2011 Personal Finance class case study presentatioon as a story book.

1. The Financial Crisis of
Bob and Pina Ing:
A STRUGGLE THROUGH YOUNG
ADULT LIFE
WRITTEN BY:
JESSICA QUAZZA
PAULA KRAUSE
SAM AWAD

2. Once upon a time there was a young
couple that were encountering a very
serious financial crisis.

3. Bob, 31 and Pina, 28 have had a
negative net worth since they
were both in college. This is
where they met and fell madly in
love.

4. When they got married they
received a generous gift of
$10,000 that they decided to put
into a savings account with a
2.5% interest rate. This is their
only large form of liquid assets
which leaves them in a very tight
bind!

5. “Bob, we need to talk.” Pina said
one day at the dinner table. “I
got laid off. How are we going to
pay off our debt now?”
“Honey, we are S.O.L.!” Bob
replied.
“No! We just need to sit down
and figure our strengths and
weaknesses in the form of a t-
chart. Then we will figure out
what we need to do,” Pina said in
an attempt to comfort her
husband.

6. Strengths Weaknesses
1. We both have college degrees 1. We live paycheck to
paycheck.
2. We have $10,000 in savings 2. Most months we have a hard
and have already started a time paying the minimum
401(k) plan with Bob’s work. payment on our 9 credit cards.
3. We have $40,000 worth of 3. We have a negative net
assets between our accounts worth, with $47,800 worth of
and personal belongings. debt.
4. Bob earns $42,000 a year 4. Pina has been laid off! Oh
no!
5. We have health insurance 5. We have no disability, life or
through Bob’s work. renters insurance.
6. We carry a 100/300/50 6. We don’t pay attention to
liability on our cars. how much they spend per
month.
7. We will always have our 7. We are clueless! Where do
love! we go from here?!

7. …Divorce?!

8. Instead Bob suggests going to a
financial planner.

9. The next week Bob and Pina
went to go see Jane Doe, the best
financial planner in their area.
When they got there they showed
her the t- chart and explained
their situation. Most importantly
they stressed their desire to pay
off their debt quickly so that they
can buy a new car and start to
think about buying a house and
having a baby.

10. “I can see why you came to me.
But you are lucky because you
guys are young! You have time on
your side so don’t panic!” Jane
Doe said.
“Really? That is great news! So
what can we do to get us on the
right track?” Bob asked
“First things first, you need to set
specific financial goals. This
means it needs to be realistic, in
measurable terms, have a time
frame and identify actions that
need to be taken,” Jane said.

11. “Then you need to organize your
financial records. This will help you
keep track of everything, including
what you are spending,” Jane said.
“It would also be helpful to make a
spending plan.”

12. What you should have in your
spending plan:
 You need to make sure you create an
emergency fund. This is super
important incase something
unexpected happens
 You need to calculate all your fixed
expenses
 And you also need to calculate all your
variable expenses.

13. “As for your
overwhelming debt… my
suggestion would be to
pay off the high interest
earning debts first. This
will probably be your
credit card bills. I would
use your savings to pay it
back quicker since
interest is going to work
against you. If you let the
money sit in savings only
earning a small amount of
interest you will actually
be losing money because
you will be paying more in
interest to the credit cards
companies,” Jane
discussed.

14. “You had mentioned earlier that
you wanted to look into way to
accelerate repayment. Here is a
great website that can help you,
www.powerpay.org. This will give
you different payment plans in
order to repay bills faster and save
money on interest,” Jane advised.
“I would also look and
make sure that you are
getting the lowest APR
you can find since you are
only paying the minimum
right now. Try to pay
more than that even if it
just a few extra dollars a
month because it adds
up,” Jane continued.

15. “Just take a look at this credit
card smarts calculator. It is
amazing to see just how much
you can save by paying more
than the minimum,” Jane
exclaimed!
“Wow we really need
to start using this!”
Pina said in pure
excitement. “If we
pay only $100 more
a month we can save
almost $4,000 in
interest!”

16. “My next piece of advise is that
you really need to get disability
insurance and a small life
insurance policy. Bob if
something happened to you
where you couldn’t work what
would you do? You would have
no income and that would be a
devastating issue,” Jane said.
 “Yeah I never thought of it in that way
but you are right Jane,” Bob said after
considering the question.

17. “Now Pina, what if you die
tomorrow. Would Bob be able to
handle your financial situation by
himself? I’m going to take a wild
guess and say no. So you should
look into getting a small life
insurance plan. You don’t need
to go crazy because you don’t
have any children but you do
need enough so that Bob can
cover all the costs and still be ok,”
Jane explained.

18. “You are on the right track with
putting 3% of Bob’s income into
his companies 401(k) plan. This
is really going to help you in the
future. Just take a look at this
calculator,” Jane said as he
hands over the Retirement
calculator. “That is roughly $25
a week so at this rate when you
are 65 you will have roughly
$144,000 saved in your 401(k)!”
Jane said.

19. After everything is in order:
 “After you have an emergency fund,
and have paid back your debt, and
have insurance, and have a retirement
fund, then it is time to invest!” This is
Jane’s favorite part to talk about. “My
suggestion is it invest in mutual funds.
They give you a diverse portfolio and a
fund manger takes care of picking the
bonds and stocks so it is less hassle for
you.”

20. “Well that is all the time we
have for today,” Jane said. “But
lets make another appointment
so we can continue helping you
out of a financial crisis and on
the road to success!”
“Thank you so much!” Bob and
Pina exclaimed.
They left feeling confident that
they had the tools to get their
finances on the right track.

22. In the end Bob and Pina got their
financial life settled. They used
the knowledge and tools that Jane
gave them and got themselves out
of debt. They have since
purchased a home and have
started a family. Pina has found
another job which has helped a
lot. They are now on their way to
becoming millionaires!

23. And they lived happily ever after!