You are a seasoned Personal Financial Advisor and you have been recently employed to advise a young couple seeking to secure their future wealth. Michael and Tipper Luke are a newly wedded couple who are also recent Ivy League graduates. Both Michael and Tipper were high performers academically in high school and each secured acceptance and a partial scholarship to the same Ivy League institution. Both Michael and Tipper borrowed a collective $400,000 as their portion of tuition after the scholarship funds were paid over their four-year college careers. Michael owed $200,000 and Tipper owed $200,000. They were both seeking jobs right out of college but unfortunately, only Tipper was able to secure a job immediately. Tipper was a computer science major with an emphasis in forensic science. She was fortunate to have received a job offer from a private company that provided forensic services to the federal government. The entry salary was $100,000 but since Tipper interned with her hiring company every summer they give her credit for her experience and started her at $127,000. The deal came with an anticipated annual pay increase of 3% per year for the next five years. They saw her as a rising star and wanted to secure her talent for a long time to come. Michael was not as fortunate on his career search. He majored in History and was having a difficult time securing a teaching position at a college and resorted to teaching in the local high school. His starting salary was $54,700. He quickly learned that he needed to secure a Ph.D. to teach at a college level. Tipper was stylish and required expensive clothing, she even had a few Birkin Bags. In addition to the $200,000, she had in debt she also had $50,000 in credit card debt. Her minimum payment of all her cards was $1,000.00 per month. She also had a personal loan of $10,000 that she borrowed to plan and finance her over-the-top, but on a budget wedding. Her loan was a 0% loan for a term of 36 months and a $277.77 monthly payment. Her student loan was deferred but would command a $1,666 monthly payment for 10 years upon repayment in 6 months. Tipper visited a Lexus dealership just days before consulting you and is planning to return to the dealership at the end of the week. She has excellent credit (780 credit scores) and expects she could secure the best interest rate. The car she was interested in would carry a $800 monthly note for a 60- month term. She was told she could secure a 1% interest rate. Tippers company offered no pension plan but did offer a 401K plan 6 percent contribution and a 6% match. Tipper was concerned that she couldnt afford to contribute to her 401K plan because she wanted to purchase a home. After all she was in her early 20s and had plenty of time to think about retirement. Therefore, retirement is not her priority. Michael works for a school district and receives a teachers retirement. He pays 7% of his income into the retirement program and the school pays an equal amount to the retirement plan. Michael has few bills other than his student loans as he still drives the Honda he starts college with worth $4000 with no balance. It was paid for as his parents bought it for him as a high school graduation gift. Like Tipper, Michaels loan payment will also be $1666 monthly. They currently live in an uptown apartment and the market rent is $3800. They average $500 a month on their utilities and they eat out to the tune of $1000 per month. They have minimum whole life insurance that would only pay for the funeral expenses.

Michael is a simple guy that does not require much in material things but also realizes that he cant provide many of the luxuries that his new bride desire. He is conscious of his spending since hes planning to obtain his Ph.D. in order to make more money. He knows he may have to work less to invest more time in his studies so hes careful to keep his expenses low. Like a responsible couple, they direct deposit their pay into one account and Tipper handles the finances. They seek your financial opinion on how they should handle their fund in order to have 20% as a down payment on a home in 24 months as well as planning for a baby in the next two years. The daycare that Tipper has selected for their future child is attended by the elite of the town. The monthly fee is $1500. Your job is to evaluate the Lukes financial scenario and advise them on what they need to do to become financially healthy and what steps to take to avoid financial challenges. Your task is to help them create a plan that would help them satisfy their goals while helping them to avoid loss and invest in their future. You will also advise them on a plan to allow Michael to go back to school for 2 years to obtain his Ph.d. You will give a detailed financial statement outlining their income, the taxable bracket in which they pay taxes, and avenues to tax deferred. You will also suggest investing and savings and plans and pathways to create access to money in case of an emergency. You will outline their debts and assists and determine whether they are solvent or not. You must itemize their current debt so that they may have a visual of their actual spending. You will make a recommendation on their short and long-term debt and make a plan that saves them on time and interest. Also, advise them on whether its best to have a fixed or variable loan on the home they seek to purchase money for the home. Also, provide them with monthly living expenses covered ratios and make recommendations for an emergency fund. Tell them their debt ratio and explain to them how you obtained it. Explain to them how they use their money and what an APR is when securing financing. Describe to them why they should put their funds in an account that pays compound interest and show them how their money would grow. Explain to them how an amortized loan work. Include in the statement their net income and calculate how much money they actually bring home each month. Advise on how to avoid taxing with tax deferments. Explain to them the purpose of social security taxes and medicare taxes. Explain to them Adjustable Gross Income. Explain the difference between CD and money market accounts. Help them understand credit and how revolving credit can help or hurt them. Describe credit card grace periods and how they can use them to their advantage. Explain cash advance fees. Give them advise on their student loans and what need they do to ease the burden of repayment. Advise them on retirement and at the same time planning for their future childs college education. Further advise Tipper on whether it is finically prudent to purchase the vehicle. Provide details as to whey she should or shouldnt purchase the car. Speak to insurance matters both life, health and property losses. Advise as to the type of insurance needed if they had a home and it flooded and a car was in the garage when it flooded. Figure in how Tippers 3% anticipated raise will work in this equation.

Create a financial plan that satisfies all of the issues stated above. Itemize all of the assets, and debts and consider their goals when you make the final suggestions for their financial wealth. Give an overall summary opinion of their financial health. Your financial statement needs to be detailed and answer all the questions correctly that were posed in this scenario. Use the context from all the chapters assigned. Your style can be any financial style that your research with preference given to ledger styles. Please use complete your assignment in 500 words or more. You are free to use any writing format you are familiar with including MLA, APA, or AMA. If you have any questions please let me know. Best of luck in advising the Lukes.