4 people: Can they afford it?

Question

1. Patricia, age 60, single

Wants to buy: a necklace

Price: $10,000

Take-home pay: 40k/year

Living Expenses: 30k/year

Savings: 500k (producing 5% or 25k/year)

debt: zero

Owns home outirght valued at 80k

Social security income when she retires at 65: 10k/year

approved or denied?

2. Tom, age 29, single, retired

Wants to buy: A famous painting to hang up in his living room

Price: $200,000

Living Expenses: 25k/year

Savings: $1 million (producing 5% or 50k/year beore taxes)

Owns home outright valued at 100k

Approved or Denied?

3. Jake, 23, Sarah, 27, married

Want to buy: New Television

Price: $3,000

Combined Take-Home Pay: 50k/year

Living Expenses: 25k/year

Savings: $5,000

They rent; do not own home

Both want to retire at: age 55

Approved or Denied?

4. Samantha, age 9

Wants to buy: A fancy make-up kit

Price: $100

Allowance: $10/week

Living Expenses: none

Plans to go to college at age 18

Savings: $1,000

Approved or Denied?

Answer 1

All of them denied.

1. Who, in their right mind, would spend $10k on a stinkn piece of jewelry.

2. Nobody needs a $200k painting - absolutely silly.

3. $3k for a TV?! seriously.

4. Girls shouldn't wear makeup - ever!

Answer 2

All approved except Jake & Sara.  They shouldn't spend over 1/2 of what they have in savings for a new TV.  The rest can afford it (or at least won't be too damaged by buying their "treats".