Joan and Sam have been married for several years. Joan is expecting in 6 months. Together they decided they ought to seek out professional investment advice. They currently have $56,500 in Sam’s 401(k) plan and have paid off all of their credit card debts and have one student loan at 6.70%, with a balance of $4,500 and a monthly payment of $179.00. They currently rent a condo and would like to find a home for their (soon to be) new family.

Ages 29 and 27 respectively.

Sam works for a national info technology company and participates in his company 401(k) plan up to the company's 3% match.

Sam and Joan are covered by Sam’s company health insurance plan with $50 office visits, $25 Rx, $100 hospital visits, and total family out-of-pocket $4,000 per year.

Joan has a home-based business and last year sales exceeded $100,000 and her net income was $41,500.

Sam’s W2 reported $107,500 gross wages and $3,225 401(k) contribution.
Sam and Joan describe themselves and college educated, middle class, long-term investors.

Use 2020 tax rates

Current monthly cash flow Income: Expenses:

Sven Net pay check $5,950.00 Rent $1,400

Joan Average $3,000.00 Util $350

Phone/Cable Internet $200

Food/Ent. $1,000

Clothing/Other $250

Car Loan(2) $750

Student Loan $179.00

Auto Ins. $250

Checking account balance $36,785.00

Car 1 2013 Ford F150 fair market value $18,500 current loan balance $8,250 $450.00 (7.5%)

Car 2 2012 Toyota Rav4 fair market value $11,500 current loan balance $5,200 $300.00 (6%)

Assignment:

Please provide a detailed financial plan recommendation with schedules if necessary, for Sam and Joan. Additionally, what are their marginal tax bracket and their average tax rate? Can you provide tax savings and if so, what would their pro forma marginal tax bracket and average tax be? Provide budgets, forecasts, net worth statements, and asset allocations as you see fit.