Running Head: CASE STUDIES 1

Finance: Case Studies

Name

Institution
CASE STUDIES 2

Finance: Case Studies

Chapter 2

#1 Waverly and Disappearing Dollars

Q1. How would you solve Waverly’s budgeting issue?

One of the best ways of solving Waverly's issue would be by using the envelope method. In this

method, it entails the utilization of systematic ways of framing a saving money while still paying

bills. The envelope system comprises placing the specific amounts of money required for

purposes in a constrained budget control (Garman & Forgue 2011). In a way, it would aid her to

set aside the money she needs for her bills while still managing to have her budget intact. This

would be helpful, as it would assist her to revisit her spending habits and create dangerous

routine practices, which aid her in establishing limits in spending. Once her envelope is

diminished, she cannot spend from tit anymore, and that keeps in change her spending habits.

Similarly, this would be crucial, as it will help her cultivate the habit of setting funds separately

and allocating her budgets apart from the bills. Again, this method would be quite crucial, as she

will be able to record all expenditures.

Q2. Is Waverly right in giving every penny a name? Why or why not?

Waverly is in the right direction by giving every penny a name. It is acceptable to have every

penny budgeted; however, there still arises some additional or unexpected expenses (Garman &

Forgue 2011). Waverly is right in that every penny has to be budgeted and have its usage

accounted for. However, on the other hand, there arise some unexpected expenses, which would

require extra finances. Again, various aspects such as loss of money and either increased prices

of foods occur, and thus it is not right to have the exact cash. Therefore, the precise budgeting
CASE STUDIES 3

would have a variance with the accurate amount to be spent, and thus, she has to have some extra

money to consolidate other costs that arise abruptly.

Q3. Instead of updating her spreadsheets every time she makes a purchase, is there a better way

for her to keep track of her money? If so, how?

I believe there exist better methods that Waverly would be using to keep track of her money. She

could attempt allocating a specific amount for overall expenses that she knows and hence keep

all receipts to have a better budgetary habit. Through assigning a certain amount of money on

particular items, it would be easier to keep it in the track. Again, the collection of receipts daily

would aid her in tracking down her spending habits as well as tracking her budgets (Garman &

Forgue 2011). These receipts act as a significant way of collecting and organizing financial

records. Similarly, receipts would be much better as they are quite time-saving. In this case, they

aid in determining her current monetary situation in terms of spending habits. Similarly, such a

record would help her to review her financial transactions, which can as well be accessed by

even family members in cases of any disputes (King, & Carey, 2017). Again using the

spreadsheet would as well be useful in that if well managed with urgent care and organization, it

would be easier for her to keep track of her expenses. Again, by double-checking the amount

while using the spreadsheet will also act as the right way of doing it.

#2Tyler and Brittany’s New Expenses.

Q1. If they continue their spending habits, predict what their financial state will be in two years

from now.

A). If their spending habits continue in such a manner, then in two years time they might be

facing a massive financial crisis. Poor spending habits are a great source of financial bankruptcy

(King & Carey, 2017). This arises from the fact that they might end up straining to spend money
CASE STUDIES 4

in the buying new homes as well as the car might end up being more than their income. Bearing

in mind that undertaking still comes with their maintenance expenses and other costs they may

even up being bankrupt in the end. Similarly, they too need basic needs such as food, clothing

and also other essential aspects they will experience a financial tumult.

b) Should Tyler and Brittany make any changes to their budget? If so, what?

Making changes would be quite necessary more so by using the envelope system to control their

spending habits to avoid spending more than they can earn. The $1850 mortgage costs seem to

cover almost a quarter of their salaries, and this would be much more as even other expenses

need to be catered for.

c) If they did not purchase a home right now, how would their financial life look like in two

years?

If both fail to purchase the home, their financial stability would be much assured. The costs

involving the cars and even other personal bills will be easier to cater for. Their saving as well

will go way higher.

d) Are there other options that Tyler and Brittany have for transportation instead of making

payments on two vehicles?

There still exists an array of choices that Tyler and Brittany would make to cater for their

transport. By having one car, one of such could be looking for an alternative car, which is a bit

cheaper. Again, they could opt to buy one car rather than two to reduce expenses. This would be

essential as being marred and having new jobs indicates that they still are not sufficiently

financially stable now.

#3: Sophia and variable Income

Q1. What advice can you give her to help her meet her goals?
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I would advise Sophia to practice the envelope method. In this way, she would be able to budget

for needs accordingly (Garman & Forgue 2011). She will be able e to set aside specific amounts

of money for the tasks she needs to be accomplished. Again, she can as well find more

babysitting jobs to accrue more money to purchase her laptop and other needs.

Q2. Should Sophia purchase a new laptop? Why or why not?

Buying a laptop would be much acceptable if her current is faulty. Again, if she effectively

utilizes the envelope method, it would be easy to make the purchase. Since laptops are quite

essential as an essential aspect of school life, she has to buy it even for future use.

Q3. Should she pay off her student loan first or start investing?

It would be crucial for her first to start investing as after graduations she will have excellent and

robust investments backgrounds which would aid her to settle a her loan. This would assist him

in finishing his studies and even obtaining a better job to help him pay for his loans.

Chapter 3 #1: Jerome and Money for College

1. Should Jerome take out the student Loans to pay for the last two years of college? Why or

Why not?

It will be crucial for Jerome to take out the student loans as through the money he obtains from

social organizations, he can accumulate them and later pay for the loan. However, on the other

hand, it will be unnecessary, as the low-interest loan would end up increasing if the overall cost

and even increase than the initial amount (Wolny, 2012).

2. If he does not take out the loans, what other options does he have to pay for tuition, room

board and books?

Thus, alternatively, he can look out for a job or ask for assistance from friends and family to aid

him to become more financially stable. Again, he could also defer or delay his studies do he can

have more jobs as well as work for more hours to obtain the finances he requires for expenses.

3. Is it reasonable for Jerome to believe he can find a good job to help him pay off the student

loans quickly? Why or why not?

On this note, I guess it depends on the degree course he is undertaking. STEM degrees and

engineering courses do seem to have high marketability and incomes. Therefore, if he pursues

any of them, it would be easier to settle his debt within a short period. His passion would also be

a dependent factor as it will enable him to gets jobs with much ease.

4. Is there another way he could save up the $20,000 he needs for the last two years of college?

It can be achieved he first delays his studies so that he can work and be able to save enough by

working in various jobs at more hours.

Case#2 Austin and Paying Debts

Q1. How would you handle Austin’s situation?

reduce the working hours, which also means his finances will go down, he has to look for

another means to ensure that the check pay he obtains, is adequate to fit in his lifestyle.

Alternatively, he can also ask for family assistance until he recovers from financial instability.

Q2. What other options does Austin have besides bankruptcy?

Other than getting bankrupt, Austin could also secure a loan that would aid him to pay his debts

in a faster way. Additional he has to avoid bankruptcy would also be evading expensive and

lavish lifestyle, which leads him to struggle financially (King, & Carey, 2017). For instance, he

could avoid going on the trip.

Q3. How could Austin have avoided this financial mess?

Austin could have avoided this mess by failing to go for the trip as it led to his struggling

financially, leaving him for bankruptcy. The fact that he has already faced the chaos calls for him

to work harder and over more extended hours and engage in investment regain his financial

stability.

Case#3: Yvonne and Student Loan Debt

Q1. What is the first thing Yvonne should payback after she graduates? Why?

Yvonne should first pay for her credit debt then later pay for the loan. In this way, he will be able

to begin reducing her debts slowly. This is also called the snowball effect (Wolny, 2012). By

starting from the smallest debt to the highest, he will also be able to balance between her

personal needs and avoid struggling financially.

Q2. Should Yvonne save up money for an emergency fund first or start paying off her debts

first? Why?

Yvonne should save up money for an emergency fund and later pay the debt. This is because in

cases of any emergencies, she can have available access of funds to sort out the contingencies, as

they are quite critical. In a way, she will have some financial backup.

Q3. Now that she will make more than minimum wage, create a game plan for Yvonne’s money.

For a suitable game plan, she needs first to obtain the emergency funds and then follow by

settling the debts non a monthly basis whereby alter she can utilize the snowball effect.
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References

Garman, E. T., & Forgue, R. (2011). Personal finance. Cengage Learning.

King, J., & Carey, M. (2017). Personal Finance. Oxford University Press.

Wolny, P. (2012). yHow Debt and Default Affect You. The Rosen Publishing Group.