Organizing and Managing

Without being given a list of expenses for Phil and Marcia it is hard to figure out a plan for them to initiate. I came up with one and although the figures may not be the right ones, depending on where they live and purchase their different insurances from, the concept is still the same. I went on the assumption that because they have no children and at this time are probably not planning to they live in a fairly upscale home. I also went on the assumption with the kind of employment they both have that they do not live in a rural area where things tend to be not as expensive. I also assumed they each have their own vehicle with Marcia’s car being paid for and Phil’s SUV not.

The thing I think about first when I consider the fact that they are just now really beginning to consider their investment planning options is that planning is the operative word. None of it will happen overnight, they need to take what they have and start from the beginning with that amount. I assumed the following for their monthly expenses and then decided after reading and research what I would do if I were lucky enough to have the same.

Mortgage Payment $800.00

Vehicle Payments 400.00

Utilities 500.00 (lights, heat, water, phone, T.V., etc)

Insurance 100.00 (vehicle)

Insurance 300.00 (after their employers’ portion)

Groceries 400.00 (includes occasional dining out)

Entertainment 350.00 (also includes dining out w/ friends)

Clothing and misc. 350.00 (includes extra commuting expenses

and petty cash)

Total expenses $3200.00

Average monthly income 5000.00

Excess income $1800.00

The amount they have between their savings and checking of $8000 is not enough. They should have at least three months worth of take home salary in case something happens to their work situations and there is no income. Investing in a Certificate of Deposit (CD) is not a good move at this point, perhaps not in the future either, because they would have to “freeze” their money for a year. Meaning they would not have access to it for that time period unless they paid an early withdrawal fee. (Winger, B., J., Frasca, R., R., 2003) That is just not financially a smart thing to do when they don’t have enough set aside to begin with.

The stock market at this point is also not what I would consider financially smart. They do not have enough room for error. There is a risk in anything financial but the risks, at this point, need to be kept to a minimum.

I would consider the NOW account at the Credit Union, with the $2500 minimum balance and interest rate of 3%. Leaving