Fixing “Chuck’s” Financial Stress
Introduction: Help Friend in Financial Mess This paper evaluates a college student’s net worth, realizing that he is in financial distress. He’s be very fortunate to not have to pay for a majority of his expenses because of his mother. Essentially, he is being unwise with his funds and acquiring unnecessary debt. Possible solutions presented to the student include living within his means, getting another job, and liquidating some of his assets.
Current Situation: Meet Chuck My friend Chuck is a sophomore in college and he is financially stressed. He understands that he will have debt coming out of college, but he wants to know where his money goes. In his second year, he currently has $10,000 in subsidized …show more content…
I split it into two sections because during the school year, he makes very little money, but earns more during the summer months. He's been fortunate that he hasn't had to pay on his credit card, so in the cash flow diagram there is no credit card payment line. He's also very fortunate to not have to spend any money, at any point in the year on housing because of scholarships and living with his mom. However, he doesn't pay on his student loans, luckily, they’re not collecting interest, but his student loan debt isn't decreasing. Let’s take a closer look at summer section of the cash …show more content…
With that being said, during the summer, Chuck feels he is able to spend more money, therefore he feels he has more money to circulate throughout his budget. Working at Walmart, full time, Chuck earns $800 a month. Chuck's fixed expenses include his car payment of $250 and his social security taxes and federal income taxes for a total of $109. He pays $0 on his student loan. Total fixed expenses totals $359. For variable expense, Chuck estimates he spends about $150 a month on food, $200 on automobile gas, $50 on clothing, $50 on gifts, $100 on entertainment, and around $46 on random miscellaneous items. Total variable expenses totals $1,155. I asked Chuck why he felt he allocated $150 to personal allowance. He said that if he has cash in hand he spends it. Because Chuck spends more than he earns, during the summer, he is over budget $355. See graphic below Graphic
Introduction: Help Friend in Financial Mess This paper evaluates a college student’s net worth, realizing that he is in financial distress. He’s be very fortunate to not have to pay for a majority of his expenses because of his mother. Essentially, he is being unwise with his funds and acquiring unnecessary debt. Possible solutions presented to the student include living within his means, getting another job, and liquidating some of his assets.
Current Situation: Meet Chuck My friend Chuck is a sophomore in college and he is financially stressed. He understands that he will have debt coming out of college, but he wants to know where his money goes. In his second year, he currently has $10,000 in subsidized …show more content…
I split it into two sections because during the school year, he makes very little money, but earns more during the summer months. He's been fortunate that he hasn't had to pay on his credit card, so in the cash flow diagram there is no credit card payment line. He's also very fortunate to not have to spend any money, at any point in the year on housing because of scholarships and living with his mom. However, he doesn't pay on his student loans, luckily, they’re not collecting interest, but his student loan debt isn't decreasing. Let’s take a closer look at summer section of the cash …show more content…
With that being said, during the summer, Chuck feels he is able to spend more money, therefore he feels he has more money to circulate throughout his budget. Working at Walmart, full time, Chuck earns $800 a month. Chuck's fixed expenses include his car payment of $250 and his social security taxes and federal income taxes for a total of $109. He pays $0 on his student loan. Total fixed expenses totals $359. For variable expense, Chuck estimates he spends about $150 a month on food, $200 on automobile gas, $50 on clothing, $50 on gifts, $100 on entertainment, and around $46 on random miscellaneous items. Total variable expenses totals $1,155. I asked Chuck why he felt he allocated $150 to personal allowance. He said that if he has cash in hand he spends it. Because Chuck spends more than he earns, during the summer, he is over budget $355. See graphic below Graphic