Lucy Keller will turn $27$ in $2$ months. She graduated from university a couple of years ago. Over the past few years since then, several things happened in Lucy$$s life. At first, when Lucy graduated, she was sure to rapidly start a great career with a top firm, and in anticipation of that new wealth and status, she bought a new car on credit. This was in her eyes, a well$-$deserved reward for her effort through university which she financed with a student loan. Thankfully, Lucy found a job fast, but it was in a startup company paying a very average salary with the promise of making her a potential millionaire in a few years when their success took off. The enthusiasm was genuine around Lucy, her colleagues cool, engaged and very friendly. She worked endless hours, partied, dined out, travelled and shopped a lot while living the dream of the successful young professional. The successful part was just a step away, but it never materialized as the company ultimately failed and stopped its activities before its employees could strike it rich, including Lucy.

Lucy had been using both her credit card and her line of credit to maintain her expensive lifestyle while working there. That was a little over a year ago. She went on EI $($employment insurance$),$ found support with her loved ones $($emotionally only as she would refuse all financial help$)$ and quickly picked herself back up to actively find another job. In three months, she found another job with an established firm, and she was very grateful for it$,$ even though it was an entry$-$level job. She had just been through a reckoning especially when she saw that half of her EI went to debt repayment each month. Eight months ago, Lucy found love with Marcus she met through friends. Marcus is $28$ and a high school teacher. Their relationship is serious, and Lucy thinks of him as the one.

Last week, Lucy was promoted to manager, a recognition of her experience and maturity. The promotion came with a salary increase. Lucy is very happy, except for one constant shadow, the debt she has accumulated. She is meeting with you today, a personal finance professional, to guide her in dealing with her debts. She wishes to $$clean the slate$$ and be able to start a family by the time she turns $30,$ but the prospect is overwhelming and daunting.

Time remaining on each debt:

Debt

Annual Interest Rate

Monthly Interest Rate

Current Balance

Monthly Payment

Remaining Months

Remaining Years

Use the information above to order Lucy$$s debts in the proper order of the debt elimination process in the table below.

Table $2$: New order of debts :

Debt

Annual Interest Rate

Monthly Interest Rate

Current Balance

Monthly Payment

Remaining Months

Remaining Years

How long will it take Lucy to pay off all her debts if she continues with current approach? $$

How much is Lucy paying each month toward debt repayments?

At this stage, you show your Lucy your findings. She is shocked! You then elaborate on your initial comment from question $1$ and explains to her the debt elimination process. She has a hard time believing that her debts could be paid off faster, but she considers Step $4$ of the process and is willing to commit an additional $$500$ per month to her debt repayment, thanks to her newly increased salary.

Question $4$

Use the extra payment Lucy is willing to make and calculate $($steps $4,5$ and $6$ of the Debt Elimination process$)$ her new debt repayment plan using the table below.

Table $3$: New Repayment Plan $(16$ points, $1$ for each cell in the shaded columns$)$

Debt

Interest Rate

Initial Balance

Initial Monthly Payment

New Balance

New Monthly Payment

Remaining Months on New Balance

Total Remaining Months

How long will it take Lucy to pay off her debts using the new approach?$(1$ point$)$

How much is Lucy paying each month toward debt payments now?

Question $5(2$ points$)$

Add two short final comments, one for Lucy $($presenting your conclusions or anything else$),$ and one as your own take$-$away.