please help me in my project

This report is generated under the following assumptions: 1) Eric and Sarah, you both remain employed at a similar rate of compensation after taxes. 2) Sarah retums to work after having a second child. 3) You will receive a gift of $100,000 from Eric's parents to purchase a new home. 4) Both of you have a sufficient credit score, are not over limit on your credit cards and have not missed payments on bills or debt obligations in order to meet the requirements to purchase a home. 5) That base interest rates on your debts do not increase affecting repayment on loans such as your credit cards and student loans. 6) Sarah is able to work throughout most, if not all of her pregnancy, so as to keep a dual income status for the period of this plan. 7) That Eric's parents are able to get permanent residency and will be able to help with the childcare of the children. Short-term Goals (Present day to 2 years away) 1) Purchase a home (High Priority) This is the big one, while there is a strong desire to have your home purchased in the next year it may be useful to wait for the longer possible time frame of 2 years. This would still be before your second child is planned to be born while paying off credit cards and other debts, in doing so lowering the TDS ratio would also occur. 2) Create an emergency fund (High Priority) While you had not directly talked about this, this is a key part of making sure that you do not have to accrue any additional debt which could impact your other goals. The objective at this point in the next year to two is creating an amount that allows you to cover all expenses for a couple of months. 3) Get rid of credit card debt (Medium Priority) This can be achieved in the short term, but you have expressed interest in purchasing a home and having to create an emergency fund could affect how long it takes you to full pay these off. Though with the proposed budget this can be completed in about two years' time. Medium-term Goals (Two to 10 years away) 1) Pay off student loans (Medium Priority) In our information gathering, you had expressed the desire for becoming financially secure and becoming debt free. This is doable within a ten year time frame, and these two loans would be the last to be paid off, excluding a mortgage that you may have. 2) Purchase new vehicle without using a loan (Low Priority) 2) Retire at 65 and travel (Medium Priority) You already have an estimated total for what you would need to live off of when you retire, and would like to achieve this by the age of 65 . You had expressed that you wouldn't dip into your CPP contributions until the age of 65 , but this also seems to indicate that you would want to have financial security and would be willing to delay retirement by a year or two if it means you have enough saved. 3) Kids will have tuition for 4 years of undergrad paid for (Low Priority) You have seen how much debt that you have with your own student loans and are wanting to make sure that you are able to help your kids be able to have the same opportunities We understand you would want to be purchasing a new vehicle without having to use any type of loan. Based on the plan that we have laid out, the replacement for your Dodge Caravan would have to be partially paid for by a loan but would allow for the replacement vehicle to be paid in full after 35 months. There is an option to not having a loan for the replacement vehicle. This is due to the Caravan currently working and if it does not reach the kilometer threshold could still allow for extra months savings to not have to get the new loan. This goal is also of low priority due to you both having currently working and reliable vehicles. Long-term Goals ( 10+ years) 1) Pay off Mortgage (High Priority) The assessment of having this paid off would then also allow for you to be able to afford extra expenses but to also be able to live debt free. If this is not done it could impact the other goals within your retirement years, which is why this is assigned a higher priority. after they graduate. This is rated low priority as you have only expressed a like to be able to do this rather than a strong desire. Evaluations of Current Finamcial Situation Your primary sources of income are your respective places of employment, with Eric's income being larger than that of your wife Sarah's. Both work in areas that tend to be relatively Eric's Income/Month w Sarah's Income/Month and RRSP. The largest area in your current Canada Child Benefit liabilities is the amount owed in student loans. While you do have a positive net worth, there is still one main is sue with your current financial situation. The lack of liquid assets at less than 5% of your net worth with no emergency funds set aside. This could be detrimental to your long:- There are the 5 Cs of credit Character/Credit Gross Debt Service(GDS) history; Capacity; Capital; Collateral; and Conditions. As part of this report, we are providing an assessment in relationship to you. Character. You both have a record of credit in your past. You are currently paying more than the Total Debt Service(TDS) minimum on your credit cards and are looking to pay those off, indicating your desire and importance of ma intaining good credit. This would be considered good in terms of your loaning character. Capacity: Your capacity is based on your GDS and IDS of which you seore 1597% and 30.71% respectively, using our proposed budget . This is good. You don t want your GDS to be higher than 32% as this means you are spending an excess on wour housing costs. Mhis means that the home you are living in is not taxing your financiall situation. Fou allso want to hame al TDS of less than 40% meaning that you are not spendino more than 40% of yourn income on housing and debt repayment. Yow are in a sireat position at on ily 30 . 106 . This also bodes well for you being able to afford a mortgage. Capital: You are in a situation in which you have a positive net worth. This is good, the issue is that most of this is not liquid and can create issues for cash flow if the amount of credit used becomes larger. Collateral: You have several high value possessions currently that are worth nearly the same as your student loan debts, should they be needed. This is good but not great. Conditions: Enic you had recently been part of the faculty that had been on strike, it is unlikely that this would happen again right away. Sarah you are the one that is a bit harder to get a sense of how things would go. There are multiple different avenues that could affect your income, if you would go on mat leave or when you may find yourself going back to school. Depending on what happens would affect debt repayment, this would leave this section as an ok. Overall, the 5C s would indicate a good credit situation should you wish to pursue taking out a mortgage or a different type of loan. Financial Plan and Debt Management You currently have multiple different sources of debt, ranging from high interest credit cards, low interest car loans, and larger principal amount owing on your student loans. The first way to help reduce your debt owing is to make sure that your budget has been optimized in order to provide a level of emergency funds, that you currently do not have, and to optimize the way in which you are paying off your debt. The first step would be to address your credit cards, these have the highest interest, it would also free up funds to put towards other goals and debts once these are paid off. The proposed budget will allow for those to be paid off two years. After the credit cards are paid off dropping down to only the RBC card, this card can be used for bills and then be paid off immediately which will keep from accruing the high interest, but also get the 4% in rewards. If the car payment is paid at the current rate, you will have it paid off in 18 months, leaving 18 months before you are looking at purchasing a new one for Sarah. At a rate of 2.5% interest for savings in that second 18 -month period, you two would have a value of $9,894.05, plus the $2,000 trade in leaving you to finance $6,105.95. The other option would be to delay the purchase for 15 months in which case it would take about 33 months total from the time the Rav4 is paid off to when you would have enough money to purchase the replacement vehicle debt free. Regardless of which option is selected for Sarah's vehicle replacement this would not affect the ability in 10 years' time for you to purchase a replacement vehicle for Eric debt free. Sarah's student loan can be paid off in approximately five years based on the budget. If Eric's payment is increased by $100 and then after the 64 months needed to pay off Sarah's loan, Eric will still owe $29,993.10. This would then allow for $920 /month to go toward Eric's loan requiring only an additiona 136 months to pay off. Meaning the loans can be paid out after less than 9 years, leaving your potential future house payment as the only source of debt. With the cashflow showing that there is a positive amount left over at the end of the month, the issue likely exists with there being an expense that is not accounted for. This is likely not a shortfall of your spending at this point but rather that this is the first time a financial plan has been drawn up and not all spending has been captured. Appendix B: Net Worth IIABILIIIIDS CURRENTHAWIIUASS FIDO Shaw Cable Twisted Steel Auto Insurance RBC Credit Card Balance CIBC Credit Card Balance TD Credit Card Balance $3,600.00 13 GDS: Gross Debt Service This is the ratio of your housing costs and heating in relationship to your monthly gross income TDS: Total Debt Service This is the ratio of your house costs heating costs, and other debts in relationship to your The plan should be organized using the following sections: 1) Title Page a) Group Members names (alphabetical by last). Instructor name, title of the project, due dat 2) Table of Contents (3) Financial Goals a) Identify and provide commentary. -b) Goals should be broken into: i) Short term goals ii) Intermediate term Goals iii) Long-term Goals c) Goals should be assigned priority (high/medium/low) -4) Evaluate the Current Situation a) Current Cash Flow, Net Worth Statement b) Commentary of the current situation financial and non-financial (5) Project Assumptions 76) Financial Plan (a) Budget and Debt Management b) Risk Management (Insurance) c) Investment d) Retirement e) Estate 7) Implementation of Financial Plan a) List of action items, who will do them and by when b) Success Criteria i) How will you measure and gauge the plan 8) Revaluate and Revise as necessary a) Provide recommendations on the revaluation process. 9) Appendices a) Current CF, recommended budget b) Current NW This report is generated under the following assumptions: 1) Eric and Sarah, you both remain employed at a similar rate of compensation after taxes. 2) Sarah retums to work after having a second child. 3) You will receive a gift of $100,000 from Eric's parents to purchase a new home. 4) Both of you have a sufficient credit score, are not over limit on your credit cards and have not missed payments on bills or debt obligations in order to meet the requirements to purchase a home. 5) That base interest rates on your debts do not increase affecting repayment on loans such as your credit cards and student loans. 6) Sarah is able to work throughout most, if not all of her pregnancy, so as to keep a dual income status for the period of this plan. 7) That Eric's parents are able to get permanent residency and will be able to help with the childcare of the children. Short-term Goals (Present day to 2 years away) 1) Purchase a home (High Priority) This is the big one, while there is a strong desire to have your home purchased in the next year it may be useful to wait for the longer possible time frame of 2 years. This would still be before your second child is planned to be born while paying off credit cards and other debts, in doing so lowering the TDS ratio would also occur. 2) Create an emergency fund (High Priority) While you had not directly talked about this, this is a key part of making sure that you do not have to accrue any additional debt which could impact your other goals. The objective at this point in the next year to two is creating an amount that allows you to cover all expenses for a couple of months. 3) Get rid of credit card debt (Medium Priority) This can be achieved in the short term, but you have expressed interest in purchasing a home and having to create an emergency fund could affect how long it takes you to full pay these off. Though with the proposed budget this can be completed in about two years' time. Medium-term Goals (Two to 10 years away) 1) Pay off student loans (Medium Priority) In our information gathering, you had expressed the desire for becoming financially secure and becoming debt free. This is doable within a ten year time frame, and these two loans would be the last to be paid off, excluding a mortgage that you may have. 2) Purchase new vehicle without using a loan (Low Priority) 2) Retire at 65 and travel (Medium Priority) You already have an estimated total for what you would need to live off of when you retire, and would like to achieve this by the age of 65 . You had expressed that you wouldn't dip into your CPP contributions until the age of 65 , but this also seems to indicate that you would want to have financial security and would be willing to delay retirement by a year or two if it means you have enough saved. 3) Kids will have tuition for 4 years of undergrad paid for (Low Priority) You have seen how much debt that you have with your own student loans and are wanting to make sure that you are able to help your kids be able to have the same opportunities We understand you would want to be purchasing a new vehicle without having to use any type of loan. Based on the plan that we have laid out, the replacement for your Dodge Caravan would have to be partially paid for by a loan but would allow for the replacement vehicle to be paid in full after 35 months. There is an option to not having a loan for the replacement vehicle. This is due to the Caravan currently working and if it does not reach the kilometer threshold could still allow for extra months savings to not have to get the new loan. This goal is also of low priority due to you both having currently working and reliable vehicles. Long-term Goals ( 10+ years) 1) Pay off Mortgage (High Priority) The assessment of having this paid off would then also allow for you to be able to afford extra expenses but to also be able to live debt free. If this is not done it could impact the other goals within your retirement years, which is why this is assigned a higher priority. after they graduate. This is rated low priority as you have only expressed a like to be able to do this rather than a strong desire. Evaluations of Current Finamcial Situation Your primary sources of income are your respective places of employment, with Eric's income being larger than that of your wife Sarah's. Both work in areas that tend to be relatively Eric's Income/Month w Sarah's Income/Month and RRSP. The largest area in your current Canada Child Benefit liabilities is the amount owed in student loans. While you do have a positive net worth, there is still one main is sue with your current financial situation. The lack of liquid assets at less than 5% of your net worth with no emergency funds set aside. This could be detrimental to your long:- There are the 5 Cs of credit Character/Credit Gross Debt Service(GDS) history; Capacity; Capital; Collateral; and Conditions. As part of this report, we are providing an assessment in relationship to you. Character. You both have a record of credit in your past. You are currently paying more than the Total Debt Service(TDS) minimum on your credit cards and are looking to pay those off, indicating your desire and importance of ma intaining good credit. This would be considered good in terms of your loaning character. Capacity: Your capacity is based on your GDS and IDS of which you seore 1597% and 30.71% respectively, using our proposed budget . This is good. You don t want your GDS to be higher than 32% as this means you are spending an excess on wour housing costs. Mhis means that the home you are living in is not taxing your financiall situation. Fou allso want to hame al TDS of less than 40% meaning that you are not spendino more than 40% of yourn income on housing and debt repayment. Yow are in a sireat position at on ily 30 . 106 . This also bodes well for you being able to afford a mortgage. Capital: You are in a situation in which you have a positive net worth. This is good, the issue is that most of this is not liquid and can create issues for cash flow if the amount of credit used becomes larger. Collateral: You have several high value possessions currently that are worth nearly the same as your student loan debts, should they be needed. This is good but not great. Conditions: Enic you had recently been part of the faculty that had been on strike, it is unlikely that this would happen again right away. Sarah you are the one that is a bit harder to get a sense of how things would go. There are multiple different avenues that could affect your income, if you would go on mat leave or when you may find yourself going back to school. Depending on what happens would affect debt repayment, this would leave this section as an ok. Overall, the 5C s would indicate a good credit situation should you wish to pursue taking out a mortgage or a different type of loan. Financial Plan and Debt Management You currently have multiple different sources of debt, ranging from high interest credit cards, low interest car loans, and larger principal amount owing on your student loans. The first way to help reduce your debt owing is to make sure that your budget has been optimized in order to provide a level of emergency funds, that you currently do not have, and to optimize the way in which you are paying off your debt. The first step would be to address your credit cards, these have the highest interest, it would also free up funds to put towards other goals and debts once these are paid off. The proposed budget will allow for those to be paid off two years. After the credit cards are paid off dropping down to only the RBC card, this card can be used for bills and then be paid off immediately which will keep from accruing the high interest, but also get the 4% in rewards. If the car payment is paid at the current rate, you will have it paid off in 18 months, leaving 18 months before you are looking at purchasing a new one for Sarah. At a rate of 2.5% interest for savings in that second 18 -month period, you two would have a value of $9,894.05, plus the $2,000 trade in leaving you to finance $6,105.95. The other option would be to delay the purchase for 15 months in which case it would take about 33 months total from the time the Rav4 is paid off to when you would have enough money to purchase the replacement vehicle debt free. Regardless of which option is selected for Sarah's vehicle replacement this would not affect the ability in 10 years' time for you to purchase a replacement vehicle for Eric debt free. Sarah's student loan can be paid off in approximately five years based on the budget. If Eric's payment is increased by $100 and then after the 64 months needed to pay off Sarah's loan, Eric will still owe $29,993.10. This would then allow for $920 /month to go toward Eric's loan requiring only an additiona 136 months to pay off. Meaning the loans can be paid out after less than 9 years, leaving your potential future house payment as the only source of debt. With the cashflow showing that there is a positive amount left over at the end of the month, the issue likely exists with there being an expense that is not accounted for. This is likely not a shortfall of your spending at this point but rather that this is the first time a financial plan has been drawn up and not all spending has been captured. Appendix B: Net Worth IIABILIIIIDS CURRENTHAWIIUASS FIDO Shaw Cable Twisted Steel Auto Insurance RBC Credit Card Balance CIBC Credit Card Balance TD Credit Card Balance $3,600.00 13 GDS: Gross Debt Service This is the ratio of your housing costs and heating in relationship to your monthly gross income TDS: Total Debt Service This is the ratio of your house costs heating costs, and other debts in relationship to your The plan should be organized using the following sections: 1) Title Page a) Group Members names (alphabetical by last). Instructor name, title of the project, due dat 2) Table of Contents (3) Financial Goals a) Identify and provide commentary. -b) Goals should be broken into: i) Short term goals ii) Intermediate term Goals iii) Long-term Goals c) Goals should be assigned priority (high/medium/low) -4) Evaluate the Current Situation a) Current Cash Flow, Net Worth Statement b) Commentary of the current situation financial and non-financial (5) Project Assumptions 76) Financial Plan (a) Budget and Debt Management b) Risk Management (Insurance) c) Investment d) Retirement e) Estate 7) Implementation of Financial Plan a) List of action items, who will do them and by when b) Success Criteria i) How will you measure and gauge the plan 8) Revaluate and Revise as necessary a) Provide recommendations on the revaluation process. 9) Appendices a) Current CF, recommended budget b) Current NW