Part 1 Family friend, Todd Church, has asked you to help him gain control of his personal finances. Single and 35 years old, Todd is employed as a salesperson for a technology company here in Winnipeg, Manitoba. His job allows him to mostly work from home. His annual salary is $93 600. He has payroll deductions for El and CPP contributions, and income taxes. Todd also recently moved from his cramped one-bedroom apartment with rent of $1,250 per month to a purchased two-bedroom condominium valued at $275,000 and a current mortgage balance of $210,000, at 4% interest, with blended mortgage payments of $1,950. Utilities and property taxes are included in the monthly condo fees. Todd needed the extra space so he could have a home office space for his work on-line. The condo is in an executive community with access to two golf courses, a lake, and an activity/fitness centre. Todd currently owns a car valued at $22,000 with an outstanding car loan balance of $18,000 (the car loan has a low dealer incentive interest rate at 1.5% which means there is about 21 months remaining on the car loan). The car will have a residual value of $9,000 once the loan is paid off and will likely cost an additional $300 per month to maintain by the time the car loan is paid off. Page 112 After having reviewed his other monthly expenses since the move, you have uncovered the following: ITEM $ AMOUNT/ MTH 725 Property Insurance and condo fees Car payment (PI) 775 Smartphone, Internet, and Netflix 355 Food (consumed at home) 550 Car Expenses (gas, insurance, maintenance) 325 Credit Card payment 700 $ A Todd is surprised by how much money he spends monthly on dothes ($250) and entertainment ($350). He uses his credit card for these purchases (the credit card balance is $6,500 and climbing) but has little trouble making the required minimum monthly payment. He would, however, like to gain control over his finances and see the balance on all his debts go down, and eventually pay his credit card off completely. Todd's other goal is to save $450 a month so that he can retire 20 years from now at 55. He would like to start saving in five years, so he can pay off his credit card and car loan first. Todd does not think the delay will affect the final amount of retirement savings he will accumulate. Todd currently has about $1,000 in his chequing account and $500 in his savings account. He has furniture valued at $3,950 and owns 600 shares of an internet stock, currently valued at $1,800, which Todd believes has the potential to make him rich. Part 1: Questions and Answers 1) What is Todd's financial planning life stage? (1 mark) 2) With respect to his current financial position, what are some of the things that Todd should be considering? (2 marks) 3) What are Todd's three major goals? (1 mark) 4) Evaluate Todd's goals in Question 3 with respect to the S.M.A.R.T. guidelines. How could each of the goals be more "Specific". (3 marks) Part 1 Family friend, Todd Church, has asked you to help him gain control of his personal finances. Single and 35 years old, Todd is employed as a salesperson for a technology company here in Winnipeg, Manitoba. His job allows him to mostly work from home. His annual salary is $93 600. He has payroll deductions for El and CPP contributions, and income taxes. Todd also recently moved from his cramped one-bedroom apartment with rent of $1,250 per month to a purchased two-bedroom condominium valued at $275,000 and a current mortgage balance of $210,000, at 4% interest, with blended mortgage payments of $1,950. Utilities and property taxes are included in the monthly condo fees. Todd needed the extra space so he could have a home office space for his work on-line. The condo is in an executive community with access to two golf courses, a lake, and an activity/fitness centre. Todd currently owns a car valued at $22,000 with an outstanding car loan balance of $18,000 (the car loan has a low dealer incentive interest rate at 1.5% which means there is about 21 months remaining on the car loan). The car will have a residual value of $9,000 once the loan is paid off and will likely cost an additional $300 per month to maintain by the time the car loan is paid off. Page 112 After having reviewed his other monthly expenses since the move, you have uncovered the following: ITEM $ AMOUNT/ MTH 725 Property Insurance and condo fees Car payment (PI) 775 Smartphone, Internet, and Netflix 355 Food (consumed at home) 550 Car Expenses (gas, insurance, maintenance) 325 Credit Card payment 700 $ A Todd is surprised by how much money he spends monthly on dothes ($250) and entertainment ($350). He uses his credit card for these purchases (the credit card balance is $6,500 and climbing) but has little trouble making the required minimum monthly payment. He would, however, like to gain control over his finances and see the balance on all his debts go down, and eventually pay his credit card off completely. Todd's other goal is to save $450 a month so that he can retire 20 years from now at 55. He would like to start saving in five years, so he can pay off his credit card and car loan first. Todd does not think the delay will affect the final amount of retirement savings he will accumulate. Todd currently has about $1,000 in his chequing account and $500 in his savings account. He has furniture valued at $3,950 and owns 600 shares of an internet stock, currently valued at $1,800, which Todd believes has the potential to make him rich. Part 1: Questions and Answers 1) What is Todd's financial planning life stage? (1 mark) 2) With respect to his current financial position, what are some of the things that Todd should be considering? (2 marks) 3) What are Todd's three major goals? (1 mark) 4) Evaluate Todd's goals in Question 3 with respect to the S.M.A.R.T. guidelines. How could each of the goals be more "Specific