Value of Money Marty and Research Proposal

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Their credit card balance of $10,000 has a minimum payment of 3% of the balance, currently $300 per month. Provided they do not add to the card balance and only make the required minimum payments to the card it would take them almost 20 years to pay off the card and they would have incurred almost $8,000 in interest paid. A payment schedule is included in Appendix II reflecting the minimum payment arrangement. As you can see by month 204 minimum payments become a constant $10.00 and even so it still takes another 43 months to pay off the entire amount. This is of course an unacceptable payment plan for many reasons, mostly the interest involved is excessive and would obviously not be the best choice in paying off such a high interest card. Since this is the most substantial of the debt considered effort should be given to paying this off first.

As regards retirement and preparing to maintain a pretax income of $54,000 for 15 yrs (age 65-80).

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Based on their current salaries tied to 3% increases over time the couple would receive an annual income of $33,000 from social security benefits leaving a shortfall of $21,000 income per year. Over 15 years this amount to $315,000. But taking into account a constant rate of inflation at 4% the actual dollars needed would be $1,344,448. Over 35 years they would need to save at least 10% of their monthly income or $450 per month until age 65 with a guaranteed interest rate of 8%. These figures assume that they are investing into a qualified non-taxable IRA or 401K plan and do not include any employer contributions.

Suggestions for initial plans:

First 12 Months:

Following:

The first phase of the pan would be dedicated to buying the new home using the twelve months to accumulate the down payment and pay for the closing costs. In this phase the credit card payment remains the same to keep cash flow going. Once.....

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