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NPLD 790 final- class presentation

Mikaela Levons

on 16 December 2009

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Transcript of Newlyweds

Upon graduating they married their college sweethearts, Layla & Mandy
Layla was at Rutgers Camden Law & Steve was a program coordinator at the YMCA of Camden County, so they rented at The Victor on the Waterfront
Steve & Chris were best friends at Yaverton University
Chris & Mandy bought a place in NYC, where Chris enrolled at Columbia Med & Mandy worked for Accenture. Mandy's dad insisted on giving them the 20% downpayment for their condo
Chris & Mandy's monthly expenses...
Layla & Steve's monthly expenses
Chris & Mandy have about SEVEN times as much wealth as Steve & Layla...
and if you look at current assets, the differential is more stark.
What will happen if Steve loses his job?
When they examine
their cash flows each month,
they both save about
but is that the full picture?
Balance sheets always tell the true story of wealth... not income statements
Steve used the MSRP of his car to represent the value. He didn't recognize the rapid depreciation of new vehicles-- his car lost value the minute it left the lot!
Steve & Layla looked up the College Board's 2009 value of an undergraduate degree: $300k! They decided to stay conservative & use their tuition as an estimate.
Chris & Mandy don't think much about Chris' trust fund, because they don't plan to use it unless they have an emergency. But it's a huge asset! They also have some value on their car, but no debt associated. Best of all, they have an appreciating asset-- their condo-- on the books. They're in great financial shape.
The couples didn't know what to make of the big wealth disparity... they sought out their accounting prof from Yaverton-- Prof. Dalai.
She wasn't surprised. She told Steve & Layla: "You have more debt because you don’t have parents who could afford to pay your tuition, college expenses, or wedding costs. Buying a brand new car may not have been wise, since it depreciates. Plus you support Steve's grandma, another unusual expense.
"Because of our country’s history of racial inequality, the average black family headed by a person over 65 has no net financial assets to pass down to its children. Steve & Layla’s family background means that they’ll have to work harder than their Yaverton peers to accumulate wealth.
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