PLEASE ANSWER 6-10 and QUESTION 12 . READ ALL PHOTOS POSTED AND TYPE ANSWER TO THE QUESTION PLEASE . NEED HELP ASAP

PERSONAL INFORMATION Antonne and LaKeisha met when they were both students at Clark Atlanta University. As freshmen, they lived down the hall from one another but met at the local skating rink at the end of their first year. They married several years after graduation as they wanted to wait until they had enough money for a wedding. Now ages 32 and 31 respectively, they live in Manassas Park, Virginia and have a 3-year- old daughter named Chloe. Following graduation from Clark Atlanta University, the Russells moved to the Washington, D.C. area where Antonne worked for BB&T as a teller and LaKeisha began taking licensing exams to teach elementary school. After working for three years as a teller, Antonne decided he wanted to go back to school to get his MBA. He was driven to go back to school, so he could increase his future salary. While Antonne obtained his MBA at The University of Georgia, LaKeisha found a job teaching fourth-grade in Athens. Antonne did not work during school, so they did their best to liv solely on her income. However, their expenses were too high at times and they accumulated some credit card debt. Upon graduation three and a half years ago, Antonne took a job in Alexandria, Virginia, as a branch manager for Big National Bank LaKeisha found a job as a second-grade teacher in Alexandria but would like to stay home with their daughter. It's important to them that LaKeisha have the option of being a stay-at-home mom if they're able to afford to live from Antonne's salary. Originally, they were thinking that she would work until the birth of their second child; however, Chloe has a lot of food allergies and other childhood-related illnesses that have taken a lot of time to resolve or control. As result, LaKeisha is feeling more pressure and desire to be a stay-at home parent to care for Chloe They'd like to buy a house or condo, so they have a home they can call their own in or near Alexandria but recognize housing costs in northern Virginia are quite expensive. Given their student loans, credit card and auto debt, and need to save for a down payment they've postponed buying a property. For now, they're renting an TILy Ike t ya house of condo, so they have a home they can ll their own in or near Alexandria but recognize housing costs in northern Virginia are quite expensive. Given their student loans, credit card and auto debt, and need to save for a down payment, they've postponed buying a property. For now, they're renting an apartment for $1,550 per month. However, they are also coming to realize that commuting almost one hour each way to work is also expensive in that they are paying for child care an extra 10 hoursa week - which adds nearly $2,500 a year. Additionally, since they can't commute together due to the differences in working hours they are driving nearly 1,000 miles a week combined that dramatically increases their transportation costs. Antonne makes $100,000 annually and has been told he can expect his salary to grow by 3% each year. He's contributing $1,000 per month to his pre-tax 401(k) as he's trying to reduce their taxes. Big National Bank matches dollar for dollar up to the first 6% ($500 per month). He also saves the maximum amount to his Roth IRA as he's heard he could one day make too much money to contribute. LaKeisha is making $40,000 and saves $750 per month to her VRS Retirement Plan. In addition to continuing to save for retirement they are still saving $300 for the down payment on their new home. As they have tried to be prodigious savers they allot themselves only $8 per day for "lunch money." This sometimes goes to lunch out for Antonne, but more frequently goes to Starbucks for coffee, the occasional "happy hour" with co-workers, or just a quick bite for LaKeisha on the nights Antonne works late. ECONOMIC ASSUMPTIONS The economy has been steadily recovering ever so slowly since the financial crisis in 2008. While the economy is back to "full employment with an unemployment rate of about 4%, studies continue to show that wages for most Americans are just barely keeping pace with the inflation rate that has averaged less than 2% since the crisis. RETIREMENT INVESTMENTS Antonne would like to retire at age 60 whereas LaKeisha could see RETIREMENT INVESTMENTS Antonne would like to retire at age 60 whereas LaKeisha could see herself rejoining the work force as a teacher (assuming she can raise their children without working) after their daughter and any future kids are more independent, such as late middle school or in high school. Antonne's family health history isn't great and many of the men in his family suffer from heart disease. Retiring at age 60 is important to him as he wants time to mark a few items off his bucket list. He'd like to go to Italy with LaKeisha, write a memoir, and volunteer teaching kids how to play hockey Antonne's Investments: Former Regional Bank Pre-tax "Traditional" 401(k) $9,692 Former Regional Roth 401(k) $25,248 Roth IRA: S11,863 Big National Bank Pre-tax "Traditional" 401k) $26.133 LaKeisha's Investments: Traditional IRA: $23,086 403(b): $13,658 VRS Vested Balance Pre-tax Retirement: $2,551 VRS Unvested Balance Pre-tax Retirement S2987 FINANCA1/NVES TABLE ASSETS (ALL ACCOUNTS ARE ON NED JOINT Checking account: $7,534 Savings account: $1,000 Brokerage account: S35.267 The brokerage account is 50% large-cap growth stocks and 50% money market. The taxable distributions in the brokerage account have been small enough to be considered irrelevant for planning purposes. UsE/PERSONAL ASSETS 2013 Subaru Outback 2.Si Premium: S18,000 2009 Hyundai Santa Fe Limited AWD: $6,000 LaKcisha drives the Subaru as they bought this when she was pregnant with Chloe and Antonne wanted her to have a very safe and dependable car LIABILITIES 2013 Subaru (Joint): o The monthly payment is $550.01 and they know they have exactly 24 payments remaining, but could not find the loan balance. The Russell's financed the Outback for six years at 4.9%. Visa (Joint): $13,500 balance (17% APR). They try to pay at least $300 per month. o Mastercard (Joint): o $9,000 balance (15% APR). They try to pay at least S250 per month STUDENT LOANS Antonne worked very hard and did not have any student loan debt from his undergraduate degree but he did take out two unsubsidized Stafford loans to help pay for his MBA. Upon graduation he consolidated his two loans into one $20,000 Direct Loan with the U.S. Department of Education. He chose the standard repayment plan and has an interest rate of 6.2%. He has made 42 payments. LaKeisha had debt from undergraduate school which she consolidated into one $36,000 loan when Antonne started graduate school in August 2012. Her original loans had annual interest rates of 6.8% and 6.0% so her consolidation loan rate is 6.4%. She chose the extended repayment option and has made 66 payments so far LIFE INSURANCE Antonne has a group term life insurance policy through work that will pay 2x his salary LaKeisha has a group term life insurance policy through work that will pay 1.5x her salary . Neither of them have additional life insurance policies HEALTH INSURANCE Big National Bank offers Antonne a varicty of health insurance plans Currently he has chosen an "employee plus one" Silver HSA plan that covers himself and Chloe. Antonne's portion of the premium is S62 which is withheld on a pre-tax basis from his semi-monthly ycheck. The total semi-monthly premium is $397 with his pa employer paying the $335 difference. If he were to keep the Silver HSA plan but change to the "family" plan to cover LaKeisha as well. his portion of the semi-monthly premium would increase to $110 or S220 per month. LaKeisha has an "employee only" POS policy through her school system. Her cost is $150 per month (including dental.) While it offers very good coverage, it would be more expensive for her to add Chloe to her policy than it costs Antonne to add her to his. Her premium is withheld on a pre-tax basis. If LaKeisha adds Chloe to her plan her monthly cost would increase to $284, and a family plan would cost $401 AUTO INSURANCE Antonne and LaKeisha have an auto insurance policy for their cars. They pay $155 monthly for both vehicles Coverage Split-limit" 50/100/50 (The same limits apply for "uninsured and underinsured" motorist) Collision and Comprehensive with deductibles of $750 RENTERS INSURANCE Since they do not currently own a home and are renting an apartment, the Russells are paying $400 every six months for coverage. Additional expenses can be found in the balance sheet. FINANCIAL GOALS Antonne and LaKeisha Russell have three primary goals for which they would like your assistance researching, analyzing, and building some strategies to achieve. Ordered from most important to least Manage their cash flow and debt level 2 Buy a house or condo in northern Virginia s. Fund or at least maintain their retirement accounts They realize that they are overspending their income because the balances on their credit cards keeps increasing but feel that they earn enough money that this should not be the case. They really want a solution to this dilemma as another priority for them is to have the option for LaKeisha to stay at home with their daughter and any other future children. They'd like to have three children. If she did stay home, LaKeisha would not earn any income for the foresecable future. CASH FLOW AND DEBT PLANNING Once a planner gets to know their client and has agreed to work together, the next step in the planning process is to analyze the clients' current situation. To that end, fill-in the missing information in their income statement and balance sheet to determine the Russells' available discretionary cash flow (unallocated income) and their net worth (how much their assets are worth after deducting any liabilities) Step one: Transfer all given asset and liability information from the case to the balance sheet. Step two: Transfer all given income and expense information to the income statement. Take care to notice that much of the data they provided was monthly, but your statement records annual amounts Step three: Calculate the missing payments and/or remaining balances using a financial calculator or on-line calculators available at www.dinkytown.net (your computer will need Java to use this site). 1. Auto loan 2. Antonne's student loan 3. LaKeisha's student loan OVERALL RESPONSE To THE RUSSELLS Home purchase focused questions: 6. LaKeisha and Antonne Russell have been struggling to determine the best way to balance their desire to save for a home (condo or house) and save for retirement. Based on the information available from Merrill Lynch at what advice would you provide the client as to how to maximize their retirement savings? ANSWER: 7. Antonne and LaKeisha really want a permanent home for their daughter, but have been super diligent about saving for their retirement so much of their money is saved in tax-advantaged retirement accounts. Is there a way that they could access their IRA accounts for part of the down payment? If so, how much could they access without paying a penalty on the distribution? ANSWER: 8. How much (as a percentage of purchase price) does a bank typically want a buyer to have for a down payment? What other applicant information (e.g., credit score, employment history. mortgage payment ratio, mortgage payment and other credit payment ratio) might the bank consider when deciding if the Russells are a good credit risk for a mortgage? ANSWER 9. Given their competing financial obligations, would you recommend that they use a 20 year or a 30-year mortgage? What are the pros and cons of each option? How would your recommendation change if you knew that it was very important to Antonne and LaKeisha to pay as little interest as possible? How would your recommendation change if they also wanted to open a 529 savings account for Chloe? ANSWER: ANSWER: 10. The Russell's financed the Outback for six years at 4.9%. How early would they pay off the loan and how much interest could they save if they immediately increased their payment by $100 per month for the remainder of the loan? Use the loan calculator at http://www.dinkytown.net to answer ANSWER: Insurance focused questions 11. LaKeisha recently spoke to a friend who was in the hospital after a car accident and is now wondering if they have enough coverage in case they hurt another person or property. What is the minimum auto coverage required by the State of Virginia? What seems to be the general minimum recommended coverage to provide adequate liability protection? ANSWER: 12. If LaKeisha stops working what would happen to her health insurance coverage through work? The repeal of the "individual mandate" is not effective until 2019. Assuming she leaves work in 2019 or later, she can avoid the fine, but does she still need health insurance? What are her options to have health insurance coverage? ANSWER: Case stwdy provideo by sher facalty of he irginia Tech Financialt Planning Program: Professor Derek Klock, De Rush Lythow and Christine Dawico, CFPa 2 PERSONAL INFORMATION Antonne and LaKeisha met when they were both students at Clark Atlanta University. As freshmen, they lived down the hall from one another but met at the local skating rink at the end of their first year. They married several years after graduation as they wanted to wait until they had enough money for a wedding. Now ages 32 and 31 respectively, they live in Manassas Park, Virginia and have a 3-year- old daughter named Chloe. Following graduation from Clark Atlanta University, the Russells moved to the Washington, D.C. area where Antonne worked for BB&T as a teller and LaKeisha began taking licensing exams to teach elementary school. After working for three years as a teller, Antonne decided he wanted to go back to school to get his MBA. He was driven to go back to school, so he could increase his future salary. While Antonne obtained his MBA at The University of Georgia, LaKeisha found a job teaching fourth-grade in Athens. Antonne did not work during school, so they did their best to liv solely on her income. However, their expenses were too high at times and they accumulated some credit card debt. Upon graduation three and a half years ago, Antonne took a job in Alexandria, Virginia, as a branch manager for Big National Bank LaKeisha found a job as a second-grade teacher in Alexandria but would like to stay home with their daughter. It's important to them that LaKeisha have the option of being a stay-at-home mom if they're able to afford to live from Antonne's salary. Originally, they were thinking that she would work until the birth of their second child; however, Chloe has a lot of food allergies and other childhood-related illnesses that have taken a lot of time to resolve or control. As result, LaKeisha is feeling more pressure and desire to be a stay-at home parent to care for Chloe They'd like to buy a house or condo, so they have a home they can call their own in or near Alexandria but recognize housing costs in northern Virginia are quite expensive. Given their student loans, credit card and auto debt, and need to save for a down payment they've postponed buying a property. For now, they're renting an TILy Ike t ya house of condo, so they have a home they can ll their own in or near Alexandria but recognize housing costs in northern Virginia are quite expensive. Given their student loans, credit card and auto debt, and need to save for a down payment, they've postponed buying a property. For now, they're renting an apartment for $1,550 per month. However, they are also coming to realize that commuting almost one hour each way to work is also expensive in that they are paying for child care an extra 10 hoursa week - which adds nearly $2,500 a year. Additionally, since they can't commute together due to the differences in working hours they are driving nearly 1,000 miles a week combined that dramatically increases their transportation costs. Antonne makes $100,000 annually and has been told he can expect his salary to grow by 3% each year. He's contributing $1,000 per month to his pre-tax 401(k) as he's trying to reduce their taxes. Big National Bank matches dollar for dollar up to the first 6% ($500 per month). He also saves the maximum amount to his Roth IRA as he's heard he could one day make too much money to contribute. LaKeisha is making $40,000 and saves $750 per month to her VRS Retirement Plan. In addition to continuing to save for retirement they are still saving $300 for the down payment on their new home. As they have tried to be prodigious savers they allot themselves only $8 per day for "lunch money." This sometimes goes to lunch out for Antonne, but more frequently goes to Starbucks for coffee, the occasional "happy hour" with co-workers, or just a quick bite for LaKeisha on the nights Antonne works late. ECONOMIC ASSUMPTIONS The economy has been steadily recovering ever so slowly since the financial crisis in 2008. While the economy is back to "full employment with an unemployment rate of about 4%, studies continue to show that wages for most Americans are just barely keeping pace with the inflation rate that has averaged less than 2% since the crisis. RETIREMENT INVESTMENTS Antonne would like to retire at age 60 whereas LaKeisha could see RETIREMENT INVESTMENTS Antonne would like to retire at age 60 whereas LaKeisha could see herself rejoining the work force as a teacher (assuming she can raise their children without working) after their daughter and any future kids are more independent, such as late middle school or in high school. Antonne's family health history isn't great and many of the men in his family suffer from heart disease. Retiring at age 60 is important to him as he wants time to mark a few items off his bucket list. He'd like to go to Italy with LaKeisha, write a memoir, and volunteer teaching kids how to play hockey Antonne's Investments: Former Regional Bank Pre-tax "Traditional" 401(k) $9,692 Former Regional Roth 401(k) $25,248 Roth IRA: S11,863 Big National Bank Pre-tax "Traditional" 401k) $26.133 LaKeisha's Investments: Traditional IRA: $23,086 403(b): $13,658 VRS Vested Balance Pre-tax Retirement: $2,551 VRS Unvested Balance Pre-tax Retirement S2987 FINANCA1/NVES TABLE ASSETS (ALL ACCOUNTS ARE ON NED JOINT Checking account: $7,534 Savings account: $1,000 Brokerage account: S35.267 The brokerage account is 50% large-cap growth stocks and 50% money market. The taxable distributions in the brokerage account have been small enough to be considered irrelevant for planning purposes. UsE/PERSONAL ASSETS 2013 Subaru Outback 2.Si Premium: S18,000 2009 Hyundai Santa Fe Limited AWD: $6,000 LaKcisha drives the Subaru as they bought this when she was pregnant with Chloe and Antonne wanted her to have a very safe and dependable car LIABILITIES 2013 Subaru (Joint): o The monthly payment is $550.01 and they know they have exactly 24 payments remaining, but could not find the loan balance. The Russell's financed the Outback for six years at 4.9%. Visa (Joint): $13,500 balance (17% APR). They try to pay at least $300 per month. o Mastercard (Joint): o $9,000 balance (15% APR). They try to pay at least S250 per month STUDENT LOANS Antonne worked very hard and did not have any student loan debt from his undergraduate degree but he did take out two unsubsidized Stafford loans to help pay for his MBA. Upon graduation he consolidated his two loans into one $20,000 Direct Loan with the U.S. Department of Education. He chose the standard repayment plan and has an interest rate of 6.2%. He has made 42 payments. LaKeisha had debt from undergraduate school which she consolidated into one $36,000 loan when Antonne started graduate school in August 2012. Her original loans had annual interest rates of 6.8% and 6.0% so her consolidation loan rate is 6.4%. She chose the extended repayment option and has made 66 payments so far LIFE INSURANCE Antonne has a group term life insurance policy through work that will pay 2x his salary LaKeisha has a group term life insurance policy through work that will pay 1.5x her salary . Neither of them have additional life insurance policies HEALTH INSURANCE Big National Bank offers Antonne a varicty of health insurance plans Currently he has chosen an "employee plus one" Silver HSA plan that covers himself and Chloe. Antonne's portion of the premium is S62 which is withheld on a pre-tax basis from his semi-monthly ycheck. The total semi-monthly premium is $397 with his pa employer paying the $335 difference. If he were to keep the Silver HSA plan but change to the "family" plan to cover LaKeisha as well. his portion of the semi-monthly premium would increase to $110 or S220 per month. LaKeisha has an "employee only" POS policy through her school system. Her cost is $150 per month (including dental.) While it offers very good coverage, it would be more expensive for her to add Chloe to her policy than it costs Antonne to add her to his. Her premium is withheld on a pre-tax basis. If LaKeisha adds Chloe to her plan her monthly cost would increase to $284, and a family plan would cost $401 AUTO INSURANCE Antonne and LaKeisha have an auto insurance policy for their cars. They pay $155 monthly for both vehicles Coverage Split-limit" 50/100/50 (The same limits apply for "uninsured and underinsured" motorist) Collision and Comprehensive with deductibles of $750 RENTERS INSURANCE Since they do not currently own a home and are renting an apartment, the Russells are paying $400 every six months for coverage. Additional expenses can be found in the balance sheet. FINANCIAL GOALS Antonne and LaKeisha Russell have three primary goals for which they would like your assistance researching, analyzing, and building some strategies to achieve. Ordered from most important to least Manage their cash flow and debt level 2 Buy a house or condo in northern Virginia s. Fund or at least maintain their retirement accounts They realize that they are overspending their income because the balances on their credit cards keeps increasing but feel that they earn enough money that this should not be the case. They really want a solution to this dilemma as another priority for them is to have the option for LaKeisha to stay at home with their daughter and any other future children. They'd like to have three children. If she did stay home, LaKeisha would not earn any income for the foresecable future. CASH FLOW AND DEBT PLANNING Once a planner gets to know their client and has agreed to work together, the next step in the planning process is to analyze the clients' current situation. To that end, fill-in the missing information in their income statement and balance sheet to determine the Russells' available discretionary cash flow (unallocated income) and their net worth (how much their assets are worth after deducting any liabilities) Step one: Transfer all given asset and liability information from the case to the balance sheet. Step two: Transfer all given income and expense information to the income statement. Take care to notice that much of the data they provided was monthly, but your statement records annual amounts Step three: Calculate the missing payments and/or remaining balances using a financial calculator or on-line calculators available at www.dinkytown.net (your computer will need Java to use this site). 1. Auto loan 2. Antonne's student loan 3. LaKeisha's student loan OVERALL RESPONSE To THE RUSSELLS Home purchase focused questions: 6. LaKeisha and Antonne Russell have been struggling to determine the best way to balance their desire to save for a home (condo or house) and save for retirement. Based on the information available from Merrill Lynch at what advice would you provide the client as to how to maximize their retirement savings? ANSWER: 7. Antonne and LaKeisha really want a permanent home for their daughter, but have been super diligent about saving for their retirement so much of their money is saved in tax-advantaged retirement accounts. Is there a way that they could access their IRA accounts for part of the down payment? If so, how much could they access without paying a penalty on the distribution? ANSWER: 8. How much (as a percentage of purchase price) does a bank typically want a buyer to have for a down payment? What other applicant information (e.g., credit score, employment history. mortgage payment ratio, mortgage payment and other credit payment ratio) might the bank consider when deciding if the Russells are a good credit risk for a mortgage? ANSWER 9. Given their competing financial obligations, would you recommend that they use a 20 year or a 30-year mortgage? What are the pros and cons of each option? How would your recommendation change if you knew that it was very important to Antonne and LaKeisha to pay as little interest as possible? How would your recommendation change if they also wanted to open a 529 savings account for Chloe? ANSWER: ANSWER: 10. The Russell's financed the Outback for six years at 4.9%. How early would they pay off the loan and how much interest could they save if they immediately increased their payment by $100 per month for the remainder of the loan? Use the loan calculator at http://www.dinkytown.net to answer ANSWER: Insurance focused questions 11. LaKeisha recently spoke to a friend who was in the hospital after a car accident and is now wondering if they have enough coverage in case they hurt another person or property. What is the minimum auto coverage required by the State of Virginia? What seems to be the general minimum recommended coverage to provide adequate liability protection? ANSWER: 12. If LaKeisha stops working what would happen to her health insurance coverage through work? The repeal of the "individual mandate" is not effective until 2019. Assuming she leaves work in 2019 or later, she can avoid the fine, but does she still need health insurance? What are her options to have health insurance coverage? ANSWER: Case stwdy provideo by sher facalty of he irginia Tech Financialt Planning Program: Professor Derek Klock, De Rush Lythow and Christine Dawico, CFPa 2