A married couple has come into your office to discuss developing a financial pl

A married couple has come into your office to discuss developing a financial plan but have not brought any financial documents with them. ***Based on their current information, please provide them with appropriate feedback (at least 25 specific suggestions/recommendations).***
Dave and Sharon Sampson are 30 years old and have two children, ages five and six. They married seven years ago and Sharon stopped working six years ago when her oldest son was born. They live off of Dave’s income of $43,000. They have not been able to save much money after paying their mortgage and monthly expenses. Now that both boys are in school all day, Sharon will be getting a part time job at a department store earning $18,000. They are hoping that the extra money can be used to save for the children’s education and begin investing. They assume that since they are so young they should invest heavily in the stock market but don’t know what to buy.
The Sampsons do get approximately $4,000 back each year from their tax return and use this money to fund the family vacation. Their record keeping consists of a filing cabinet with folders containing all bills since they were married. They have no emergency fund but realize that they need to save about $1,000 to fund this account. The Sampsons purchased their own home seven years ago which is valued at $100,000 and carries a 30 year mortgage of $90,000 with a fixed-rate of 4.6%. They have a homeowner’s insurance policy and a floater policy for a ring inherited from Sharon’s mom worth $12,000. They pay just above the minimum on their two credit cards that have balances in excess of $8,000 and carry interest rates of 22% and 23%, respectively. They own their two cars that are 8 and 10 years old and carry insurance of 50/200/100. Sharon thinks that she needs to get a new car because her small Toyota can only fit her two boys in the back seat and she now car-pools with several other moms to school. They want to buy a new car, so they don’t have any unexpected mechanical issues with a used car, but they do not have any money for the down payment. In addition, Dave owns an antique Harley motorcycle that is valued at $35,000. Dave does not ride the motorcycle so they carry no insurance on it; he keeps it for sentimental value as it was his father’s.
The family is covered under Dave’s company’s medical group insurance. The company offers both an HMO and a PPO; the Sampsons are currently enrolled in the PPO program. Sharon thinks if they switch to the HMO they may save on their monthly contributions but she is unsure if the boy’s doctors are plan providers. This coverage includes dental and orthodontics. The company does not provide vision, disability insurance, or long term care. Term life insurance is provided by the firm at 2xs Dave’s salary. They are unsure if that is sufficient coverage and were thinking of taking out a whole life policy for $500,000 on Dave and $250,000 on Sharon. Now that Sharon will be contributing to the monthly income, Sharon and Dave would like to begin investing; however, they are unsure of where to begin. Dave contributes 2.5% of his income to his 401k plan; his employer will match up to 5%. Dave would like your opinion as to what he should be invested in for retirement. He is unsure of his current 401k balance and the asset allocation but thinks that his plan is with Fidelity and is invested in mutual funds. He can get the information, if necessary. Dave is unsure if he is contributing enough to this account but does not see any benefit to increasing this contribution since they need the extra monthly income now and since they will not be retiring for 30 more years. Dave also does not understand the benefit of a Roth IRA or a spousal IRA account for Sharon. His philosophy is that they need all of their current income to pay bills and put the boys through college. As a result of this goal, the Sampsons would like to start saving for the boys’ college education. They assume that the more aggressive the stocks that they select, the more money they will have available to pay for school.