Topic 4:
Create a debt repayment plan to be presented to the client. The final plan should be neat
and easy to follow, clearly show the advantage of following the proposed plan, and should
contain Action Steps for the client to follow.
Amy Smith has come to your office for advice regarding a debt repayment plan. Amy is a single
mom who recently completed nursing school. Unfortunately, she supported herself and her child
largely through use of debt while she was attending school and could work only part time. Now
that she has finished school she is earning enough to live comfortably and can put some extra
money toward paying off debt instead of just paying the minimum each month as she has been
doing over the past several years. Amy would like you to help her develop a repayment plan that
will result in a lower amount of interest paid. The following is a listing of Amy's current debts.
JC Penny's credit card: Current balance is $5,500. Interest rate of 17.99%. Minimum payment
is $82.50.
Walmart credit card: Current balance is $3,100. Interest rate of 12.99%. Minimum payment is
$46.50.
Citibank credit card: Current balance is $8,250. Interest rate of 13.25%. Minimum payment is
$165.
Personal loan from credit union: Borrowed $10,000 at 8% for 60 months. So far 4 monthly
payments of $202.76 have been made.
Student loans: Balance $8,789 at 6.8% for 120 months. The first payment of $101.14 is due this
month.
Chase credit card: Current balance is $950. Interest rate is 9.99%. Minimum payment is
$14.25.
Amy believes that she can pay a total of $785 per month toward her debts.
What other alternatives should be pursued?
What other cash management areas are important to discuss with Amy