. Background information on the Jones family: Lucy and John Jones currently have 2 children (ages 9 and 7) and a golden retriever dog. John works as a manager at a local manufacturing plant. His current annual salary is $59,400. They have barely started saving for retirement and are not receiving full matching funds from the company for their 401(k) plan (a retirement plan through employers). To qualify for the maximum matching funds from John's employer, they would need to triple their current 401(k) contributions. They tend to spend more than they make each month but are not sure how much more. They feel like they have too much credit card debt, and don't have enough money set aside for family savings in the categories of emergency, December holidays, medical, or vacation. In reality, the Joneses feel like they are not sure where the money seems to be going and would like to start a monthly budget action plan. In summary, they need your help! a. What you are going to do: 1. Determine who the spokesperson for your group is going to be. The spokesperson should click on the Status Quo Jones Family Budget Template link on Moodle. Make a copy and share that document with each of the members of your group (and with me), so that everyone can help out filling in the numbers on the spreadsheet. Name this new file Status Quo Budget (names of group members). You will use the spreadsheet to quantify the Joneses' monthly inflow and outflow. The formulas are already set up and you will be able to use the template to help the Joneses' balance their monthly budget, helping them achieve their financial goals. 2. Build a "status quo" budget for the Joneses. That is, find out the status of their current net monthly cash flow. Read the detailed information about their finances and enter the prorated monthly amounts into the categories of income, payroll deductions, savings, and expenses. Make sure each amount is an accurate monthly reflection of their financial situation. Please note that there may be more information than you will use and the items may not necessarily match the order of the spreadsheet. Be sure to proofread afterwards. Here is the information for your spreadsheet. Each month John's payroll deductions include $367.45 for federal income tax, $162.50 for state income tax, and $378.68 for their FICA (Social Security and Medicare) tax. Currently $34.17 is being deducted and deposited into his 401(k). b. Probably one of the biggest concerns for the Joneses right now is getting on top of the credit card debt. Their current MasterCard balance of $4,730 is being assessed an 18% APR finance charge and they have a minimum payment of $95 monthly. They are hoping to pay off their debt within two years but this would require that they increase their monthly credit card payment to at least $236.14 to meet their goal. The family bought a home 5 years ago for $250,000. Their loan is for 30 years at a fixed rate of 5% APR and their monthly payment is $1,342. To safeguard against theft, fire, and other calamities, they carry homeowner's insurance with an annual premium of $984. They are insuring their home with a different company than their vehicle insurance company and hope to combine both types of policies with the same insurer to save 15% on premiums. The Joneses pay $675 every six months for county property taxes on their home and lot. d. They currently pay a monthly cable TV bill of $65.49, a landline phone bill of $32.50, an Internet provider bill of $43.68, and a cell phone bill of $109.45. Their utility bills for electricity, natural gas, and water/sewer/garbage are $39.56, $89.75, and $53.49 respectively. The Joneses are a two-vehicle family. They own an older minivan that is paid for but recently purchased a brand new Ford F-150 4x4. They had to borrow just under $30,000 at a 7% APR, which resulted in a $586 monthly payment. They have estimated that they spend about $360 per year on vehicle maintenance and their vehicle insurance premium is $468 every six months. Lately, they have been averaging about $150 per month on gasoline for the van and truck combined. f. Because the family rarely plans out their weekly meals or uses coupons, $635 is a typical monthly average on groceries. They eat out quite often and spend about $125 at restaurants. Both Lucy and John belong to a local health club and spend a total of $48 per month on membership dues, their clothing expenditures average about $90 for the c. e. family, entertainment is $65, household supplies about $35, miscellaneous items $70, and their monthly dog food and vet bills for their golden retriever average about $42. They also pay approximately $60 to various charities each month. g. Finally, the Joneses are doing their best to protect the family with health and life insurance policies. Currently they pay $197.89 (their monthly share of the company's health insurance package) and $47.82 (their quarterly life insurance premium). 3. Once you are done with the status quo" budget for the Joneses, then check in with me to verify everything is correct. 4. The group spokesperson should make a copy of the status quo file and share that new file. Call the new file New Budget. (names of group members)". 5. Using the New Budget file, your group should modify the quantities so you can get the net monthly cash flow to zero and achieve as many of the goals as possible that were mentioned in the background information. You can do this by trimming and consolidating expenses and possibly recommending some realistic ways to increase income. Help them make a new budget action plan and answer the following questions: What was the original (status quo) net monthly cash flow for the Joneses? a. b. Again, from their status quo budget what percent of their monthly gross income is dedicated to the combination of their mortgage, homeowners insurance, and county property taxes? If this is different on their new budget, what is the new percentage? c. Go online and see what financial experts recommend as a maximum percentage for the answer to part (b). Find two opinions. Are the Joneses within the maximum percentage? d. Once again, from their status quo budget what percent of their monthly gross income is dedicated to vehicle expenses? If this is different on their new budget, what is the new percentage? e. List at least 5 of your creative but realistic recommended changes to their budget: Jones Family Monthly Budget Action Plan Monthly Monthly Monthly INCOME Miscellaneous Income Salary Income Total EXPENSES Home Cable TV Cellular telephone Plast 0.00 Electricity Home Mortgage PAYROLL DEDUCTIONS Federal Income Tax FICA Tax State Income Tax 401(k) Retirement Plan Payroll Deductions Total 0.00 EXPENSES Insurance Auto Health Homeowner's Life Insurance Total Transportation Fuel Maintenance/Repairs Truck Payment Transportation Total County Property Taxes Internet Landline telephone Natural Gas Water/Sewer/Garbage Home Total Daily Living Charitable Contributions Clothing Credit Card Payment 0.00 0.00 0.00 Total Expenses 0.00 FAMILY SAVINGS Emergency Holiday Gifts Medical/Dental/Vision Vacation Family Savings Total Net Monthly Cash Flow 0.00 Dining Out 0.00 Reminder: Cash Flow = Income - Deductions - Savings - Expenses Entertainment Groceries Health Club Dues Household Supplies Miscellaneous Pet Food / Vet bills Daily Living Total 0.00 . Background information on the Jones family: Lucy and John Jones currently have 2 children (ages 9 and 7) and a golden retriever dog. John works as a manager at a local manufacturing plant. His current annual salary is $59,400. They have barely started saving for retirement and are not receiving full matching funds from the company for their 401(k) plan (a retirement plan through employers). To qualify for the maximum matching funds from John's employer, they would need to triple their current 401(k) contributions. They tend to spend more than they make each month but are not sure how much more. They feel like they have too much credit card debt, and don't have enough money set aside for family savings in the categories of emergency, December holidays, medical, or vacation. In reality, the Joneses feel like they are not sure where the money seems to be going and would like to start a monthly budget action plan. In summary, they need your help! a. What you are going to do: 1. Determine who the spokesperson for your group is going to be. The spokesperson should click on the Status Quo Jones Family Budget Template link on Moodle. Make a copy and share that document with each of the members of your group (and with me), so that everyone can help out filling in the numbers on the spreadsheet. Name this new file Status Quo Budget (names of group members). You will use the spreadsheet to quantify the Joneses' monthly inflow and outflow. The formulas are already set up and you will be able to use the template to help the Joneses' balance their monthly budget, helping them achieve their financial goals. 2. Build a "status quo" budget for the Joneses. That is, find out the status of their current net monthly cash flow. Read the detailed information about their finances and enter the prorated monthly amounts into the categories of income, payroll deductions, savings, and expenses. Make sure each amount is an accurate monthly reflection of their financial situation. Please note that there may be more information than you will use and the items may not necessarily match the order of the spreadsheet. Be sure to proofread afterwards. Here is the information for your spreadsheet. Each month John's payroll deductions include $367.45 for federal income tax, $162.50 for state income tax, and $378.68 for their FICA (Social Security and Medicare) tax. Currently $34.17 is being deducted and deposited into his 401(k). b. Probably one of the biggest concerns for the Joneses right now is getting on top of the credit card debt. Their current MasterCard balance of $4,730 is being assessed an 18% APR finance charge and they have a minimum payment of $95 monthly. They are hoping to pay off their debt within two years but this would require that they increase their monthly credit card payment to at least $236.14 to meet their goal. The family bought a home 5 years ago for $250,000. Their loan is for 30 years at a fixed rate of 5% APR and their monthly payment is $1,342. To safeguard against theft, fire, and other calamities, they carry homeowner's insurance with an annual premium of $984. They are insuring their home with a different company than their vehicle insurance company and hope to combine both types of policies with the same insurer to save 15% on premiums. The Joneses pay $675 every six months for county property taxes on their home and lot. d. They currently pay a monthly cable TV bill of $65.49, a landline phone bill of $32.50, an Internet provider bill of $43.68, and a cell phone bill of $109.45. Their utility bills for electricity, natural gas, and water/sewer/garbage are $39.56, $89.75, and $53.49 respectively. The Joneses are a two-vehicle family. They own an older minivan that is paid for but recently purchased a brand new Ford F-150 4x4. They had to borrow just under $30,000 at a 7% APR, which resulted in a $586 monthly payment. They have estimated that they spend about $360 per year on vehicle maintenance and their vehicle insurance premium is $468 every six months. Lately, they have been averaging about $150 per month on gasoline for the van and truck combined. f. Because the family rarely plans out their weekly meals or uses coupons, $635 is a typical monthly average on groceries. They eat out quite often and spend about $125 at restaurants. Both Lucy and John belong to a local health club and spend a total of $48 per month on membership dues, their clothing expenditures average about $90 for the c. e. family, entertainment is $65, household supplies about $35, miscellaneous items $70, and their monthly dog food and vet bills for their golden retriever average about $42. They also pay approximately $60 to various charities each month. g. Finally, the Joneses are doing their best to protect the family with health and life insurance policies. Currently they pay $197.89 (their monthly share of the company's health insurance package) and $47.82 (their quarterly life insurance premium). 3. Once you are done with the status quo" budget for the Joneses, then check in with me to verify everything is correct. 4. The group spokesperson should make a copy of the status quo file and share that new file. Call the new file New Budget. (names of group members)". 5. Using the New Budget file, your group should modify the quantities so you can get the net monthly cash flow to zero and achieve as many of the goals as possible that were mentioned in the background information. You can do this by trimming and consolidating expenses and possibly recommending some realistic ways to increase income. Help them make a new budget action plan and answer the following questions: What was the original (status quo) net monthly cash flow for the Joneses? a. b. Again, from their status quo budget what percent of their monthly gross income is dedicated to the combination of their mortgage, homeowners insurance, and county property taxes? If this is different on their new budget, what is the new percentage? c. Go online and see what financial experts recommend as a maximum percentage for the answer to part (b). Find two opinions. Are the Joneses within the maximum percentage? d. Once again, from their status quo budget what percent of their monthly gross income is dedicated to vehicle expenses? If this is different on their new budget, what is the new percentage? e. List at least 5 of your creative but realistic recommended changes to their budget: Jones Family Monthly Budget Action Plan Monthly Monthly Monthly INCOME Miscellaneous Income Salary Income Total EXPENSES Home Cable TV Cellular telephone Plast 0.00 Electricity Home Mortgage PAYROLL DEDUCTIONS Federal Income Tax FICA Tax State Income Tax 401(k) Retirement Plan Payroll Deductions Total 0.00 EXPENSES Insurance Auto Health Homeowner's Life Insurance Total Transportation Fuel Maintenance/Repairs Truck Payment Transportation Total County Property Taxes Internet Landline telephone Natural Gas Water/Sewer/Garbage Home Total Daily Living Charitable Contributions Clothing Credit Card Payment 0.00 0.00 0.00 Total Expenses 0.00 FAMILY SAVINGS Emergency Holiday Gifts Medical/Dental/Vision Vacation Family Savings Total Net Monthly Cash Flow 0.00 Dining Out 0.00 Reminder: Cash Flow = Income - Deductions - Savings - Expenses Entertainment Groceries Health Club Dues Household Supplies Miscellaneous Pet Food / Vet bills Daily Living Total 0.00