Reference no: EM133190310
The Cooper's
George (27) and Mary (27) Cooper were married three years ago, about a year after graduating from university. George recently received his B.Eng. degree and is employed with a large general construction contractor earning $78,500 per year and Mary has a degree in nursing and works at an area hospital earning $83,600 per year. They estimate their after tax income to be about $58,200 and $65,500 respectively. Both George and Mary have extended health benefits and long-term disability insurance benefits through work, and they both have 1 times their salary in life insurance benefits. Both feel that their job positions are secure.
George and Mary have a one year old child; Sheldon. Mary has just returned to work after a year's maternity leave. They pay $980 per month in child care costs. They would like to have a second child within the next 2 years or so and they want to be in their own home before the child is born.
The Cooper's currently live in a 3 bedroom townhouse in North West Calgary that they rent for $2,500 per month.
George and Mary have been saving $600 per month for the past 3 years for a down payment on their 1st home. They currently have about $20,500 in a joint savings account, and they believe they should continue to save $600 per month for the down payment on the home. They plan on buying a 3 bedroom home near the home they are currently renting. Since the real estate market is softening due to Alberta's slowing economy they expect to pay about $485,000 when they buy the home in two years.
Mary drives a 2012 Toyota Camry valued at $6,000 and George drives a 2015 Toyota Tacoma valued at perhaps $25,000. George purchased his Tacoma in January of 2018 for $32,000. He financed the purchase with a six year $30,000 car loan at 5.9%. His monthly payment is $496 and his current balance is approximately $11,200.
George and Mary plan on replacing Mary's car with a minivan in three years. They expect they will only get $3,000 for a trade in on Mary's car. They will buy a slightly used van and expect to pay about $25,000 (in today's dollars). George plans to replace his truck with a used car in 4 years. He thinks he will be able to get $5,000 in trade-in value. He expects to pay about $20,000 (in today's dollars).
George and Mary have student loan balances totaling $8,500. They pay $118 per month and the interest rate is 6.5%. They also have a $3,500 balance on a joint credit card from last summer's vacation. They are paying $300 per month and the interest rate is 19.9%.
George has been contributing $250 per month to a RRSP account and his current balance is about $11,000.
Mary works for the Alberta Government and is part of the LAPP Pension plan. She contributes 11% of her gross pay to her defined benefit pension plan. She plans on retiring at age 60 with a full pension (estimated to start at $79,500 per year in future dollars or $35,200 in today's dollars and increase at 60% of inflation). The current commuted value of Mary's LAPP pension is $31,500.
The Cooper's monthly expense include; utilities $600, renter's insurance $40, groceries and household stuff $800, clothes budget $300, haircuts and personal care $200, entertainment and eating out $250, health club membership and sports fees $150, hobbies $150, gifts budget $250, charity $100, travel budget $300, auto insurance $175, auto maintenance budget $150, auto fuel and oil changes $450, misc auto $50.
The Cooper's have exciting plans for the future. They would like to purchase their 1st home in 2 years. They want to have a second child in two to three years when they are in their new home and Mary will want to take another year of maternity/parental leave (they figure they need $28,000 saved to cover the loss of income during Mary's leave). They want to be in control of their financial future therefore they would like to get out of debt as soon as possible so they only debt they have going forward is their home. They want to be able to take family vacations without putting the trip on their credit card and then stressing over paying the balance off. They also want to be able to save for their vehicles in the future so they don't have to take on debt. In addition they know how valuable their university education is for themselves and they want to be in a position to pay for their children's tuition for 4 years of university.
The Cooper's feel good about how they have managed their money to date. However they are not sure what they should be doing to make sure they can achieve their goals and they don't really know if what they have been doing is what they should be doing. They have come to you looking for help in creating a financial plan.
Just only answer the question
a.) Success Criteria
b.) Future Budget