The Knope Family Profile Ben Knope and his wife Leslie Knope recently relocated to McKinney, Texas from Pawnee, Michigan. The Knope family is now your typical suburban family. Ben and Leslie met at a public parks department back in Michigan.They have been married for just over 7 years and have one child name April (age 5). Ben (age 37) and Leslie (age 36) are both employed. Ben is an accountant and Leslie is a political consultant.

The Knope's want to make sure that they are tracking their expenses, meeting or exceeding important financial ratios and understand where they currently are in terms of assets, liabilities and net worth.They also have put together a list of questions for you to answer. The Knopes are very visual learners so graphs, charts, tables, and bullet points are important.

The Knope's Financial Information

Note: missing data can be found using TVM calculations. See data in footnotes. Data provided as of 12/31/2019Leslie's Monthly Salary 8,500 Jewelry 30,500 401(k) Account (His) 160,258 Dividend/Interest Income (monthly) 15 401(k) Account (Her) 85,000 Mortgage Payment (PITI) jQuery224040354276949305156_1575338922677?? Boat 16,000 LEXUS 3 Series Payment (monthly) ???? 2018 Prius GT 58,000 Prius Payment (monthly) 888 Furniture 25,500 Affluent Financial Credit Card Payment (monthly) 400 LEXUS 3 Series Loani 55,200 Sears Credit Card Payment (monthly) 600 Brokerage Account (stocks only) 78,000 Satellite Bill (monthly)300 Alarm System (monthly) 50 Affluent Financial CCii Balance 10,200 Life Insurance premium (monthly) 140 Health Insurance premium (monthly) 500 Internet bill (monthly) 100 Auto fuel costs (monthly) 370 Cellphone expense (monthly) 145 Ben 's Monthly Salary 8,000 Water and Trash (monthly) 110

Sears CCiii 12,800 Entertainment (monthly) 500 Auto Insurance Premiums (monthly) 130 Child Care (monthly) 1,000 Home Repairs (monthly) 200 LEXUS Automobile (estimated) 55,100 Groceries (monthly) 500 Checking Account (Joint) 5,000 Bank CD - 6-month maturity (Joint) 4,000 Dining Out (monthly) 700 Hobbies (monthly) 300 Savings Account 10,250 Roth IRA (His) 22,250 Dry Cleaning (monthly) 120 Primary Mortgage Balanceiv 325,000 Landscaping (monthly) 300 Maid (monthly) 500 Parking and Tolls (monthly) 50 Dividend/ Interest Reinvestment (monthly) 15 Student Loan Payment (monthly) 773 Ben 's 401(k) contributions (monthly) 300 Student Loan Balance Hv ????? CD (8 month maturity) $3,500 Leslie's 401(k) contributions (monthly) 250 Cash Savings Contribution (monthly) 300 Prius Auto Loan Balancevi 58,000 Ben 's Roth Contributions (monthly) 500 Income Tax Withheld (monthly) $1,500 FICA taxes paid (monthly) ???? Primary Home (VALUE) 450,000

Questions

2. Ben and Leslie feel like they will live in their home forever. They are considering refinancing their home. Ben and Leslie were told by a mortgage broker that they would qualify for a 3.85% rate on a 15 year or 4.25% on a 30-year mortgage. Provide an analysis showing the pros and cons of each decision. Remember to look at financial ratios. Remember that Ben and Leslie are very visual learners. Assume that refinance costs are $7,000 and will be rolled into the new loan.

3. The Knopes would like to know your recommendations on an approach to get out of debt. They have told you that all options are on the table in terms of cutting expenses, but they are not sure how to put together a payoff plan or which debt to attack first. Please use powerpay.org and provide some recommendations for paying off all of their debts. Please provide an amortization sheet of the payoff plan. Please explain your strategy. Furthermore, they want a recommendation on how to use the brokerage account funds. They are thinking either using it for an emergency fund, reducing certain debts. There is no tax liability upon the sale of the stocks in the brokerage account.

4. Ben and Leslie would like to send their child to Texas Tech University. They have heard about a 529 plan. They want to know more about the plan and how much they should save for April's 4 years of education. April will enter college at 18 years old. You will assume an 8.5% rate of return on investments before April enters college and 5% rate of return during the 4-year college experience. You will need to look up the cost for tuition for TTU at their website. College inflation will run 5% per year. If this is too much for their budget then recommend a different strategy. (Hint: community college first then transfer, student loans, etc)