Katelyn Sharpe, age 26, is a few years out of college and is $25,400 in debt. Of this amount, $18,500 is owed on student loans and $6,900 is owed on two credit cards. Sharpe wants to pay off her debt as soon as she can so she can put more into her savings.

Sharpe isnt going to wait to pay off her debt before she puts money into her savings. She participates in a 403(b) plan at work and is currently saving $100 bi-weekly. So far, she has accumulated $3,100 but she is not sure if she chose her investment options wisely. She puts 25% of her deposit in a stock index fund, 25% in aggressive growth, 25% in an actively managed growth fund, and 25% in a money market fund. She admits that she didnt know what to choose so she copied a co-worker.

Sharpe is interested in participating in automatic saving. She'd like to save more for retirement in her 403(b) plan and for emergencies. She is concerned about what would happen in the event of an emergency. After eventually paying off her debt and putting money into her savings, Sharpe wants to purchase a home and a new car within ten years. She understands that there will be some investment risk to achieve a high rate of return.

Like many young adults out of college, Sharpe has a negative net worth. Currently, her debts ($25,400) exceed her assets ($6,450) for a net worth of minus $18,950. Her assets consist of $950 in a checking account, $3,100 in her 403(b), and a $2,400 car.

Sharpe shares an apartment with her friend and pays $400 per month for rent, plus $350 toward her debts. She earns $31,200 annually ($2,600 per month). Last year, Sharpe received a $715 tax refund and spent it by shopping for clothes and furnishing her apartment.

Sharpes employer provides health insurance for her. She participates in an HMO and is satisfied with the level of service. She does not have a renter's insurance policy to cover the potential loss or theft of her personal possessions. Her automobile insurance policy has $150,000 of liability coverage. Sharpe also has employer provided disability insurance to provide income if she was unable to work and contributes $15.32 per month toward the premium. The policy only provides benefits for two years.

Sharpe does not contribute to an IRA and wants to retire in 41 years at age 67. She attended an employee benefits seminar two years ago and began her 403(b) plan as a result. She learned about compound interest at that seminar and plans to save more once she repays her debts.

CURRENT SITUATION

Prepare Statement of Cash Flow (Use format in your book.)

Prepare Statement of Net Worth (Use format in your book.)

Goals Worksheet

Short Term

Medium Term

Long Term

RECOMMENDATIONS

(Remember that you may not be able to meet all goals in the clients timeline. Recommend which goals need to be postponed and why.)

Income and Expenses:

Savings and Investment:

Debt Management:

Risk Management and Insurance:

Retirement Planning: