Personal Financial Plan

JM is a 25yo male who recently graduated from the University of Kentucky College of Pharmacy (Big basketball fan, so there was really no other school better to attend). JM had to pay for all costs of college obtaining PharmD and MBA degrees (including costs of living and probably more bourbon than JM needed), putting him in a total student debt of $220,000. He will have a total of $5,000 cash in all accounts (checking and savings) as of December 31, 2020. His student loans are financed at a 6% interest rate but he hasn’t decided whether to set them for a 10-year or 25-year term for payment.

JM Job Opportunity:
Given his love for leadership & management (and his tendency to be a work-a-holic), he is excited to accept a management position at a pharmacy within a large grocery store chain in Louisville, Kentucky to kick off his new career. The new position comes with a whopping starting salary of $125,000/year, a 5% 401k retirement “match” program, and full health and life insurance benefits for a monthly premium of only $300/month.

JM’s preferences:
• He wants to set aside some long-term savings, but also likes to enjoy life
• He has an old car with a lot of mileage that may need to be replaced soon
• He is thinking of renting or buying a house, but is not able to make a down payment
• He wants to have a cell phone, cable with high speed internet, and a gym membership
• He is not very picky when it comes to groceries, but enjoys going out to eat with friends
• He likes to play golf in his free time
• He just met a really nice girl named Ashlee that hasn’t finished pharmacy school yet, but he hopes to budget some money for a diamond ring one day (No rush!)

He will start the new pharmacy manager position on January 1, 2021 and needs your help building a Personal Finance Plan for 2021!

Your Task:
1. Develop a full “Annual Budget” using the Personal Finance Plan Excel Sheet (Worth 8 points) that includes a recommended budget for the following variables:
a. Housing
b. Student Loan Payments
c. Cable/Utilities/Cell
d. Gym Membership
e. Insurance Premiums
f. Food
g. Auto
h. Personal Goals (What can JM budget for each paycheck to save for things that he really wants? E.g. New golf clubs, an engagement ring)

2. Develop a Personal Balance Sheet (2 points):
a. January 1, 2021 – Where JM is at the start
b. December 31, 2021 – Where he could be at the end of the year (#goals)