Question

Jim and Sue are newlyweds and are struggling with a difficult decision. Jim is in between jobs, and Sue is currently commuting 45 minutes to work with no public transportation available. They are trying to decide on whether or not to buy a new 55" television that Jim has wanted for several years. The TV costs $1000. Sue is driving a 1997 Nissan Sentra with 150,000 miles and has recently had over $500 on repairs spent on the car. What should their decision be as to how they should spend or save their money?

a. buy a small TV, at less cost, and save some of the money
b. buy the TV, the vehicle has lasted this long, of course it will last
c. don't buy the TV, and use the money as a down payment towards a new car
d. put the money they would have spent on the TV into savings and wait until the car dies

Answer 1

Jim and Sue should consider their financial stability and the need for a reliable vehicle over the desire for a new TV. The most financially responsible options are to use the money as a down payment towards a new car or to put it into savings, with the former potentially being the more practical choice.

Step-by-step explanation:

Jim and Sue are facing a common financial dilemma: prioritize a luxurious want or address a potential need. When considering Jim's unemployment and the aging car Sue relies on for commuting, creating a budget is essential for making an informed decision. The purchase of a 55" television for $1000 may fulfill a long-standing desire but does not seem prudent given their current financial uncertainties.

Option (a) buy a small TV at less cost and save some money, is a compromise but may still be an unnecessary expense. Option (b) buy the TV with the hope that the vehicle will continue to run, ignores the imminent risk of a breakdown which could then result in more financial strain. Option (c) suggests not purchasing the TV and instead, using the money as a down payment towards a new car, which could be a pragmatic approach since Sue's car is older and has already required costly repairs. Lastly, option (d) put the money into savings and wait until the car dies, is a conservative strategy that prioritizes financial stability over immediate gratification.

Given the described situation, the sensible choice would likely be between option (c) and (d), leaning towards preparing for a more reliable vehicle or securing savings for future emergencies or opportunities. The importance of a well-maintained vehicle for Sue's commute and their current financial situation suggests that option (c) might be the most financially responsible choice.