Finance

I need 150 word response to this persons post

Discussion 7
Grace Leskanic posted Apr 13, 2022 12:32 PM

I think that the Hartwicks financial status before the automobile failure could have been a lot better. It only took the second automobile break down to make them realize they don’t know where their money is going.
I think that many expenses are out of line in the Hartwicks case. For a family of three, I don’t think that their food and household necessities should be $880. I think that it could be reduced to a maximum of $500 a month. I also noticed that their recreation and entertainment is high at $800. I think that if they really want to be prepared for the future they should cut it in half at a max of $400. I think that the gifts and donations could be cut to $200 as well. Everything else seemed normal.
I think that some investment goals the Hartwicks need to look into is putting more money into the Rith IRA Contribution. I noticed that they put $200 into it every month, if they reduce other expenses and have a higher surplus every month, they could put more into this account. They could also look into stocks and see if they want to invest any money into something like that.
With the asset allocation concept, you’re not putting all your eggs into one basket, it’s a safer option for the family. With the time value of money concept, the small sums that the family puts into savings accounts will grow over a long period of time. They might also get a higher rate of return.
For the Hartwicks I would recommend stocks or mutual funds. With stocks the family can put in money and watch it grow. If something happens and they need funds fast, and as a last resort, they could pull the money. This will help them for their future retirement and if emergencies happen.

ANSWER

Hello Leskanic,

I agree that the Hartwick’s are spending a tremendous amount of money on liabilities that are not essential at the expense of the automobile business. Sustaining such a business requires a high level of financial discipline, which the family seems to lack. To help the company fulfill its potential, they need to cut back on its expenses by almost a half, as you’ve observed. In addition, developing financial freedom can also be attained through external investments like stocks. This will enable the money to gain more interest over a considerable amount of time, which can be used to bail out the automobile business at the time of need. Distributing their investments will allow the family asset allocation, which is a finical concept that reduces the risk of losing investments by allocating all the funds in one section. In essence, the Hartwick’s have the opportunity to explore their options and reconsider their spending and ultimately help save the automobile company.