Jamie Lee Jackson, age 23, recently decided to switch from attending college part time to full time in order to pursue her business degree and to graduate within the next three years. She has 55 credit hours remaining to earn her bachelor’s degree. She knows that it will be a challenge to complete her course of study while still working part time in the bakery department of a local grocery store, where she earns $390 a week. Jamie Lee wants to keep her part-time job, as she loves baking and creates very decorative cakes. She dreams of opening her own cupcake café within the next five years. She also realizes that by returning to school full time, she will forgo any free time that she enjoys now socializing with friends.

Jamie Lee currently shares a small apartment with a friend, and they split the living expenses, such as rent and utilities. She would really like to eventually have a place of her own. Her car is still going strong, even though it is seven years old, and she has no plans to buy a new one any time soon. She is carrying a balance on her credit card and is making regular monthly payments of $50 with hopes of paying it off within a year. Jamie recently took out a student loan to cover educational costs and expenses. She also began depositing $1,800 a year in a savings account that earns 2 percent interest, in hopes of having the $9,000 down payment needed to start the cupcake café two years after graduation.

Current Financial Situation 

Checking account: $1,250 

Emergency fund savings account: $3,100 

Car: $4,000 Student loan: $5,400 

Credit card balance: $400 

Gross annual salary: $2,125 

Net monthly salary: $1,560

Questions 

1. Using Personal Financial Planner Sheet 3, Personal Financial Goals, as a guide, what are Jamie Lee’s short-term financial goals? How do they compare to her intermediate financial goals?

2. Review Jamie Lee’s current financial situation. Using the SMART approach, what recommendations would you make for her to achieve her long-term goals?

3. Name two opportunity costs that might be considered in Jamie Lee’s situation.

4. Jamie Lee needs to save a total of $9,000 to get started in her cupcake café venture. She is currently depositing $1,800 a year in a regular savings account earning 2 percent interest.

Using Personal Financial Planner Sheet 5, Time Value of Money, as a guide, how much will she have accumulated five years from now in the regular savings account, assuming she leaves her emergency fund savings account balance untouched?