Question: Your client is having trouble figuring out where all her money goes each month. Here is her financial information for you to review: MONTHLY VISA

Your client is having trouble figuring out where all her money goes each month. Here is her financial information for you to review: MONTHLY VISA BILL $355* CHECKING ACCOUNT BALANCE $825 STOCKS IN BROKERAGE ACCT $5,500 QUARTERLY AUTO INSURANCE (NOT YET DUE) $450 MASTER CARD BILL $245* ANTIQUE COIN COLLECTION $3,250 MONTHLY PAYCHECK (GROSS) $3,000 CONDOMINIUM $65,000 PAYROLL TAX WITHHELD $ 600 MONTHLY GROCERIES $225 MONTHLY MORTGAGE PAYMENT $530 AUTOMOBILE $9,000 MUTUAL FUNDS $2,100 FURNITURE $5,500 401(K) RETIREMENT ACCT $4,500 MORTGAGE BALANCE $50,000 MONTHLY CAR PAYMENT $265 AUTO LOAN BALANCE $4,225 MONTHLY UTILITY BILL $275* OTHER PERSONAL PROPERTY $8,000 SAVINGS ACCT BALANCE $2,300 OTHER MONTHLY CASH EXPENSES $150 MONTHLY CLOTHING EXPENSES $45 ANNUAL MEDICAL EXPENSES $264 *Bills represent the average of the prior month’s charges AND ALSO current month’s expenses.

1) Please read the "Wealth Accumulation Formula" in the Course Documents section of Blackboard. There you will see the "Wealth Formula" devised by Thomas Stanley, a leading expert on Millionaires and author of the "The Millionaire Next Door". Assuming your client is 40 years old would Mr. Stanley consider him an AVERAGE accumulator of wealth, an OVER accumulator of wealth or an UNDER accumulator of wealth? Please give the evidence to back up your answer.

2) What is the take Home Pay?

3) What are the total Monthly Living Expenditures?

4) What is the Monthly income Available for Savings & Investment?

5) What is the Savings Ratio?

6) What is the Month’s Living Expenses covered ratio?

7) What is the Long-Term debt Coverage Ratio?

8) What suggestions would you give your client to better help her financial situation? HINT: Since they are average amounts you may assume that the credit card and utility bills are both a debt (related to the prior month) and an expense (related to the current month).

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