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Meet the Marcottes, Martin and Luz Marcotte that is. Martin is a successful graphics designer who...

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Finance

Meet the Marcottes, Martin and Luz Marcotte that is. Martin is asuccessful graphics designer who is 38 years old, while Luz is acounseling psychologist, 35 years old and is working at a Statefacility in Kansas. They have a 10 year old daughter Paloma, who isin the first grade, and a three year old son Joel, who goes to thenearby daycare center. The Marcottes will be facing numerouschallenges as the financial planning topics progress, which willrequire you to practice sound financial decision making, and inother instances where there is a sufficient time horizon, someprudent financial planning.

Currently, Luz is finishing her doctoral program in Psychology,while maintaining a parttime status at the Habilitation Centerwhere she works. The Marcottes own a home, two cars, haveapproximately $10,000 saved up in various savings and investmentaccounts, and own some assets around the house. They are alsovested in their 401ks that they maintain at their respective placesof employment. Presently, there are some financial issues facingthis couple, they have not addressed. Although, they both have jobswhere they make decent salaries, they have not really thought abouttheir children’s educational needs. Inflation in the cost ofcollege education is a reality for most parents, which has to bekept in mind when planning for the future. Moreover, Martin’s momwho is in her late seventies, has been facing declining health, andwill not be able to live by herself, like she has been, for verylong. Luz, who is originally from Peru, also sends regular amountsof money to her family, but her folks are also aging and may needsome financial assistance in the future.

Lastly, since they lead a fairly hectic lifestyle, they have notgiven much thought to their own retirements, or the possibility ofhow they would handle a layoff from work. Consider the situationwhere Martin has been told by his boss that due to lower sales thecompany is anticipating layoffs. After getting the word Martin camehome and talked to his wife and the kids.

They decided to make up a list of 3 things.(1) bills they haveto pay each month (2) areas where they can reduce the spending and(3) sources of funds to help them pay current expenses. Each familymember has several ideas on how to cope with the impendingfinancial situation.

Currently the Marcottes monthly take-home pay is $3165. Eachmonth, the money broadly goes for the following items: Rent $880Utilities $180 Food $560 Auto Expenses $480 Clothing $300 Insurance$280 Savings $250 Personal Items $225

After Martin is laid off, the monthly income will drop to $1550from his wife’s income and his unemployment benefits. The Marcotteshave $12,000 in various savings and investments accounts for thechildren’s education. Besides this they have about $24,000 in theirretirement accounts and investments.

Q1: What items might the Marcottes consider reducing to copewith their financial difficulties? Please explain the detail. Whatalternative actions can they take to reduce some of theirexpenses?

Q2: How should the Marcottes use their savings and retirementfunds during the financial crisis? Analyze and list in detail.

Q3: What additional sources of funds might be available to themduring their time of employment? (think out of the box)

Q4: What other current and future financial actions would yourecommend to the Marcottes?

Q5: Based on the information above, how should the Marcotteshave in an emergency fund? What steps should they take to reachthat amount?

Answer & Explanation Solved by verified expert
4.4 Ratings (868 Votes)
Answers 1 To reduce the financial difficulties Marcottes should reduce their unncessary and avoidable expenditure Following items Marcottes should consider reducing to cope with their financial difficulties avoidable and unnecessary RentAuto expenses as they are having their own home and 2 cars rent and auto expenses can be avoidable While the other expenditures are necessary and day to expenditure any way they have to be    See Answer
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Meet the Marcottes, Martin and Luz Marcotte that is. Martin is asuccessful graphics designer who is 38 years old, while Luz is acounseling psychologist, 35 years old and is working at a Statefacility in Kansas. They have a 10 year old daughter Paloma, who isin the first grade, and a three year old son Joel, who goes to thenearby daycare center. The Marcottes will be facing numerouschallenges as the financial planning topics progress, which willrequire you to practice sound financial decision making, and inother instances where there is a sufficient time horizon, someprudent financial planning.Currently, Luz is finishing her doctoral program in Psychology,while maintaining a parttime status at the Habilitation Centerwhere she works. The Marcottes own a home, two cars, haveapproximately $10,000 saved up in various savings and investmentaccounts, and own some assets around the house. They are alsovested in their 401ks that they maintain at their respective placesof employment. Presently, there are some financial issues facingthis couple, they have not addressed. Although, they both have jobswhere they make decent salaries, they have not really thought abouttheir children’s educational needs. Inflation in the cost ofcollege education is a reality for most parents, which has to bekept in mind when planning for the future. Moreover, Martin’s momwho is in her late seventies, has been facing declining health, andwill not be able to live by herself, like she has been, for verylong. Luz, who is originally from Peru, also sends regular amountsof money to her family, but her folks are also aging and may needsome financial assistance in the future.Lastly, since they lead a fairly hectic lifestyle, they have notgiven much thought to their own retirements, or the possibility ofhow they would handle a layoff from work. Consider the situationwhere Martin has been told by his boss that due to lower sales thecompany is anticipating layoffs. After getting the word Martin camehome and talked to his wife and the kids.They decided to make up a list of 3 things.(1) bills they haveto pay each month (2) areas where they can reduce the spending and(3) sources of funds to help them pay current expenses. Each familymember has several ideas on how to cope with the impendingfinancial situation.Currently the Marcottes monthly take-home pay is $3165. Eachmonth, the money broadly goes for the following items: Rent $880Utilities $180 Food $560 Auto Expenses $480 Clothing $300 Insurance$280 Savings $250 Personal Items $225After Martin is laid off, the monthly income will drop to $1550from his wife’s income and his unemployment benefits. The Marcotteshave $12,000 in various savings and investments accounts for thechildren’s education. Besides this they have about $24,000 in theirretirement accounts and investments.Q1: What items might the Marcottes consider reducing to copewith their financial difficulties? Please explain the detail. Whatalternative actions can they take to reduce some of theirexpenses?Q2: How should the Marcottes use their savings and retirementfunds during the financial crisis? Analyze and list in detail.Q3: What additional sources of funds might be available to themduring their time of employment? (think out of the box)Q4: What other current and future financial actions would yourecommend to the Marcottes?Q5: Based on the information above, how should the Marcotteshave in an emergency fund? What steps should they take to reachthat amount?

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