Case 1: Single and income under $35,000

Sharon, 40 years old, graduated from a top school and is now working for a local hospital near her home.  Currently, she earns $60,000.00 per year and has $5,000 saved in a bank savings account.  Sharon has set a goal for buying a house within the next two years and wants to know how she can save more money for the down payment and where she should invest her money to receive the highest return.  Although she is single and making $60,000.00 per year, she feels she lives paycheck to paycheck and money seems to slip through her fingers.  She wants to learn how to manage her money better.  She rents an apartment for $2,000.00 per month and she just bought a new car, a Toyota Camary.  With insurance, her monthly car expenses are $650.00.

Sharon loves to shop and finds that she spends a lot of money on clothes and luxury items she doesn’t necessarily need.  She has 3 major credit cards and 5 department store charges, all which are at their limits and charge a 28.93% finance charge.  Her total amount of debt is $20,000.00.  Every month she sends checks to these credit holders totaling $1200.  Since Sharon works many evenings, she eats out 4-5 times a week at a usual cost of $10-$12 per evening.

Sharon has a 401 (K) matching retirement plan with her employer.  Every month the company automatically takes 6% of her paycheck before taxes and for every dollar they match it with 50 cents.  The money is placed in a growth-oriented mutual fund that she chose as her investment option.  She started this plan when she first became employed and now has $7,000 saved.  She also has a $2,000 traditional IRA with a major bank.  She has now decided not to contribute anymore to her traditional IRA.  Sharon pays a substantial amount of her earnings to the government in taxes.

1. What do you believe is Sharon's attitude and habits for money?
2. How many goals do you think Sharon should set?
3. What do you feel is Sharon's financial standing?

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