John has been working for 8 years in a company with an annual salary of Php 1,080,000.

There are number of things that he would like to do with his money. First, he needs to repay his personal loan (total of Php 75,000) and he would like to reduce some outstanding balances on credit cards (total of Php 25,000). John also needs to purchase a car to get to work and would like to put money aside for his eventual retirement.

John needs to do some financial planning for which he selected a 10-year time frame. At the end of 10 years, he'd like to have paid off his current loan and credit card debt, as well as have accumulated Php 100,000 for a down payment on a condo. Lastly, John would like to put aside 10% of his take home salary for retirement. He has gathered the following information to assist him in his planning.

Personal loans are typically repaid in equal monthly installments over a period of 10 years. The interest rate on John's loan is 8% compounded monthly.

Credit cards vary greatly in the interest rate charged. Typical APR rates are close to 17% and monthly minimum payments are usually computed using a 10-year repayment period. The interest rate on John's credit card is 18% compounded monthly.

Car loans are usually repaid over three, four or five years. The APR on a car loan can be as low as 2.9% or as high as 12%. As a first-time car buyer, John can secure a Php 600,000 car loan at 9% compounded monthly to be repaid over 60 months. In the next 5 years after paying the car loan, John wants to continue to set aside this amount each month for the second five years. Insurance for his vehicle will cost Php 36,000 per year, and John has budgeted Php 6,000 per month to cover fuel and maintenance.

A 30-year fixed rate mortgage is currently going for 5.75%-6.0% per year. If John can save enough to make a 20% down payment (Php 100,000) on the purchase of his condo, he can avoid private mortgage insurance that can cost as much as Php 3,000 per month. Investment opportunities can provide variable returns. If John chooses "Safe" investments, he should be able to earn 6% compounded monthly on his savings.

Currently, John rents in an apartment near his place of work with a monthly rent of Php 15,000. The rental office provided him with a monthly utility cost estimate of Php 5,000 to cover water and electricity.

Aside from his monthly rent, he also developed the following estimates for his monthly living expenses: o Food- Php 10,000 o Phone - Php 2,000 o Miscellaneous - Php 5,000 o Subtotal: Php 17,000

John's parents and older siblings have reminded him that his monthly take home pay will be reduced by income taxes and benefit deductions. He should not count on being able to spend more than 80% of his gross salary.

As John's friend, you have been asked to review his financial plans. How reasonable are his goals?