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Balance Sheet P. / Spouse: V.

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RUNNING HEAD:PERSONAL FINANCE TERM PAPER

Personal Finance Term Paper

November 22, 2015

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My Current Financial Situation/Introduction: I am currently an international college student

who works part-time and I share an apartment with a good friend. I make $620 a week and have

to pay $500 for my half of the rent once a month. I understand that my financial future is

dependent on the type of job that I receive once I complete college. In fact, the job I receive after

college is important on several levels. The first is that if I am unable to find a full-time job after

graduation, but the job I am currently working in will still have me-then in order to pay my rent

and bills I have to stay with that job even though it’s not a great deal of money. Another reason

the type of job I get after college is important is because I want to work in real estate which is a

job that is dependent on commission and is not as steady as the typical 9-5. At the same time, it

has the potential to be very lucrative for me in the long run and would allow me to not only have

money to spend on necessities-I will also have money to spend on (for lack of a better term)

rewarding myself with more trivial, superfluous items and experiences like clothing and

vacations. There is also the chance that I will end up with a 9-5, which will help me in terms of

paying for the necessities like rent and bills that I mentioned above.

The above discussion is essentially about my future. Right now my financial situation is on

solid ground (for reasons to be discussed below) in that I am able to attend school while at the

same time living relatively independently (i.e.: I don’t live with my parents). The goal is for my

financial status to improve as I get older and this discussion is instructive to that end. With that

said I do have some expenses that I have to worry about even though school is still a priority

over making enough money to meet those financial obligation, in other words I would choose

school over work if I had to make that choice and find another way to live regularly. Luckily I

am not in a situation where that decision has to be made.

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Because I am living with a roommate, I do have several obligations that I have to fulfill.

Besides rent, I also have to pay a $100 cell phone bill every month. I also have to contribute

$100 to the electric bill and the cable bill per month. As noted I make $620 a week after taxes so

I make $2,480 a month. With that in mind, I am able to contribute $700 to necessities and still

have thousands of dollars remaining. One of the biggest positives of my financial situation at the

moment is that I don’t have a credit card. There are negatives to not having a credit card that will

be discussed below-but when looking at having money to spend on myself or having money in

the case of emergency (ex: my roommate can’t make the rent or can’t pay his portion of the bills

in a given month)-it is a positive that I don’t any debt.

My long term financial goal is focused on buying a house. Because I live in New York and

plan on staying here long term, I don’t think that having a car is necessary so I would only be

interested in one if it wouldn’t affect my ability to pay for necessities or even less important

items that I happen to desire. Being in a steady enough position to pay for life insurance is

something else that is very important to me because I plan on having children and I want them to

be safe in the event something happens to me. Investing my money in order to facilitate long-

term financial security is not something I am necessarily interested in as much as it is something

that I want to research in the event that it makes sense for me in the future. Notwithstanding the

specific and potential goals that I have going forward, it is important to look at all possibilities

when it comes to my financial goals now, after college and well into my professional career.

Banking: Currently I have a checking account. I use Chase bank. Based on the Chase bank

website, there are no interest rates on checking accounts. If I decided to create a savings account

Chase would pay out 0.05 APY (Chase Bank, 2015). It should be noted that Chase does

automatically take $5 from my checking account to put into my savings once a month. A

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certificate of deposit (CD) from Chase would mean that I would have a predictable and steady

rate of return which would be a positive as I begin the process of hopefully purchasing a home. I

can purchase a CD that is viable for a little as one month or as long as 120 months (10 years).

There is also an opportunity for greater interest rates in comparison to savings accounts, with that

opportunity also comes a punishment for early withdrawal. When considering my bank account

(which is in between $0-$9,999), I can get (for instance) a 15 percent interest rate benefit for

keeping the money in the CD for as little as 18 months. If I decided to keep it for 10 years, I can

have a 90 percent interest rate benefit (my CD plan will be discussed in the “my financial plan”

section) (Chase Bank, 2015).

One of the biggest benefits to purchasing a CD is how easy it is. The CD can be funded with

the money from my savings or my checking account as long as I have a minimum of $1,000.

Chase Bank also provides FDIC insurance protection for CD’s just like it does for savings

accounts. In other words, my CD purchase would be insured and that insurance is automatic

(Chase Bank, 2015).

When it comes to the idea of banking in general, it is always important to for a person to have

some sort of plan with his or her money. As Bank of America (2015) says one of the most

important questions that a person has to ask about their finances is how to make sure the money

they keep is more than the money that they spend. Chase Bank gives me options (if I choose)

that will allow me the opportunity to keep more money than I spend. One of the most important

aspects of beginning the banking process is deciding what I want in the long-term and how

proper banking can help me make that purchase. In other words, if I want to buy a car or a house-

how much money do I need to make sure that I have if I want to make that purchase or purchases

within a certain time frame?

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Credit Cards: I currently don’t have any credit cards even though I don’t owe anything on my

last one because I settled on the account. While I have the ability to pay off my credit card bills

right now, I don’t want to be in the situation that I was just in where I ended up having to pay

$1,000 to settle a credit card debt. It’s not worth it to me as it stands right now. There are

positives and negatives to my decision, but my decision is based on my recent history (discussed

above).

One way to look at my situation is to look at the advantages and disadvantages of credit cards

in juxtaposition to not only my current financial situation, but also my history and general

mentality when it comes to how credit cards have and could affect my life. The advantages of

having a credit card include: convenience, record keeping, low-cost loans, instant cash, perks,

building positive credit, purchase protection, and balance surfing (depending on the credit card

company) (360 Financial Literacy, 2015). When analyzing the advantages, the convenience of a

credit card is counteracted by the fact that I have a debit card from Chase. I don’t need a credit

card for record keeping because I have my Chase debit card and Chase in general to help with

that (they have both electronic and mailed/printed records that I can keep). Instant cash is also

something else that a credit card has which is negated by my Chase debit card. The biggest thing

that I am missing from not getting a credit card is the ability to establish good credit for the

future. As I will discuss in the “my financial plan” section, my decision not to apply for a credit

card is temporary because I do want to establish positive credit going forward.

The negatives of having a credit card include: overuse, paperwork, high-cost fee