Project #58962 - personal finance

The Sanchez Family Profile

The Sanchez family is your typical suburban family living in Frisco, Texas. Mario and Meredith met at a Journey concert during college and it was love at first sight. They have been married for several years and have two children that currently attend daycare (ages 4 and 6). Mario (age 35) is a sales executive for a large insurance company and Meredith (age 28) is a part time teacher at the local community college.

The Sanchez’s want to make sure that they are tracking their expenses, meeting or exceeding important financial ratios and understand where they currently are in terms of assets, liabilities and net worth. The Sanchez’s hope that you can help them with these issues so that they can begin looking at college funding for their children, retirement planning and finally getting out of debt.

 

*NOTICE FOOTNOTES

 

The Sanchez’s Financial Information:

Data provided as of 12/31/2014

 
   

Meredith's Monthly Salary

4,500

Jewelry

3,500

401(k) Account (His)

102,657

Dividend/Interest Income

120

401(k) Account (Her)

72,589

Mortgage Payment (PITI)

1,785

Boat

14,500

Infiniti Payment

448

2007 Jeep Patriot

7,000

Jeep Payment

280

Harley Payment

175

Furniture

14,300

BB National Credit Card Payment

195

Infiniti Loan

42,000

Sears Credit Card Payment

200

Brokerage Account

3,700

Cable

105

Alarm System

39

BB National CC

5,288

Life Insurance

145

Internet

100

Gas

300

Cellphone

130

Mario's Monthly Salary

6,000

Harley Davidson

17,000

Water

80

Sears CC

9,800

Entertainment

400

Auto Insurance

168

Child Care

1,200

Home Repairs

200

2010 Infiniti E35

33,200

Groceries

500

Checking (Joint)

2,009

Bank CD (Joint)

3,259

Dining Out

400

Hobbies

300

Savings Account

5,668

Roth IRA (H)

4,295

Club Dues

175

Harley Davidson Loan

14,000

Dry Cleaning

160

Charity

350

Primary Mortgage [i]

180,000

Landscaping

300

Maid

500

Parking and Tolls

45

Dividend/ Interest Reinvestment

120

Student Loan Payment

357

Mario's 401(k) contributions[ii]

350

Student Loans H

55,380

Meredith's 401(k) contributions

450

Cash Savings Contribution

700

Jeep Auto Loan

5,500

Mario's Roth Contributions

240

Total Taxes (FICA AND INCOME TAX)

1200

Primary Home (VALUE)

280,754


 

 

 

 

 

 

Questions

 

1.       Mario and Meredith are very sensitive to commission charges and expenses. Furthermore, they are concerned with the recent horror stories they have heard about in the financial services industry. Assuming that you are a CERTIFIED FINANCIAL PLANNER™ Practitioner, explain to your clients the different types of fee structures a planner can charge and elaborate on the process required to get your designation. Finally, explain fiduciary responsibility and why it is or isn’t important.

 

2.       Mario and Meredith are curious about financial record keeping for their important documents. Please write a summary advising Mario and Meredith on what to do with important and confidential financial records. Pease use three outside references and list the sources for these specific questions.

 

3.       Mario and Meredith feel like they will live in their home forever. They are considering refinancing their home. Mario and Meredith were told by a mortgage broker that they would qualify for a 4.2% rate on a 15 year or 4.6% on a 30 year mortgage. Provide an analysis showing the pros and cons of each decision. Remember to look at financial ratios. Remember that Mario and Meredith are very visual learners. Assume that refinance costs are $5,500 and can be rolled into the new loan if needed.

 

 

4.       Mario and Meredith are concerned if they have adequate insurance for their auto, home and life. They have a split limit policy of $50k/$100k/$50 for liability limits and $500 deductibles, but they don’t understand what this really means. Mario and Meredith also have their home insured 100% of its actual cash value and they have replacement cost coverage on their property. They would like you to explain to them what these numbers mean and provide guidance if needed.

 

5.       Mario and Meredith might receive a settlement in the amount of $1,500,000. Mario and Meredith want to know how to make sure that $1,000,000 is protected by FDIC and want to invest the other remaining amount into an assortment of mutual funds. Their risk tolerance is moderate and they are looking for growth potential. Their time horizon is 20 years. Provide a recommendation of how the $5,000,000 should be allocated and what funds specifically should they invest in using yahoo finance. What are the fees associated with the funds? What are the pros and cons of the funds chosen?

 



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Due By (Pacific Time) 02/28/2015 12:00 am
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