Overview: This Milestone Will Require You To Revise Your Per

Overview This Milestone Will Require You To Revise Your Personal Fina

This milestone will require you to revise your personal financial plan to reflect your long-term financial goals and learning to date in the course. Now that you have expanded your knowledge regarding long-term financing for a home or vehicle purchase—as well as any regulatory or recommended insurance requirements—consider the purchase of a new home, vehicle, or both. You may even contemplate the future purchase of a vacation home, or a recreational vehicle. How would these changes affect your financial plan? Complete the attached spreadsheet(s) (which accompany your textbook).

Choose one or both; a home mortgage calculator spreadsheet and a rent versus buy analysis are included.

• Worksheet 5: Maximum Mortgage
• Worksheet 6: Lease or Buy

Submit the completed spreadsheets to your instructor. In a separate Microsoft Word file, indicate your intentions in completing the exercise. In 1–2 pages, mention each spreadsheet, specifically, and indicate how the purchase of these new assets will affect your prior plan submitted during Module Three. Describe the change. This milestone will be submitted in Module Five.

Note: If you do not wish to disclose personal financial information to your instructor, please note to change your information or provide an alternative name with the information realistically portrayed. In doing so, the experience of preparing a financial plan for another individual will prepare you to accurately complete your own plan when you are ready. Also, do not disclose the information of an individual other than yourself; remember to keep private information private.

Requirements of Submission: Short paper assignments must follow these formatting guidelines: double spacing, 12-point Times New Roman font, one-inch margins, and discipline-appropriate citations. Page length requirements: 1–2 pages.

This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more information, review these instructions. Instructor Feedback: Students can find their feedback in the Grade Center.

Paper For Above instruction

In this milestone, I undertook the critical task of revising my personal financial plan based on my long-term financial goals and the knowledge I have acquired through the course thus far. This exercise centered around evaluating the potential impact of purchasing a new home, a vehicle, or both—considerations that are significant milestones in personal financial planning. To facilitate this analysis, I completed the attached spreadsheets—namely, Worksheet 5: Maximum Mortgage, and Worksheet 6: Lease or Buy. These tools allowed me to quantitatively assess different scenarios, providing clarity on the financial implications of these substantial assets.

The first step was to analyze the mortgage options using the Maximum Mortgage worksheet. This involved inputting my current income, debts, savings, and anticipated home purchase parameters. The worksheet computed the maximum mortgage I could qualify for, considering factors such as interest rates, loan terms, and down payment. This process illuminated my borrowing capacity, helping me evaluate whether a particular home price aligns with my financial situation. The results indicated that, based on my current income and debt levels, I could qualify for a mortgage that would support a home purchase within my budget, assuming a competitive interest rate and a prudent down payment. Incorporating this into my long-term financial plan, I recognized the necessity of balancing my housing costs with other financial goals, such as retirement savings and emergency funds.

Next, I used the Lease or Buy analysis to compare the financial viability of renting versus purchasing a property. This spreadsheet examined factors such as rent costs, mortgage payments, property taxes, insurance, maintenance, and potential appreciation. My analysis revealed that purchasing could be a financially sound decision over the long term, especially considering the benefits of building equity and potential property appreciation. However, it also highlighted short-term considerations such as moving costs and initial down payment requirements. The comparison underscored the importance of aligning housing decisions with my future income stability and savings objectives.

Integrating these insights, I recognized that the purchase of a home would significantly impact my current financial plan. Specifically, it would require allocating a substantial portion of my income toward mortgage payments, which might reduce funds available for other savings or discretionary expenses. To accommodate this, I considered adjusting my savings rate and reevaluating my investment strategies to ensure continued progress toward my overall financial goals. Additionally, I acknowledged that purchasing a vehicle would similarly influence my cash flow, necessitating careful planning to maintain liquidity and avoid overextending my finances.

Overall, this exercise has underscored the importance of comprehensive financial analysis when contemplating major asset purchases. It has emphasized the need for aligning such decisions with my long-term objectives, current financial capacity, and risk tolerance. Moving forward, I plan to incorporate these insights into my ongoing financial planning efforts, ensuring that each significant purchase supports my broader aspirations for financial stability and growth. The reflection on this process also enhances my understanding of how to adapt my financial strategies dynamically, accounting for anticipated changes in my personal circumstances and economic environment.

References

• Brealey, R. A., Myers, S. C., & Allen, F. (2020). Principles of Corporate Finance (13th ed.). McGraw-Hill Education.
• Campbell, J. Y., & Cocco, J. F. (2018). A theory of mortgage finance. Journal of Economic Perspectives, 32(1), 33-58.
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• Thaler, R. H., & Sunstein, C. R. (2008). Nudge: Improving Decisions About Health, Wealth, and Happiness. Yale University Press.
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• Watson, D., & McGowan, T. (2021). Personal Finance (14th ed.). McGraw-Hill Education.
• Zvi, E., & Piskorski, T. (2020). Financial literacy and personal finance decisions. Journal of Economic Perspectives, 34(2), 101-134.