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lee_case_study-newlyweds.PDF The Lee Case Study Megan and Kevin Lee--The Newlyweds Megan and Kevin were married just a few months ago, and they are happily adjusting to their new lives together. Megan, who grew up in San Diego, and Kevin, who grew up in a small town 30 miles from Memphis, met at State University and dated for most of their college careers. Both had enrolled in a large Physics course, and they happened to sit next to each other the first day of class. By the end of the week, they each decided the only way to survive the class was to organize a study group...and by the end of the semester they were “an item.” While neither of them decided to become a physics major, Megan did receive her Bachelors degree in psychology and started graduate school two years ago. Kevin received his Bachelors degree in Business last summer and began his first job with a large consulting firm soon thereafter. He received a $5,000 signing bonus that he used to open a money market mutual fund and to buy stock in AT&T. The first few months of marriage have been accompanied by many changes in both Megan and Kevin’s lives. These include the normal challenges of merging two individual lives into one (e.g., selecting an apartment, taking a spouse’s needs and wants into account when deciding on employment, etc.). But, as with many couples, financial management issues have been particularly challenging. While dating they were each somewhat aware of the other’s spending patterns and college funding, but financial practices were considered individual choices and not really discussed. Now as a married couple they want to merge their finances, so both past and future financial management practices are topics of debate. The good news is that Megan and Kevin communicate well with each other. They have always been able to express their opinions, even conflicting opinions, without letting the conflicts become personal in nature. In addition, a two-day financial planning seminar given by an experienced Certified Financial Planner (CFP) practitioner was one of the perks offered by Kevin’s employer for all new employees and their spouses. This combination of instruction and personal communication skills has provided Megan and Kevin with the tools to start tackling their financial planning issues. The bad new is that there are some difficult issues to tackle. They have significant debt, some education loans as well as credit card balances. While Kevin’s father supported him financially for at least half of his college costs, Megan provided for most of her own college expenses. In addition, after years of college Megan and Kevin are experiencing pent up demand--the urge to buy new clothes, furniture, cars, etc.--now that Kevin finally has a real job with a good income. Then there are decisions to make about employer benefit plans, insurance, savings, etc. And finally, Kevin is concerned about his father’s (Lyle Lee’s) financial future. His mother died when Kevin was in high school, and his father (now age 50) has worked hard to see that all three children were able to finish college. However, Kevin is concerned that his father has not been able to provide for his own retirement. Motivated by the financial planning seminar they attended, Megan and Kevin have worked the past couple months to gather as much financial information as they could. Since they had little idea about how much they were spending on things like eating out, entertainment, etc., they have been keeping track of all their expenditures for the last two months. They have now filled out the following forms they received at the seminar as completely as possible. Read the information Megan and Kevin have provided so that you can “get acquainted” with them. As you first read the case, you probably will not understand all the vocabulary or why certain information is even included. Feel free to read ahead in your text or ask about terms that are not clear to you. By the time you reach the end of this course, Megan and Kevin, as well as their financial lives, will be old friends, and you will feel very comfortable with what all of this means! PERSONAL FINANCIAL INFORMATION Client Information Spouse Information Name: Kevin Lyle Lee Name: Megan Lynne Lee Birth Date: October 7, 1978 Birth Date: July 28, 1976 Soc. Sec. No.: 459-23-8887 Soc. Sec. No.: 323-54-3990 Business Phone: 512/555-5379 Business Phone: 512/555-5697 Residence Address: 1626 Volunteer Dr. #425 Smithvale, USA 78131 Home Phone: 512/555-9836 Wedding Date: July 18, 2001 CHILDREN Name Birth Date Social Security Number Grade None EDUCATION School Degree Year Received Kevin State University B.A. Business August, 2001 Megan State University B.A. Psychology May, 1999 State University Ph.D. Social Work May, 2004 (projected) OCCUPATION Employer Position Years From To Kevin DeVitt Consulting Computer Information Specialist 2001-present Megan State University Teaching/Research Assistant 1999-present FINANCIAL PLANNING CONSULTANTS Name Address Phone Financial Planner Eric Anderson, CFP Anderson Financial Consultants 555-1256 Attorney None Securities Broker None Bank Officer None State University Credit Union Smithvale, USA 60131 555-6662 Insurance Agent Alice Rodriguez The Axtell Agency 1563 Trail Brush Smithvale, USA 60131 555-6722 FINANCIAL PLANNING DOCUMENTS Location Personal Property Inventory None Wills/Trusts: None Insurance: Life Group policy through DeVitt Consulting Information booklet in desk drawer at home Health Group coverage through DeVitt Consulting Information booklet in desk drawer at home Dental Group coverage through DeVitt Consulting Information booklet in desk drawer at home Disability income None Auto Policy in desk drawer at home Homeowners/ Renters None Deeds: Auto In desk drawer at home Birth/Marriage/Other Certificates: Birth Marriage Megan’s is in desk drawer, but cannot find Kevin’s In desk drawer at home ASSETS - January 1, 2002 LOCATION BALANCE RATE OF INTEREST MATURITY CHECKING State Univ. Credit Union1,2 State Univ. Credit Union1,3 (minimum balance acct.) $ 4,809 $ 780 N/A N/A N/A N/A MONEY MARKET ACCOUNTS/FUNDS State Univ. Credit Union1,4 (opened 2001) Fidelity Cash Reserves2 (opened 2001) $ 2,603 $ 3,610 2.5% 4.9% N/A N/A SAVINGS ACCT. First National Bank1,3 (opened 1983) $ 518 2.0% N/A CASH ON HAND Desk drawer at home $ 340 N/A N/A VESTED PENSION 401(k)-DeVitt Consulting See Security Investments $ 558 SECURITY INVESTMENTS Cost Current Value Security # Shares Date Acquired Per Share Total Per Share Total AT&T2