a)
INCOME:
- Disposable: $3,600
- Interest on Deposits: $0
- Dividends Payments: $0
Total Income~ $3,600
EXPENSES:
- Mortgage payment: $1,410
-Groceries: $288
-Car Loan Payment: $12,000
-Car Maintenance: $280
-Recreation Expense: $480
-Utilities Expense: $120
TOTAL EXPENSES~ $14,578
NET CASH FLOW~ -$10,978
PERSONAL BALANCE SHEET:
ASSETS
(Liquid Assets)
-Cash: $0
-Checking Account: $600
-Savings Account: $0
TOTAL LIQUID ASSETS~ $600
HOUSEHOLD ASSETS
-Home: $350,000
-Car: $18,000
-Clothes Owned: $540
-Furniture: $14,000
TOTAL HOUSEHOLD ASSETS~ $382,540
TOTAL ASSETS~ $383,140
LIABILITIES
(Current Liabilities)
-Credit Card Balance: $11,160
TOTAL CURRENT LIABILITIES~ $11,169
(Long-Term Liabilities)
-Mortgage: $217,200
-Car Loan: $12,000
TOTAL LONG-TERM LIABILITIES~ $218,400
TOTAL LIABILITIES~ $229,569
b)
Savings Rate = Savings during the period/ Disposable income during the period= 600/ 3,600 = 16.67%
Liquidity Ratio = Liquid Assets/ Monthly Living Expenses = Liquidity Ratio = 600/ 14,578 = 4.12%
Debt-to-asset ratio = Total Liabilities/ Total Assets = 229,569/ 383,140 = 59.92%
c)
1- Save cash in the bank not used for expenditures
2) Lower expenses (i.e. recreation, grocery, etc)
3) Sell assets that aren’t essential
4) Find a better paying job OR work more jobs