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For this question, assume this year the family has already incurred medical expense

of $7000 (Not including premiums and penalties). They incur $1000 for a visit to a doctors office visit. The doctor was listed as a Tier 2

provider. How much will the insurance cover?(Assume the individual out of pocket limit has not been reached)

STATEMENT OF CASH FLOW (2019 Expected)

Michael's Salary

$85,000

Investment Income

Interest

$500

Other Income

$600

Total Investment Income

$1,100

TOTAL INCOME

$86,100

1

Pre Tax Contributions

401(K) Contributions

$4,800

Health insurance premiums

$1,200

TOTAL PRE-TAX REDUCTIONS

$6,000

2

Taxes*

Federal

$7,025

State

$1,250

TOTAL TAXES

$8,275

3

Living Expenses

Rent

24000

Food & Outside Meals

12500

Clothing

4500

Child Care

2500

Entertainment & Travel

7650

Utilities & Phone

3600

Auto Maintenance

1500

Church Contributions

500

TOTAL LIVING EXPENSES

56750

4

TUITION & EDUCATION

12500

5

Other payments

Car Payment (Loan and Insurance)

4400

6

TOTAL OUTFLOW

$87,925

2+3+4+5+6

(7)

NET CASH FLOW

($1,825)

1-7

*Michael takes the standard deduction, and child tax credit for his two children

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INFO 209 Personal Finance Project

*

Michaels 401 (K) is 100% invested in the stock of his company

,

Cornerstone, LLC.

**CDs are earning 2% per year and are for 12 months en

ding

October 2018

. They will l

ose interest

earned if they redeem early

***Credit Car

d APR: 28%. Credit Limit $5

000

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