Personal Financial Planning 2021

Betty and Raul have been married for several years. Betty is expecting in 6 months and together they decided they ought to seek out professional investment advice. They currently have $137,500 in Rauls 401(k) plan, $37,500 in a local bank savings account, have paid off all of their credit card debts and have one student loan at 6.65%. (balance of $4,500 / 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 29 respectively.

Raul works for a national business services company and participates in his company 401(k) plan up to the company 3% match.

Raul and Betty are covered by Rauls company health insurance plan with $50 office visits, $25 Rx, $100 hospital visits and total family out of pocket $1,000 per year.

Betty has a home-based business and last year sales exceeded $150,000 and her net income was $51,000.

Rauls W2 reported $97,500 gross wages and $2,925 401(k) contribution.

Raul and Betty describe themselves and college educated, middle class, long-term investors.

Use 2020 tax rates

Current monthly cash flow Income: Expenses:

Sven net pay check $6,000.00 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 Pmt $450.00 (7.5%)

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

Assignment:

Please provide a detailed financial plan recommendation with schedules if necessary, for Raul and Betty. Additionally, what is their marginal tax bracket and their average tax rate(using 2020 rate rates). 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.