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248. Shorty is worried that his health may soon deteriorate to the point where he will no longer
be able to take care of his own finances. One way he could ease his mind would be to:
Mini-Case
Ira Roth and Penny Weiss met and married in the early 1990s, during their days at State
University. Both came from families with limited financial resources. They had to work at part-
time jobs during school, and still needed student loans to help pay for their college education. Ira
and Penny shared a strong work ethic and had a great desire to succeed financially and enjoy the
good life.
Penny and Ira quickly experienced financial success in the latter half of the booming 1990s. Ira
used his marketing major and extensive knowledge of computers to obtain a high-paying job in a
successful dot-com business. Penny, who cleaned homes to earn money during college, used her
experience to start her own business. Her entrepreneurial spirit surprised Ira and their friends,
and she built a successful cleaning business with a growing base of residential clients and even a
few commercial customers. She soon had to hire several part-time employees to keep up with
demand. With money rolling in, Ira and Penny began to live the good life, buying an expensive
new car, a state-of-the-art home entertainment center, and expensive wardrobes. As busy as
they were, and as hard as they both worked, they often found it easier to dine at a nice
restaurant rather than fix meals at home.
When the dot-com bubble burst in the early 2000s, Ira was lucky enough to keep his job, but was
forced to take a significant pay cut. The economic downturn forced some of the households and
businesses that used Penny's company to cut back on professional cleanings, so her business
suffered too. Soon the couple was struggling to pay the rent on their upscale apartment. They
began relying on credit cards to cover expenses, but after a few months the credit limits on their
cards had been reached. They fell behind in paying off their student loans and started getting
some unpleasant calls from bill collectors. The stress and frustration led to arguments that began
to threaten their personal relationship. With their personal finances out of control, Ira and Penny
knew that they had to make changes to save not only their financial dreams, but also their
marriage. However, they were at a loss as to where to start. Family members encouraged them to
seek the advice of a financial planner. The couple reluctantly agreed that this was something
they needed to do.
249. One of the first things the financial planner is likely to have them do would be to:
250. By using the financial planner's advice, Penny and Ira were able to find ways to cut back
on their spending and began to live more modestly. They began to have a few hundred dollars left
over each month after handling their normal expenses. Which of the following is the first thing
they should do with their extra money?
251. As their situation began to improve, the financial adviser began discussing investment
strategies with Penny and Ira. He suggested that they might want to invest in the stock market.
He surprised them by saying that they should try to buy stocks during a major downturn in the
market—just when most people were trying to sell. This statement suggests that the financial
adviser agreed with the:
252. Once Ira and Penny achieved a more solid financial foundation, they began to consider
the purchase of a home. From a financial standpoint, a sound strategy for them to consider would
be to:
253. In saving for retirement, Penny could take advantage of the unique tax shelter offered
only to small-business owners in a:
254. What advice might a personal financial advisor offer a recent college graduate desiring to
become financially secure?
255. What are the advantages of investing in a home?
256. Identify and discuss the six steps that individuals can take to gain control of their
personal finances.
257. Compare the basic features of the traditional IRA and Roth IRA.
258. How does term insurance differ from whole life insurance? Describe the newer types of
life insurance that have been offered in recent years.
259. Describe the major steps involved in estate planning.
