Gssc 1027 - Financial Plan

FINANCIAL PLAN ASSIGNMENT 1

KYUCHAN LEE #101013845

GSSC 1027

Assignment 1

Current Situation

Currently, Chris is a 22 year old male and enrolled at George Brown in the last semester of a two-year program. His OSAP loan is $ 20,000. He will not further study over the next few years and would like to get a position of a nurse in his major, nursing. He also would like to have a family with five years old two children. In addition, he would like to have his house and have a few amount of savings.

Currently, he lives in a rental house and the rent fee is $1000 per month for the 6 months he is at school since his home is far away from his school. Fortunately, he got a good paying winter job in a nursing home that paid $8000 after expenses and a part-time job that pays $4000, however, he still has an OSAP loan of $20,000. He foresees that he will continue with the same job new year. In addition, he receives $ 4,000 form an RESP to cover expense. Tuition is $ 4050 and incidental fees and textbooks are $ 1800, however, he also receives $ 1050 from the 30% tuition rebate.

This winter he will be getting married. His future wife’s name is Jane and is also a same student in his program in his college. As they are both students and have OSAP loan, the cost of the wedding will be in the range of $2500 to $3500. The wedding place will be their college or the garden in the city. His spouse will find out a position in a nursing home or a hospital. Jane did not get a good paying job like Chris. However, she lives at her parents’ house, and thus, her OSAP loan was only $ 6000. Therefore, their total OSAP loans will be approximately $ 26000 at graduation because both of them are in the last semester of their studies. They are going to get married in April, two months after they both gradate. They did not save money for their wedding and hence, they are likely to get help from their parents to cover the wedding cost.

Chris does not have his car. He uses a Post-Secondary Metropass of $ 116.71 and when he goes back to home, the bus fare is $ 45 each way in one trip each month. He has set $ 100 per week for food and $ 500 per month for other expenses except transportation fees.

Future Position

Chris would like to hold the position of a nurse manager about 10 years in the future. He knows that this would require additional study, but this could be done part time.

As they were in the same program, Jane would like to work as a nurse in the future as well. The current average wage of a nurse in Toronto is $85,000 (Payscale, n.d). This shows their aimed position by 2027. An inflation rate is presumed approximately 2% per year and in 10 years, 20 % will be added to the prices and wages (Calculated as 1.0210).

Route from Current Position to Future Position.

After graduation, they should pay off the student loans and save money for a house and car. The salary of a nurse starts at $62,000, which make their combined salary of $ 124000, which should net around $95,000. Their salaries will increase after five years of nursing practice if they maintain their nursing practice.

Transportation

They will live in Toronto after they get married even though nursing jobs are available across Canada. Some nursing homes are difficult to get by public transportation and thus, both of them will purchase cars. They will not be hired by the same hospital or nursing home and thus, both of them need cars respectively. They will purchase Hydai car of which price is suggested as $ 30,000, however, discount and including tax, delivery and prep makes up $30,000 each (Toronto Hyundai, n.b). As mentioned above, they do not have enough money to pay for the car, and thus, they will loan $ 60,000 and the loan payments will be $1068 per month, or $12, 816 per year. The loan period is 5 years. (“The CIBC Loan Calculator: Use Our Loan Payment and Line of Credit Calculator, n.d.)

Housing

After marriage, they stay in Chris’ rent house until they buy a house. Therefore, their accommodation is about $ 10,000 and all other expenses including utility, clothing and food will be doubled to $18000 and then their fixed expenditure will be $ 30,000. This ( $15,000 plus $18000) and their net income, $ 95,000, would make $ 372,000 savings over five years. The calculation is $ 〔95,000- ($15000+$18000)〕 X12. Car purchases of $60,000, $ 62000 after the loan cost, loan repayment of $40,000 and future house down payment of $100,000 total $212,000. A cushion of $160,000 ($ 372000 savings minus $212000) will occur. Therefore, their low housing costs and planned spending for reduce debt, having a cheap car, and $100,000 down payment in five years after graduation are made.

They would like to purchase a house worth approximately $ 600,000 in 5 years. Some houses already meet their requirements (“Property Search,” n.d.). According to the calculations from the Tangerine website, their monthly mortgage payment would be $ 2,250. 85 per month repaid over 25 years, and $100,000 down payment is made (“Mortgage Payment Calculator,” n.d.). $ 200 of taxes per month, condo fees are $365.50 per month, utility is $ 120 per month and insurance at $90 per month are presumed. This makes the monthly housing payments $ 3200. The townhouse that he would like to buy has three bedrooms and two bathrooms and they would buy it after they get married and pay off the car loan first around 2022. It is presumed that house prices in the GTA are above the inflation rate, which has not been calculated. It may bring about buying a more modest house. Regardless of what kind of house they buy, a mortgage of $500,000 with an interest rate 2.7% of and an amortization period of 25 years would make approximately $ 400,000 at 2027, in five years since their house purchase (“Mortgage Payment Calculator,” n.d.).