2. Eric’s uncle left him a trust fund that will provide him

$50,000 per year for the next 20 years. He is a 28-yearold bachelor making a salary of $4,200 per month, with a condo payment, fees, and utilities totaling

$1,750 per month. He also has a car payment, gas costs, and maintenance expenses averaging $600 per month. Clothing, eating out, and other expenses vary greatly depending on how active his social life is that month. He has managed to steer clear of any credit card debt, but he has not started putting away money toward any long-term goals and he is living paycheck to paycheck. (LO 1-2)

a. With his current windfall, how close is Eric to reaching financial independence (passive income equaling expenses)?

b. What are two options Eric has for achieving financial independence?

c. Does Eric have the option of quitting his current job?

d. If Eric were to quit his job, what would he have to do to maintain this temporary financial independence over the long-run?

e. What would you recommend Eric do and why?