Personal Finance Assignment Essay Example | Topics and Well Written Essays - 500 words - 1

Personal Finance Assignment - Essay Example The current disposable monthly income after paying their fixed monthly expenses is $2,423 a month. The couple has to set some long term financial objectives. These objectives must be projected based on the amount of money that the couple currently has available. The fixed monthly expenses of the couple are $935. There are other variable expenses that occur during the month such as lunch money, additional gasoline expenses for leisure trips, car maintenance, entertainment, and medical expenses which must be considered in a budget. Sam and Judy must allocate approximately $500 for additional expenses. The total fixed and variable expenses of the couple are $1,435. The amount of disposable income Sam and Judy have after paying all their fixed and variable expenses is $1,923. It is time for Sam and Judy to set some short, medium, and long term financial goals. In the short term the couple must create a savings and investment plan for their future. The most common types of investments are stocks and bonds (Besley & Brigham). The cash that the couple has left over after paying variable and fixed expenses amounts to $23,076 for the first year. The $23,076 should be divided into savings, investment, and retirement plans. The allocation ratio of the plans is divided in the following manner: 65% savings, 25% investment, and 10% retirement plan. The short term goal of the couple should be to save enough money to get a down payment for a house. The most valuable asset of most Americans is the equity of their homes. The couple should target buying a home worth $150,000. To be able to buy the home the couple must save at least $15,000 for down payment and closing costs. The down payment of the home is 7.5% and 2.5% for closing costs. It will take Sam and Judy 12 m onths to save the $15,000. The mortgage payment of the $150,000 loan with a 7.5% down payment for a term of 30 years is $745. The couple after year one