According to Josh, “It’s hard to believe, but we don’t even have a savings account because we spend almost everything we make.” Every month, they deposit each of their paychecks in separate checking accounts. Josh pays the rent and makes the car payment. Pam buys the groceries and pays the utilities. They use the money left over to purchase new clothes and the other “necessities” for enjoying life.
In an effort to make wise use of credit, the Brocks have examined various sources that could serve their current and future financial needs. In the assessment process, they compared the APR along with various fees and potential charges.
Josh and Pam are also learning about various actions that might be useful if they encounter credit troubles. Their discussions with friends and money management advisers provided expanded knowledge of credit counseling and bankruptcy alternatives.
Renting an Apartment
Monthly income $5,840/ Living expenses $3,900/ Assets $13,500/ Liabilities $4,800/ Emergency fund $1,000
Q1. What is the minimum amount that the Brocks should have in an emergency fund? What actions might be taken to increase the amount in this fund?