget and other statement information. She tells you that she wants to start saving for retirement and pay off her credit cards, but doesnt really know where to start. She has also heard that you are supposed to have an Emergency Fund, but doesnt know if she really needs one or how much it should be. She asks you what she can do to help build financial security. Read through and assimilate the following information to help Cindy reach her goals:

Monthly Paycheck:

Gross Salary 4,167

FICA Tax 319

Fed w/h 225

State w/h 80

Health Insurance 200

Dental Insurance 50

Net Paycheck 3,293

Budget:

Paycheck 3,293

Less Expenses:

Rent 1,200

Student Loan payment 300

Auto Payment 300

Auto Insurance & Fuel 250

Utilities 350

Groceries 300

Misc Exp/Entertainment 300 3,000

Surplus 293

Statement Balances:

Auto Loan 17,000

Student Loan 12,000

Credit Card Balance 2,500

Checking Account 1,500

Savings Account 500

Other Assets (Market Value):

Car 15,000

Personal Property 5,000

Cindy has tracked her spending for the last 6 months using her checking account and credit card statement. Below are her ACTUAL average Monthly Expenses:

Rent 1,200

Student Loan payment (Income-Based Repayment plan) 140

Car Payment 400

Auto Insurance & Fuel 250

Renters Insurance 50

Food (groceries) 350

Utilities 350

Entertainment/ Miscellaneous 500

(including eating out)

Clothing 125

ATM withdrawals 160

Credit Card Payment 100

(more than minimum, but doesnt pay in full)

Financial Statements & Analysis:

1. (15) Assemble Cindys Net Worth Statement. Be sure to label categories, subcategories and accounts as appropriate and make any necessary calculations. See Illustration 2.4.1 on page 2-30.

1. (15) Assemble Cindys monthly Income Statement (actual income and expenses). See

Illustration 2.5.2 on page 2-39.

1. (5) What is Cindys Net Worth?

1. (5) What is Cindys Current Ratio?

1. (5) What is Cindys Debt Ratio?

1. (5) What is Cindys actual monthly Surplus/Deficit?

1. (5) Is Cindys monthly rent payment in-line with HUD recommendations? Explain.

1. (5) What is Cindys Savings Ratio?

• 0+0/4167=0%

1. (5) What is Cindys Emergency Fund Ratio?

• 2,0002,525100= 14.81%

1. (10) Is Cindy meeting her stated monthly budgeting goals? Support your answer. If not, give two specific suggestions to correct this and demonstrate mathematically how they will correct the problem.

-No, Cindy is not meeting her stated monthly budgeting goals. Her projected budget shows that she should have almost $300 left over each month to save, but her savings account never seems to grow. She also has credit card debt that is taking longer to pay off than she expected.

To correct this, Cindy can make two specific suggestions. Firstly, she should create a more realistic budget that includes all of her expenses and sets aside some money for savings and paying off debt. She should also consider cutting back on her miscellaneous expenses, such as entertainment and eating out, which add up to $500 per month. If she reduces this to $300 per month, she will have an extra $200 to put towards her savings or debt repayment.

Mathematically, if Cindy reduces her miscellaneous expenses by $200, her surplus each month will increase to $493 ($293 + $200). This extra money can be put towards paying off her credit card debt or contributing to a retirement account. Additionally, if Cindy follows a more realistic budget that accounts for all of her expenses, she will be able to better control her spending and save more money each month.

Liquidity & Debt Management:

1. (10) Is Cindys Emergency Fund sufficient? If not, what amount should she be working towards? Justify your answer.

-Based on the information provided, Cindy's Emergency Fund is not sufficient. Her savings account balance is only $500, which is not enough to cover unexpected expenses.Cindy's monthly expenses are approximately $3,000, so her Emergency Fund should ideally be between $9,000 and $18,000

1. (10) Why is it taking Cindy so long to pay off her credit cards? (provide 2 reasons)

1. (10) Comment on Cindys student loan repayment plan and any concerns or suggestions you have for her. Remember, her goal is to build financial security.

Retirement Savings:

1. (10) Since Cindy was not eligible for her companys 401k during her first year of employment, what could she have done to stick with her plan of beginning to save for retirement with her first paycheck