Brad Brooks Case

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Brad Brooks has two goals. On the one hand he wants to pay off his credit card balance of $8,000 and on the other hand he wants to save $4,000 so that he can retire 25 years from now. He has two ways to achieve those goals. One way is that he improves his cash flow statement by decreasing its monthly expenses. Most of his spending is made for entertainment, like going to the restaurants, playing gold and even doing weekend trips. He can scale back his spending while still enjoying these activities. He can try to reduce his spending at restaurants by about $80. He can also try to save at least $100 for his weekend trips. By revising his spending behavior in this way, he can reduce his cash outflows by $180 per month. Beside this he can also try to cut down the expenses for cell phone, use not too much his car so that he does not need to refuel the car many times and in addition he can also try to spend less on grocery. So just imagine by doing all this he could be able to save $400 per month. So he would be able to save $4800 per year. Another aspect is that it was …show more content…

For that either he increases his assets or decreases his liabilities. He can increase assets by increasing his savings account or increasing the value of any asset he owns. He should set aside funds more in the saving account that can be used as an emergency fund, because he is experiencing a large amount of expenses, without having sufficient cash inflows. One important thing he has to keep in mind is that he doesn't increase his liabilities along with his assets. Increasing your net worth through an asset increase will only work if the increase in assets is greater than the increase in liabilities. The same goes for trying to decrease liabilities. A decrease in what you owe has to be greater than a reduction in assets. Even when he is able to save $217, the negative net cash flows, so that at the end his net cash flow is zero, he can increase his net

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