6. Jamie Lee and Ross agree that by accomplishing their short-term goals, they can budget $5,000 a year toward their long-term investment goals. They are estimating that with the allocations recommended by their financial advisor, they will see an average return of 7 percent on their investments. The triplets will begin college in 15 years and will need $100,000 for tuition.

Using the time value of money information found in the Figure It Out! feature in this chapter, decide if Jamie Lee and Ross will be on track to reach their long-term financial goals of having enough money from their investments to pay the triplets’ college tuition.

INVESTING BASICS AND EVALUATING BONDSThe triplets are now three-and-a-half years old, and Jamie Lee and Ross, both 38, are finally beginning to settle down into a regular routine. The first three years were a blur of diapers, feedings, baths, mounds of laundry, and crying babies!
Jamie Lee and Ross went out to a dinner out on the town, while Ross’s parents watched the triplets.
They had a conversation about their future and the future of the kids. They guessed that college expenses would be $100,000, and their eventual retirement is a major worry for both of them. They have dreamed of owning a beach house when they retire. That could be another $350,000, 30 years from now. They wondered how could they possibly afford all of this.

They agreed that it was time to talk to a financial planner, but they wanted to organize all of their financial information and discuss their family’s financial goals before setting up the appointment.
Current Financial Situation Assets (Jamie Lee and Ross combined):
Checking account, $4,500 Savings account, $20,000 Emergency fund savings account, $21,000 IRA balance, $32,000 Cars, $8,500 (Jamie Lee) and $14,000 (Ross)
Liabilities (Jamie Lee and Ross combined):
Student loan balance, $0 Credit card balance, $4,000 Car loans, $2,000 Income:
Jamie Lee, $45,000 gross income ($31,500 net income after taxes)
Ross, $80,000 gross income ($64,500 net income after taxes)
Monthly Expenses:
Mortgage, $1,225 Property taxes, $400 Homeowner’s insurance, $200 IRA contribution, $300 Utilities, $250 Food, $600 Baby essentials (diapers, clothing, toys, etc.), $200 Gas/Maintenance, $275 Credit card payment, $400 Car loan payment, $289 Entertainment, $125