04 Mar Personal Financial Management? Term Project Instructions With personal financial planning we learn to acquire, use, and control our financial resources more efficiently. Y
Personal Financial Management
Term Project Instructions
With personal financial planning we learn to acquire, use, and control our financial resources more efficiently. You are asked to prepare a ‘roadmap’ to outline your financial plans for the future. By creating this ‘roadmap’, you will be able to monitor and control your finances better to achieve your goals. The purpose of this assignment is to help you take a closer look at your own personal financial situation and to make necessary decisions to achieve your financial goals. This assignment is based on YOUR own financial situation; therefore, each project is unique and different.
Your report MUST include the following side headings and details:
1. My Current Financial Situation (provide detailed information about your financial situation in terms of your sources of income, expenses, debt to create a clear picture of where you are financially)
2. Banking (visit your local bank branch and find out more about savings accounts, checking accounts and certificates of deposit (CDs). What are the requirements for opening each account, interest rate, fees and other charges? Which of these accounts do you need and why?
3. Credit (how many credit cards do you have? If you don’t have any, explain the benefits and drawbacks of having credit cards. What are the major credit reporting agencies in the U.S.? What is a FICO score? Explain how your credit may impact your financial future and what the best way to use credit cards is.
4. Insurance (explain the different types of insurance coverage you need including health, life, auto, homeowners, etc. With each type of insurance coverage explain how to select the appropriate amount of insurance and the benefits/costs of such coverage)
5. Buying a Car (explain the different car ownership options—cash payment, financing, leasing and list the advantages and disadvantages of each. Which option is most appropriate for your situation and why? What are some of the steps you need to take before making the decision to buy a car? What are the expenses associated with car ownership—Specify total yearly expenses)
6. Buying a House (research your local real estate market and specify the different types of house ownership options available. Are there any government programs available for first time home buyers? What are the requirements to take advantage of these government programs? What are the steps necessary to take to help you make a decision about buying a house? How much down payment do you need to make? What is a mortgage and what are the different types available? When do you plan to buy a house and how do you intend to finance it?)
7. Investing (discuss the difference between saving and investing. Give three different options to invest. Explain the difference between investing in stocks, bonds, mutual funds, IRAs, and 401 Ks. How do you plan to invest for your retirement? When should you start planning for retirement?)
8. My Financial Plan (this is your opportunity to indicate your detailed financial plan for the future. List your financial goals for the future, in terms of the next five years, ten years, and thirty years. What are the steps you plan to take to achieve these goals? Based on what you’ve learned so far, how do you assess your financial situation? What would you do differently and why?)
9. References (be sure to include all sources of information you may have used-minimum 5 different sources-and format your references page in APA style; click on the following link for help formatting your references page: http://owl.english.purdue.edu)
· Your research project must be TYPED, double-spaced, use Times New Roman size 12 font for body of report (8-10 pages minimum excluding cover page and references page). Number all pages in your report.
Please see attachment of my notes and assignments and instructions and a sample.
I have been married with my spouse for over 6 years and together for over 13 years.
Recently bought a house in 2020, in Queens New York.
Have two car leases. A puppy.
I work fulltime in the medical field as a Senior Admin Assistant, in Emergency Medicine. Full-time Student in getting my degree in Healthcare Administration by the end of this year. My job offers a 403B savings account with Transamerica but its not much just 3% I invest.
My spouse work as HR Director for an engineering company. He handles the mortgage and lease and his personal credit card and loan.
I handle all the utilities and car insurance, groceries, and household things. My personal credit cards and personal loan payments.
Once I have my degree I can apply for a managerial position. Within the next two years we are looking into adoption. When I do get a new position, we can live a little bit more comfortably and pay off more things faster. Another note is we have a 30-year mortgage and starting next year hopefully we would like to pay towards the PMI so we can drop that off from our mortgage and cut our mortgage addition 5-10 years off. Another goal is to start looking into investing in stocks or a vacation home in Saint Martin.
I have learned a lot from this class, and I started to save more etc.
|Liquid Assets||Current Liabilities|
|Cash on hand||$ 600.00||Utilities||$ 415.00||Water/Gas/Electricity|
|In checking||$ 19.18||Rent|
|Saving accounts||$ 500.00||Insurance premiums Auto||$ 426.00|
|Spouse's checking||$ 6,504.00||Taxes|
|Spouse's Saving accounts||$ 4,000.00||Medical/dental bills|
|Total Liquid Assets||$ 11,623.18||Repair bills|
|Bank credit card balances||$ 2,410.93|
|Dept. store credit card balances||$ 300.00|
|Investments||Spouse's credit card balance||$ 7,000.00||Spouse's credit card|
|Stocks||Credit card balances||$ 3,643.00|
|Bonds||Bank Line of credit balances|
|Certificate of deposit||Gas for Auto||$ 140.00|
|Mutual funds||Total Current Liabilities||$ 14,334.93|
|Retirement funds, IRA||$ 2,543.50||Long-Term Liabilities|
|Other||Primary residence mortgage||$ 599,069.00|
|Total Investments||$ 2,543.50||Second home mortgage|
|Real estate investment mortgage|
|Real Property||Auto loans||$ 22,239.00||For 2 Auto Lease left to pay 18 months left.|
|Primary residence||$ 725,000.00||Appliance/furniture loans|
|second home||Home improvement loans||$ 30,000.00||Spouse pays for this.|
|Total Investments||$ 725,000.00||Education loans|
|Margin loans used to purchase securities|
|Personal Property||Other long-term loans (from parents)|
|Auto(s)||Total Long-Term Liabilities||$ 651,308.00|
|Auto(s)||(II) Total Liabilities||$ 651,308.00|
|Household furnishings||$ 15,000.00||Net Worth [(I)-(II)]||$ 128,858.68|
|Jewelry and artwork||$ 26,000.00|
|Other||Total Liabilities and Net Worth||$ 780,166.68|
|Total Personal Property||$ 41,000.00|
|(I) Total Assets||$ 780,166.68|
Balance Sheet P. / Spouse: V.
How is My Credit
My credit score has gone down to 640. This is a result of two small loans and five credit cards. Besides, my husband and I took a mortgage from a bank to purchase a house in 2020, when our credit was even better. We also have two lease vehicles. A 640-credit score is fair. But some lenders may consider it a bad credit score and may fail to approve my credit applications in the future. Others may charge high-interest rates and fees.
I need to improve my creditworthiness to around 700 or 800 credit score. The first thing to do is to make timely payments with my existing credit cards. This will show lenders that I am a trustworthy borrower and can pay my loans on time. Making timely payments will also help build a positive payment history. The other thing to do is to reduce my credit card utilization. Most experts recommend keeping credit card utilization below thirty percent (DeNicola, 2020). This can be achieved by reducing my spending, asking for higher credit limits, and avoiding closing credit cards. By reducing my credit card utilization, I can boost my credit score and build a positive credit history. Besides, I am planning to get a credit builder card to build my creditworthiness.
Overall, I intend to improve my creditworthiness to ensure more access to credit cards, loans, and even job opportunities. A good credit score also means lower fees, better interest rates, and favorable terms and conditions on a loan or credit card, which indicate more money in my pocket. I am also planning to save more. As we all know, savings offers peace of mind and can help me handle uncertainties in life.
DeNicola, L. (2020). 6 ways to lower your credit card utilization. Credit Karma. Retrieved from: https://www.creditkarma.com/advice/i/how-to-lower-your-credit-card-utilization
Banking Needs Financial Institutions
Mortgage payment Commercial banks or Savings and loan associations (S&Ls)
Checking and Savings accounts Commercial banks
Bill payments Commercial banks
Debit and credit cards Commercial banks
Is there one banking institution that would meet all your needs, or do you think you’d require several?
Commercial banks will meet all my needs. These are financial institutions that manage financial matters for organizations and individuals. They offer various financial services, such as checking and savings accounts, loans, and credit cards. Other services include traveler’s checks, safe deposit boxes, and check cashing services. I am currently banking with Chase – an American consumer and commercial bank providing various financial services to America’s households. My husband usually pays for our mortgage through the bank, our mortgage is from Sun West Mortgage Company. I also pay bills through Chase Bank. Lastly, I have a checking and savings account with the bank. This allows me to save and access my money any time. With chase mobile app, I can access my account at any time: send and receive money with anyone that has Zelle pay or a Chase account.
Several banking services are available from other regions. These include services offered by savings banks. Savings banks often accept savings and pay dividends or interest to savers (Lake, 2023). However, they are found primarily in New England. They originated as a way to encourage saving among people. Moreover, stockbrokerage firms could be very useful to me. Besides selling and buying securities on behalf of the customer, stockbrokerage firms provide credit card services and money market mutual funds. I plan to start investing in stock in a few years. The aim is to increase my savings and grow my investment portfolio. Thus, I may need a stockbrokerage firm to assist in selling and buying stock.
Lake, R. (2023). What Is A Savings Account And How Does It Work? Forbes. Retrieved from: https://www.forbes.com/advisor/banking/savings/what-is-a-savings-account/
Taking a Loan
People take out consumer loans for various reasons. A person will need a consumer loan to consolidate debt, cover emergency expenses, make a huge purchase, pay for a vacation, finance home improvement expenses, or cover funeral expenses. But before getting this type of loan, it is necessary to answer certain questions to determine whether a person really needs to take the loan and have the ability to repay. Defaulting on a consumer loan can significantly affect a consumer’s credit score, making it difficult to get other forms of credit in the future. The first question to be answered is, “why do I need a loan?” According to Push et al. (2022), a consumer loan should only be utilized to finance necessary expenses. The other question is, “Can I afford the monthly payment?” Consumers should always consider their ability to repay before taking out a consumer loan. This entails calculating the monthly payment and including it in their monthly budget. Answering these two questions is necessary before signing any loan agreement.
It is important to consider different factors when shopping for a loan. One is the interest rate. The interest rate is a critical factor that ascertains the loan's affordability. When shopping for a loan, it is necessary to compare the interest rates charged by different lenders. Even a trivial percentage difference can affect the true cost of a loan. It is also necessary to consider any extra fees applicable to the loan. Some lenders may charge underwriting, processing, credit report, origination, appraisal, and administration fees. These fees might be included in the monthly payment. Besides, consumers must consider monthly payments when shopping for a loan. Taking out a loan with higher monthly payments is not advisable as it can compromise one’s ability to repay. Missed payments can negatively affect consumer’s credit score and creditworthiness.
GlobalNewswire. (2020). Key Factors To Consider When Shopping For A Loan According To Birchman Lending. Retrieved from: https://www.globenewswire.com/en/news-release/2020/02/24/1989481/0/en/Key-Factors-To-Consider-When-Shopping-For-A-Loan-According-To-Birchman-Lending.html
Push, A., Lowery, K., Frankel, L., Lowery, K., & Benton, E. (2022). What’s the Purpose of a Loan? Common Reasons to Get a Personal Loan. LendingTree. Retrieved from: https://www.lendingtree.com/personal/8-good-reasons-to-get-a-personal-loan/
RUNNING HEAD:PERSONAL FINANCE TERM PAPER
Personal Finance Term Paper
November 22, 2015
PERSONAL FINANCE 2
My Current Financial Situation/Introduction: I am currently an international college student
who works part-time and I share an apartment with a good friend. I make $620 a week and have
to pay $500 for my half of the rent once a month. I understand that my financial future is
dependent on the type of job that I receive once I complete college. In fact, the job I receive after
college is important on several levels. The first is that if I am unable to find a full-time job after
graduation, but the job I am currently working in will still have me-then in order to pay my rent
and bills I have to stay with that job even though it’s not a great deal of money. Another reason
the type of job I get after college is important is because I want to work in real estate which is a
job that is dependent on commission and is not as steady as the typical 9-5. At the same time, it
has the potential to be very lucrative for me in the long run and would allow me to not only have
money to spend on necessities-I will also have money to spend on (for lack of a better term)
rewarding myself with more trivial, superfluous items and experiences like clothing and
vacations. There is also the chance that I will end up with a 9-5, which will help me in terms of
paying for the necessities like rent and bills that I mentioned above.
The above discussion is essentially about my future. Right now my financial situation is on
solid ground (for reasons to be discussed below) in that I am able to attend school while at the
same time living relatively independently (i.e.: I don’t live with my parents). The goal is for my
financial status to improve as I get older and this discussion is instructive to that end. With that
said I do have some expenses that I have to worry about even though school is still a priority
over making enough money to meet those financial obligation, in other words I would choose
school over work if I had to make that choice and find another way to live regularly. Luckily I
am not in a situation where that decision has to be made.
PERSONAL FINANCE 3
Because I am living with a roommate, I do have several obligations that I have to fulfill.
Besides rent, I also have to pay a $100 cell phone bill every month. I also have to contribute
$100 to the electric bill and the cable bill per month. As noted I make $620 a week after taxes so
I make $2,480 a month. With that in mind, I am able to contribute $700 to necessities and still
have thousands of dollars remaining. One of the biggest positives of my financial situation at the
moment is that I don’t have a credit card. There are negatives to not having a credit card that will
be discussed below-but when looking at having money to spend on myself or having money in
the case of emergency (ex: my roommate can’t make the rent or can’t pay his portion of the bills
in a given month)-it is a positive that I don’t any debt.
My long term financial goal is focused on buying a house. Because I live in New York and
plan on staying here long term, I don’t think that having a car is necessary so I would only be
interested in one if it wouldn’t affect my ability to pay for necessities or even less important
items that I happen to desire. Being in a steady enough position to pay for life insurance is
something else that is very important to me because I plan on having children and I want them to
be safe in the event something happens to me. Investing my money in order to facilitate long-
term financial security is not something I am necessarily interested in as much as it is something
that I want to research in the event that it makes sense for me in the future. Notwithstanding the
specific and potential goals that I have going forward, it is important to look at all possibilities
when it comes to my financial goals now, after college and well into my professional career.
Banking: Currently I have a checking account. I use Chase bank. Based on the Chase bank
website, there are no interest rates on checking accounts. If I decided to create a savings account
Chase would pay out 0.05 APY (Chase Bank, 2015). It should be noted that Chase does
automatically take $5 from my checking account to put into my savings once a month. A
PERSONAL FINANCE 4
certificate of deposit (CD) from Chase would mean that I would have a predictable and steady
rate of return which would be a positive as I begin the process of hopefully purchasing a home. I
can purchase a CD that is viable for a little as one month or as long as 120 months (10 years).
There is also an opportunity for greater interest rates in comparison to savings accounts, with that
opportunity also comes a punishment for early withdrawal. When considering my bank account
(which is in between $0-$9,999), I can get (for instance) a 15 percent interest rate benefit for
keeping the money in the CD for as little as 18 months. If I decided to keep it for 10 years, I can
have a 90 percent interest rate benefit (my CD plan will be discussed in the “my financial plan”
section) (Chase Bank, 2015).
One of the biggest benefits to purchasing a CD is how easy it is. The CD can be funded with
the money from my savings or my checking account as long as I have a minimum of $1,000.
Chase Bank also provides FDIC insurance protection for CD’s just like it does for savings
accounts. In other words, my CD purchase would be insured and that insurance is automatic
(Chase Bank, 2015).
When it comes to the idea of banking in general, it is always important to for a person to have
some sort of plan with his or her money. As Bank of America (2015) says one of the most
important questions that a person has to ask about their finances is how to make sure the money
they keep is more than the money that they spend. Chase Bank gives me options (if I choose)
that will allow me the opportunity to keep more money than I spend. One of the most important
aspects of beginning the banking process is deciding what I want in the long-term and how
proper banking can help me make that purchase. In other words, if I want to buy a car or a house-
how much money do I need to make sure that I have if I want to make that purchase or purchases
within a certain time frame?
PERSONAL FINANCE 5
Credit Cards: I currently don’t have any credit cards even though I don’t owe anything on my
last one because I settled on the account. While I have the ability to pay off my credit card bills
right now, I don’t want to be in the situation that I was just in where I ended up having to pay
$1,000 to settle a credit card debt. It’s not worth it to me as it stands right now. There are
positives and negatives to my decision, but my decision is based on my recent history (discussed
One way to look at my situation is to look at the advantages and disadvantages of credit cards
in juxtaposition to not only my current financial situation, but also my history and general
mentality when it comes to how credit cards have and could affect my life. The advantages of
having a credit card include: convenience, record keeping, low-cost loans, instant cash, perks,
building positive credit, purchase protection, and balance surfing (depending on the credit card
company) (360 Financial Literacy, 2015). When analyzing the advantages, the convenience of a
credit card is counteracted by the fact that I have a debit card from Chase. I don’t need a credit
card for record keeping because I have my Chase debit card and Chase in general to help with
that (they have both electronic and mailed/printed records that I can keep). Instant cash is also
something else that a credit card has which is negated by my Chase debit card. The biggest thing
that I am missing from not getting a credit card is the ability to establish good credit for the
future. As I will discuss in the “my financial plan” section, my decision not to apply for a credit
card is temporary because I do want to establish positive credit going forward.
The negatives of having a credit card include: overuse, paperwork, high-cost fee
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