Answer the 3 questions for the case study presented below as completely as

possible using relevant information. It is important that you read the case

study carefully so that you can understand the situation and answer the

questions as completely as possible:

Case Study

Ron Harrington has worked for a large manufacturing company and his gross annual income is

$85,000 as a quality control manager. He and his wife, Jennifer, purchased a three-bedroom

home in Folsom, CA and live there with their two children, ages 18 and 16. Although Jennifer

has an undergraduate degree, she has not worked outside the home since their last child was

born. The Harringtons have a credit card balance of $3,600 but no other debt. They have saved

for their children's education in a tax-deferred account that is approximately at $30,000. Ron,

Jennifer and their children currently live comfortably on Ron's income, they have about

$50,000 in home equity and they financed the house with a $250,000 mortgage. Ron has not

been able to participate in his employer sponsored retirement plan nor have they been able to

invest their money for their future goals except for their children's education.

Ron's employer recently announced plans to lay off a substantial number of employees over the

course of the following year as a cost-cutting measure, and Ron is worried that he might lose his

job in the next three to six months. Ron will also be eligible for unemployment compensation for

several months, but he is concerned that this amount will be insufficient to cover their

household expenses, and he knows it will take a long time to find a comparable job. He

estimates that he will have to take a lower-level job at a salary lower than what he now earns.

A. Make a realistic budget for the Harrington family when Ron will not have his job, which

means that the family has to cut back on non-essential expenses. Make sure that you

have side-by-side columns for monthly income and expenses that reflect average

expenditures in California for a family of four and the budget is balanced. Under the

income category, calculate what Ron and his family have to pay in federal, state and

FICA taxes so that you have the approximate annual and monthly net income

B. What are some alternatives for the Harringtons to reduce their credit card debt?

C. Why should Ron and Jennifer be saving for retirement and what factors should the

family be considering when planning for their future?