Anne is 22, just out of college, and moving to a new city for her first job. She is concerned about her finances. She wants to start saving for an emergency fund and to buy a new car for about $24,00 in 2 years with a 20% down payment and finance the rest over 4 years.

Her gross income is $40,000 and her disposable income is $31,000. Her monthly living expenses will be about $2,000 ($1,400 fixed). Her employer offers a retirement plan and a credit union. She has $5,000 in a regular checking account. Anne has started shopping around for accounts to hold her liquid assets and would like the highest rate possible as well as avoiding fees if her balance falls below a specified minimum balance. Her thought is to open 2 accounts; one for paying monthly bills and the other for short-term savings. 1. What major factors should Anne consider when selecting savings and checking accounts? 2. What amount and within what timeframe should she try to reach for her emergency fund? What type of account would you recommend she hold it in (and why)?

3. Anne has narrowed her choice of liquid asset accounts to a checking act at the credit union paying 0.25%, a money market deposit act paying $1.00% and a money market mutual fund paying 1.75%. She is concerned that if she used a CD she could incur early withdrawal penalties. What would you recommend for an act to pay monthly expenses (and why)?; an act to save for a car downpayment (and why)? 4. Anne has been using her parent's credit card while an undergrad. She is not sure whether to apply for a VISA card with no annual fee and an APR of 24.99% or an AMEX card with a $75 annual fee, 14.99% APR and no fee for foreign transactions. She doesn't know what to do. What questions would you ask her to determine which card is least expensive for her?

5) Anne has little background or understanding of the potential liabilities of credit card usage. What general advice would you offer her about using credit cards? Since she has done little with respect to establishing a credit history give 3 suggestions for establishing credit and achieving the highest score possible before buying her new car. What would you tell her ids the value in having a high credit score?