Since the major portion of Pam’s income is based on commission, her earnings vary from one month to the next. This situation makes it difficult for her to establish a realistic budget. During lean months, she has had to resort to using her credit card to make ends meet. In fact, her credit card debt, $3,470, is at a fairly high level. In addition, she has not been able to save much for various unexpected expenses and for her long-term financial security.
During the year, Pam has had tax withholding greater than her actual tax liability. As a result, Pam is expecting a fairly large tax refund. In the past, she has always used tax refunds to finance major purchases (a vacation or furniture) or pay off credit card debt. Currently, she is also considering saving some of the money.
Starting a career
Monthly income $2,600
Living expenses $2,180
Emergency fund $530
Q1. What are financial actions and revised goals Pam might want to consider at this time?