Left college with debt on four credit cards totaling $7,000 and now has $15,000 in debt at an interest rate of 21.9%. Making minimum payment of $300/month. Bill said he was prioritizing this bill since it would have the largest impact on his credit score. He would like to pay off his credit card within 5 years so he can start saving for other things.

Incurred student debt of $35,000 (which is about average for recent college graduates), with a 4.45% interest rate for the 10 year term. He has missed his last three payments. Bill had heard that there was a government plan to forgive student loans after 10 years so he wasnt too concerned about missing those payments. Besides, since these were federal loans, they wouldnt affect his credit score.

Purchased a new mini-Cooper as a present to himself after graduating from college and has a $20,000 loan outstanding at 7.99% interest over a 5 year term. He hasnt made a payment in three months. Bill had resigned himself to the fact that he could always just sell the car and all would be good.

Answer this: 3. Complete the table below, listing each of Bills debts and use this loan calculator to

calculate his monthly payments. Debt description Amount Term Interest Rate Monthly payment

TOTAL Monthly Payments ________________

4. What misconceptions should Juanita correct during her meeting with Bill?

5. Based on Juanitas recommendations in #2, will Bill be able to cover his TOTAL. monthly debt payments (#3)?

6. What other next steps/actions does Bill need to take to address these three items?

7. What inaccuracies should Juanita correct in Bills comments about debt consolidation?

8. Help Bill by identifying, in your own words, at least three differences between credit

counselors and debt consolidation firms.

9. Which service do you think he should choose? Why?

10. What should Juanita tell Bill that he is missing?

11. Using all of the information provided in this case, as well as your previous knowledge, develop a plan for Bill to tackle his debt demons. Be sure that your plan is very specific and includes the following:

• Recommended changes to his budget and how they will impact his ability to pay down his debt (i.e. how much more money will you free up to make his monthly payments)

• Total monthly payments currently required to service his debt

• Discussion of pros/cons of the three alternatives (a chart would be useful)

• Reason that a particular course of action was selected