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Personal Financial Management
1. When TDSR exceeds the maximum allowable limit, what are four options that you could consider based on your spending (car)?
Your future income = $45,000/year
You pay $1000/month in rent
You have a cell phone bill of $85/month
You have a student loan payment of $200/month
You have a VISA card with a $1000 limit and $1000 outstanding balance
Car insurance will cost $4000/year
Groceries cost you $100/week
Gas will cost you $50/week
($1000 + $200 + $50 + $321.83) / $3750 = 0.41915
= 42%
It is not qualified for this purchase.
This ratio should not exceed 40%.
2. Your professor (who currently drives a practical, family-friendly Mazda) is going through a mid-life crisis and announces to the class that she is going to buy a 2019 Ferrari 488 Spider with a sticker price of over $300,000 and that will be the answer to all of life’s problems.
Explain three concerns you have about this purchase from a wealth management perspective
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