Pam Washburn earns $19,080 a year as a file clerk. She also earns $100 a month selling homemade cakes. Her monthly rent is $420, monthly groceries run $200, and monthly utility bills are about $275. Auto and renters insurance runs about $600 a year. Health insurance costs $110 a month. Her car payment is $315 per month. Annual medical expenses are $900, and she spends $150 a month on entertainment and recreation. Miscellaneous personal expenses run $30 a month.

1. Develop a monthly budget (income expenses) for Pam and determine her surplus or deficit.

2. Her landlord has told Pam that the rent will be raised $50 per month beginning next month. Can Pam afford the same apartment?

3. What advice would you give Pam about her finances?