Activity 2: What Do You Recommend?

Carrie Savarin, age 25, is a nurse practitioner with the local health department. She earns $50,000 per year, with about $4000 of her income coming from overtime pay. Her employer provides a qualified tax-sheltered retirement plan to which Carrie contributes 4 percent of her salary and for which she receives an additional 4 percent matching contribution from her employer. (She could contribute up to 6 percent with an equal employer match.) Carrie has $19,000 in outstanding student loans on which she will pay $354 per month over the next five years, and her total credit card debt is $3000. Otherwise, she is debt free. Carrie would like to purchase a new or late-model used car to replace the car she has been driving since her senior year in high school. She has $2000 to use as a down payment.

What would you recommend to Carrie on the subject of building and maintaining good credit regarding.

1. Factors she should consider regarding her ability to take on additional debt?

2. The impact of her current debt on her ability to obtain a loan to buy a vehicle?

3. Where she might obtain financing for a vehicle loan?

4. The effect of taking on a loan on her overall financial planning?

Activity 4: what would you do?

Chen recently graduated from college and accepted a job in a new city. Furnishing his apartment had proven more costly than he anticipated. To assist him with making purchases, he applied for and received a credit card with a $5,000 credit limit. Chen planned to pay off the balance over six months. Six months later, Chen found that there were other expenses incurred in starting a new career, which restricted him to making minimum payments only. Not only that, he had borrowed on his card to the full extent of its credit limit. Upon returning from work one day, Chen found a letter from the credit card company offering to increase his limit to $10,000 because he has been a good customer and has not missed a payment.

1. Discuss the ethics of credit card companies that offer to increase credit limits to individuals who

make only minimum payments and who have maxed out their card.

2. Should Chen accept the credit card companys offer? Why or why not?

Activity 5: Research on Information theft.

Research on Information theft as to what is it, what are the types, the description for each, and how

should one avoid such?