2023 Personal Finance Case Dan and Sue Koogler Dan and Sue Koogler 29 | Assignments Online

Personal Finance Case: Dan and Sue Koogler  

Dan and Sue Koogler, 29 and 28, are trying to get ahead financially. They just purchased two “big ticket” items, a second car and a home, and want to pay for Dan to complete his college degree requirements. Their primary financial objective, however, is to reduce debt and achieve positive cash flow. The couple also has very little savings and would like to be able to put some money aside. The Kooglers have one child, Melissa, who is five years old and starting Kindergarten, Sue is a stay-at-home mom. Dan is the sole breadwinner and earns $50,000 annually, after all deductions, as an aircraft mechanic. His place of employment is located on a bus line a short walk from the Koogler’s home. Sue is interested in returning to the labor force but concerned about whether child care costs and taxes would wipe out whatever she would earn. She also enjoys being a stay-at-home mom and thinks that she should be home in the afternoons with Melissa. Before becoming a stay-at-home mom Sue was an elementary school teacher making $50,000 per year with summers off. Unfortunately, the Kooglers are starting to face some financial difficulty. Monthly payments on their debts are consuming a greater percentage of their income and, along with their mortgage, don’t leave them much income for other expenses. The couple has absolutely no money in savings for emergencies. Another indicator of financial distress is the couple’s net worth. The couple’s assets include $1,000 in a checking account, $2,600 in Dan’s 401(k), a 1500 square foot home valued at $150,000, and two cars, a 2010 Honda Accord worth $5700 and a 2011 BMW 5 Series worth $17,500 both cars are paid off. They also have a time share which is valued at $12,000 other personal property worth $13,000. On the debt side, the couple owes $142,500 on their mortgage, two personal loans totaling $15,000, $10,000 on a credit card, $12,500 on a time share, and $13,000 to Sue’s parents. Dan and Sue have the following payments each month: PITI $962.89 Cable TV $130.00 CC minimum payment @ 29% interest $300 Food $300.00 Time Share Payment $180.00 Auto Insurance $257.00 Time Share HOA Dues $125.00 Gas $325.00 Parent Loan $217.00 Utilities $75.00 Personal Loans Payment $304.00 Auto Maintenance $135.00 Gym Membership $55.00 Clothes $175.00 Recreation $250.00 Dining Out $300.00 Cell Phones $125.00 Dan says he would like to retire when he is 55 and “live comfortably and independently.” Neither Sue nor Dan has and IRA, however, and Dan has stopped contributing to his employer  4 401(k). The couple has no wills. “I don’t have money to pay a lawyer to do the will and am not sure how to do it without a lawyer,” Dan explained. The couple has $300,000 of term life insurance on Dan and family health insurance paid for by Dan’s employer which has a $2000 per person deductible, $40.00 copay and 80/20 coinsurance. They carry $300,000 of liability insurance on their cars and have a $100 deductible on collision and comprehensive fire and theft coverage. They have homeowner’s insurance with 90 percent coinsurance and a $500 deductible and $142,500 coverage on the dwelling. Building costs in their area for a comparable home are $150.00 per square foot. There is no disability insurance to cover the loss of Dan’s income should he be unable to work due to accident or illness. The Kooglers, knowing you have recently taken a personal finance course have come to you for advice.