Ravi and Anjali were seeking financial advice as they have not done any real planning in the past. They have questions but they also know there may be issues that they dont know and would like to be advised regarding any issues you feel appropriate. The following are some details you collected: Ravi was in his 12th year of employment at a Kitchener auto parts company. Anjali had found success as an IT specialist, though at this point she was enjoying maternity leave following the birth of Arvind, the couples first child nine months ago. They did plan to have a second child within two years. After one year of maternity leave the couple planned to have Anjali return to work and pay for daycare. The couple had high incomes: $73,000 for Ravi, and $105,000 for Anjali. Both are 35 yrs old. The couple just got the news that Anjali is pregnant with their second child. Over the years, to cover their bills, the couple have repeatedly dipped into their line of credit (owing $45,000) and carry balances on credit cards ($25,000). They have one car worth $25,000 with 4 years of payments left on a loan that is currently $20,000. They have another truck worth $30,000. They have not made much of an effort to track their spending. In fact, the first time they tried to estimate their annual spending they could not account for a large portion of their income. Entertainment is about $3,600 a year, and they expect it will remain the same for the next few years. Anjali further explained that after the birth of our second child we want to do something special. When the youngest of the two children is five, we want to take them Disney in Florida. We also want to take them both to Europe for two weeks when the youngest is eight. They believe the Disney trip would cost about $15,000 today and the European trip about $25,000 today. The family mortgage was just $145,000. (The couple, who met eight years ago, had both been homeowners and were able to sell their homes, pool their resources and purchased their current home for $375,000). They have spoken with a real estate agent who told them their home would be worth about $525,000. With the new baby and another on the way they want to know if they would qualify to buy a larger home and what the maximum price they would qualify for. They also asked if it matters how much down- payment should they use? The couples investments are mostly in GICs. They want to retire at age 55 with household gross income of $80,000. Ravi currently has $100,000 and Anjali $145,000 in RRSPs. Anjali also has $23,000 in non-registered GICs. Neither has company pensions. They have $6,400 in their bank account. Ravi asked if he and Anjali are allocating their income properly. They currently have no insurance protection in place except for car and home.

The following is an overview of their present financial situation based on rough estimates provided by the couple: EXPENSES Income tax & deductions $43,000 Mortgage 18,400 Property tax 4,800 Car loan payment 4,800 Home insurance 900 Vehicle gas, maintenance & insurance 5,500 Utilities 3,700 Phone, computer, internet, TV 6,000 Home improvement 10,000 Line of credit 500 Credit Cards 3,600 Clothing 3,500 Food 12,000 Pet expenses 900 Charity 600 Child expenses 3,600 Entertainment 3,600 Gifts 2,680 RRSP contribution Ravi 600 per month RRSP contribution Anjali 700 per month Miscellaneous ?? Prepare a brief report answering the clients questions and providing financial planning advice. Your answer must be: typewritten; times new roman 12 point font; double spaced; and have 1 inch margins. Presentation must be professional, with proper headings, grammar and structure. The report must be a minimum of 2 pages and no more than 3 pages, excluding an Exhibits section and title page. If these format guidelines are not followed, 20% will be deducted from the reports grade. If you decide any important details/goals are missing or need further clarification, make estimates and prepare a list of questions/goals you need to clarify (if you have such a list, include in exhibits). Note: any calculations MUST be included in the exhibits section. This case is worth 5% of your final mark.