Carol Baum is an advertising specialist for Success Advertising, Inc. Her annual salary is $\$ 37,500$, of which 20 percent is withheld for federal income taxes, 7 percent for state income taxes, 7.50 percent for FICA taxes, and 5 percent for a tax-sheltered annuity. She estimates that her monthly expenses are approximately as follows:

Rent ..... \$ 475 Food ..... 240 Automobile payment ..... 250 Automobile gasoline and maintenance ..... 120 Utilities ..... 70 Clothing ..... 100 Entertainment ..... 150 Miscellaneous ..... 130 Total monthly expenses ..... $\$ 1,535$

Required: 1. Prepare Carol's monthly budget, assuming that the car payments will continue for about three years.

2. Assume that Carol would like to accumulate savings of $\$ 12,000$ in order to take an extended leave from her job. This will allow her to travel and take courses as a way of generating some fresh ideas she can use in creating new approaches to advertising. How long will it take her to save the needed amount? (Ignore interest earnings, and assume that she has no savings at the present time.)

3. Interpretive Question: If Carol asked you for advice on how she might reduce her expenses, what would you suggest?