Personal Financial Planning

4532 Words Oct 10th, 2011 19 Pages
Personal Financial Planning
Executive Summary

Further to our recent discussions, the following is a detailed analysis of your current financial position and recommended action plan for achieving your stated financial goals. Key findings are summarized below and detailed supporting financials are provided in Appendices I thru VI.

As at March 31, 2011, your total net worth/equity is estimated at $22,090. In reviewing the details of your assets and liabilities, with all other personal assets fully leveraged, this net worth is comprised primarily of the value of your household contents. While these household items are valued at a replacement cost of $25,000 on the family balance sheet, these items could not be sold for this amount to
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Other assumptions include: o The TDS ratio prior to the second mortgage well exceeded the 40% threshold, which is why RBC or similar large banks would not extend any further credit to the Chang family o Combined balances owing on the credit cards and line of credit (e.g. Other Debts) were an estimated $55,000; this included the amount for the renovations of $10,000; the balance was reduced to $20,000 in February 2011 with the funds received from the second mortgage o Cash Outflows for payments for Other Debt were an estimated $850 each month prior to securing the second mortgage (i.e, April/10 to February/11) o Chang family funded the cash shortfall each month by using credit cards and their line of credit Assets • Cash and Investments - current balances in TD chequing account and mutual fund investments of $1,000 respectively o Given their current financial situation, this family would have only a minimum amount of liquid assets; if they had anything substantial they would have used it to pay down a portion of their outstanding debt • RRSP, RESP, Company Pension Plan – nil o As noted above, given the family’s current financial position, they have not had the cash flow for any investment for retirement or children’s education fund • Car – asset of $12,000 o Reflects current market value for a 2007 Honda Accord purchased 2
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