Current Financial Information

They own their home which they purchased two years ago for $285,000. Their town (Rumford, Rhode Island) tax office has assessed the home value at $200,000. Recently, Mary hired a certified real estate appraiser to prepare a home appraisal and his appraised value was $300,000 (the real estate appraiser based her opinion of value on recent sales of comparable homes in similar neighborhoods and considered current construction costs and land value.) While surfing the web, Mary noticed that their home is listed on Zillow.com with a Zestimate of $350,000. Zestimates are powered by an algorithm. Mary knows that the variables of the valuation system, including analysis of home exterior and interior and traditional real estate facts and figures images, can be inaccurate and may need updating, however Mary logs into Zillow often to see how the system is valuing one of the families largest and most important asset.

The mortgage on the home has a balance of $140,000. A review of the Douglas' financial information, bank statements, and other documents shows the following as of Dec. 31, 2021:

2015 Camry worth about $11,000 (Kelly Blue Book), with a bank loan balance of $3,000

2014 Volvo S60 purchased six months ago for $14,500 is worth about $15,000 (Kelly Blue Book), with a bank loan balance of $10,000

An insurance policy on Jeff's life with a face value of $100,000 with a cash surrender value of $2,500 and no policy loan balance. Mary is the beneficiary listed on Jeff's policy.

An insurance policy on Mary's life with a face value of $10,000 and no cash surrender value. Jeff is the beneficiary listed on Mary's policy.

Credit card balances that total $3,500.

A savings account with a $1,000 balance.

Two mutual funds earmarked for the children's college education. The account for Paul has a balance of $10,000 and Marcy's has $11,000 as a current balance. The fund has averaged an 8% annual rate of return over its life.

100 shares of Apple Inc. (NASDAQ: stock symbol = AAPL), formerly Apple Computer, Inc. You need to value this stock and all the stocks they own based on the Dec. 31, 2021 price per share. You will need to find that on the Internet. The cost basis is $120 per share.

200 shares of AT&T. The cost basis is $41 a share.

50 shares of Microsoft. The cost basis is $158 per share.

75* shares of Alphabet Inc. The cost basis is $1,600 per share. (*There was a 20:1 stock split after they bought the shares and so they now have 1,500 shares). Use 1,500 shares to determine the market value of the Alphabet stock.)

A checking account with a balance of $3,000.

Jeff estimates that their furniture, fixtures etc. in the home are worth about $7,000.

Jeff and Mary have retirement accounts that have a current market value of approximately $200,000.

Mary still has an education loan with an outstanding balance of $15,000. It still has seven years left on it.

A vacation loan of $750 due in 6 months and a home improvement loan of $2,000 due in 2 years (unsecured - not a home equity loan.)

Jeff wants to finish the basement and he has discussed this at length with Mary. He is getting estimates from contractors based on ideas that both he and Mary have to create a play area for the children and a TV/den for the family. Jeff and Mary love to play ping pong and pool and would love to introduce the children to both "sports." He believes that the project will cost about $30,000 and he is interested in tapping into the home equity.

Jeff is also an avid baseball fan and is looking at buying a membership to a local baseball/softball facility for both Paul and Marcy. He figures that since he doesn't have any expensive hobbies, it would be fun to get Paul started as a baseball player and Marcy as a softball player. The membership costs and related costs are as follows: $1,500 per year (covers both kids), equipment $500 per year, and team registration and travel costs will be about another $1,000 to $2,000 a year depending on how serious the kids become. Mary is not sure that this is a priority at this point and wants to explore this possibility in more detail.

11. Pretend you are a personal financial planning professional attempting to devise a comprehensive personal financial plan for Jeff and Mary. What other areas of Jeff and Mary's personal financial situation should be examined and what observations can you make about there current situation? Please mention at least 2 other concepts that they should take a careful look at. Please write a few paragraphs that answer this question. Feel free to pose additional questions that you would like to ask Jeff and Mary as a way of making sure you, as a financial planner, understand their situation. What other areas of the family's personal financial situation should be examined? 11. Pretend you are a personal financial planning professional attempting to devise a comprehensive personal financial plan for Jeff and Mary. What other areas of Jeff and Mary's personal financial situation should be examined and what observations can you make about there current situation? Please mention at least 2 other concepts that they should take a careful look at. Please write a few paragraphs that answer this question. Feel free to pose additional questions that you would like to ask Jeff and Mary as a way of making sure you, as a financial planner, understand their situation. What other areas of the family's personal financial situation should be examined