Client Scenario #1 The Case of the Stone Family Here is the Stone family- Bill, age 30, and Linda, age 29. Linda is due with her first child in six months and plans to have one more child within two years after the birth of the first child. Bill has a degree in engineering and works for a small engineering firm. Bills annual salary is $140,000. Linda is a CPA and works in the tax department of a small local CPA firm. Lindas annual salary is $65,000. Both Bill and Linda are required to share in the cost of their health insurance. Each has a car approximately three years old with six monthly payments of $600 each remaining. The Stones purchased their first house last year for $450,000, obtaining a $28,000 mortgage for thirty years at 6% APR. Linda plans to stay home for the first year after the birth of each child, if possible. A partner at the CPA firm told Linda that she could work ten hours a week at home on firm clients if she desires. Listed below is a breakdown of their annual gross income. Gross Income Bills Salary $140,000 Lindas Salary 65,000 Interest/ Dividend Income 2,500 Total $207,500 Expenditures and Savings Housing a $40,800 Utilities 6,400 Food 6,800 Entertainment b 12,500 Clothing and Personal Care 8,700 Medical Care and Insurance 18,200 Recreation and Vacations 12,000 Transportation c 18,500 Taxes d 68,500 Misc. Purchases 7,500 Savings 7,600 $207,500 Additional & Supplemental Notes & Information a includes principal, interest, taxes, insurance b includes meals outside the home c includes car payment, insurance, gas, maintenance, taxes d includes federal, state, and social security On the following page is a breakdown of expenses as a percentage Housing 19.7% Utilities 3.1 Food 3.3 Entertainment 6.0 Expense breakdown continued Clothing and Personal Care 4.2 Medical Care and Insurance 8.8 Recreation and Vacations 5.8 Transportation 8.9 Taxes 33.0 Miscellaneous 3.6 Savings 3.6 100.0% The stone family has heard about you as an up and coming emerging financial professional. They would like to hear your opinion and thoughts about their financial situation.