Rudabeh, 34, and Donovan, 31, want to buy their first home. Their current combined net income is $62,000 and they have two auto loans totaling $30,000. They have saved approximately $10,000 for the purchase of their home and have total assets worth S56,000, which are mostly savings for retirement. Donovan has aways been cautious about spending large amounts of money, but Rudabeh really likes the idea of owning their own home. They do not have a budget but they do keep track of their expenses, which amounted to $53,000 last year, including taxes. They pay off all credit card bills on a monthly basis and do not have any other debt or loans outstanding. Other than that, they do not spend a great deal of time tracking their finances. a. What financial statements should Rudabeh and Donovan prepare to begin realizing their home purchase goal? What records should they use to compile these statements? b. Calaulate their net worth and income surplus. How does their net worlh compare to that of other individuals younger than 35? culate and interpret their months living expenses covered ratio and their debt ratio d. What other information would be necessary or helpful to develop more complete statements? e. What six-to eight-step process should Rudabeh and Donovan undertake to develop a budget? f. Why might adopting Principle 6: "Waste Not, Want Not - Smart Spending Matters be important to Rudabeh and Donovan, given ther goal of home ownership? Rudabeh, 34, and Donovan, 31, want to buy their first home. Their current combined net income is $62,000 and they have two auto loans totaling $30,000. They have saved approximately $10,000 for the purchase of their home and have total assets worth S56,000, which are mostly savings for retirement. Donovan has aways been cautious about spending large amounts of money, but Rudabeh really likes the idea of owning their own home. They do not have a budget but they do keep track of their expenses, which amounted to $53,000 last year, including taxes. They pay off all credit card bills on a monthly basis and do not have any other debt or loans outstanding. Other than that, they do not spend a great deal of time tracking their finances. a. What financial statements should Rudabeh and Donovan prepare to begin realizing their home purchase goal? What records should they use to compile these statements? b. Calaulate their net worth and income surplus. How does their net worlh compare to that of other individuals younger than 35? culate and interpret their months living expenses covered ratio and their debt ratio d. What other information would be necessary or helpful to develop more complete statements? e. What six-to eight-step process should Rudabeh and Donovan undertake to develop a budget? f. Why might adopting Principle 6: "Waste Not, Want Not - Smart Spending Matters be important to Rudabeh and Donovan, given ther goal of home ownership
