1. Mini Case Presentation Example
Finance 553
Mini Case
Presentation Example

2. Mini Case The Clients Brandon (Age 40) and Jill Bowden (Age 43)
Children: Cole (Age 9) and Owen (Age 5)
Brothers and Sisters of Brandon and Jill (Unknown)
Parents of Brandon and Jill (Unknown)
Brandon works as vice president of health care company
Salary $124,000
Matching 401(k) at $0.50 per dollar up to 3% of salary
Other benefits (unknown – health coverage, life insurance, disability insurance)
Jill is stay at home spouse with no income stream

3. Mini Case Stated Goals (Dreams, Desires, etc.) Save for Retirement
Save for children’s college expenses
Percent of college (unknown)
Public or Private College (unknown)
Transfer assets to children with after second to die
What is missing?
What they enjoy doing and want to continue doing
What support they could expect from parents, grandparents, other family members

4. Financial Data of Couple
Balance Sheets on Pages 98 and 99
Net Worth at 12/31/2014 is only $222,241
Major assets are home and cars with some savings for education and retirement
Large outstanding balance on mortgage (89% of value of house)
Income Statement on 101
Overall spending (plus contributions to retirement and college funds) exceeds income
Drawing down assets
Credit Card debt significant part of budget
Insurance policies
Life, home and auto…only premiums

5. Mini Case Key Financial Ratios for Couple
Liquidity Ratio – Emergency Fund Level
Calculation on page 104 – 1.70 months
Target Ratio should be close to 6.0 months (single income family)
Solvency (Debt Ratio)
Housing Ratio 1 on page 106 – 28.9%
Target Ratio should be at or below 28% (slightly above high mark)
House Ratio 2 on page 109 – 39.5%
Target Ratio should be at or below 36% (credit card debt major issue)
Savings Rate
With employer match on page 113 – 6.11%
Target rate is 13% to 20% for couple in early 40s and no substantial savings

6. Mini Case Immediate Concerns for Brandon and Jill
Reduce Credit Card Debt
Credit card payments at minimum and $7,000 per year or $583 per month (implied interest rate at 10.55%)
If debt was gone – pay each month entire balance funds could be used to balance budget, increase emergency fund and increase savings
Emergency Fund
Need to triple emergency fund (goal $36,000)
High end of scale for single income family
Need to make sure life insurance and disability insurance coverage is sufficient
Long-term Goals put on hold except continue 401(k) at 3% to get maximum match and $2,000 into 529 to get tax break and keep building college fund

7. Mini Case Reasonable Benchmarks for Brandon and Jill Bowden
Next Six Months
Stabilize budget at current level (no major acquisitions)
Increase credit card payments so that a pay down to zero balance can happen in the next three to five years ($450 to $600 per month above minimum).
Possible sources of extra money (couples choice)
Reduce contributions to church (temporarily)
Reduce spending on clothes and entertainment
Reduce or postpone major vacation plans
Next Two – Three Years
Use Brandon’s salary increases to fund inflation in budget, pay off credit cards, and restore short-term reductions
Part-time or Full-time employment for Jill (boys are full-time in school, unless at-home schooling)

8. Mini Case Future Meetings In Six Months In one Year
Follow up to measure progress on short-term goals
Budget Stable?
Reducing Credit Card Debt?
Emergency Fund Growing?
In one Year
Continued review of progress
Any significant changes in income for modifying short term goals
Review legal documents (Will, Powers of Attorney, etc.)
Review insurance products and coverage
Family changes – parents, grandparents, brothers, sisters, etc.

9. Mini Case My Expectations Clear presentation of clients and data
Notes on missing information for case that could alter recommendations
Use of financial ratios and other appropriate measures to inform clients on their current strengths and weaknesses
What are your immediate concerns for your clients (note the client does not have to agree with your appraisal but it is your “expert opinion” on where they need to focus their immediate attention)
What are your recommend short-term goals (if necessary) or long-term goals for the clients?
What is your suggested follow-up (timing and measures) for your clients?