Personal Finance Assignment Essay Example | Topics and Well Written Essays - 500 words

Personal Finance Assignment - Essay Example The kinds of credit available can be categorized into two; short term credit and long-term credit depending on the repayment period (Chandra 56). Purchasing of a new camera and a wardrobe for business does not require a lot of cash; Sam and Judy can opt to take a short term loan for purchase of these two items. On the other hand, they can take long term credit for the purchase of a new 52 inch television and a car. Another credit available to them is personal savings. While budgeting, it is vital that things that need to be purchased be arranged in order of priority (Chandra 27). Without arranging the purchases in order of priority, a person ends up buying the wrong commodity not required within the period. It is noteworthy that Sam and Judy should consider buying what is necessary to them at the moment. Suitable clothing for business wear is the most vital commodity to consider buying. They should purchase clothing immediately since they need them when in business. In purchasing clothing, they can use personal savings or short term loans. A camera, car and television, should be purchased later after purchasing clothing. This is because a camera, car and television are luxury commodities that the two can live without (Chandra 44). If the two were to take a loan in purchasing the commodities, then they would have an extra monthly budget of the following: camera $ 900, car $11000, television $ 2500, and clothing $ 3000. These new expenses add up to $ 17,400. These expenses cannot be payable once. Hence, Sam and Judy have to appropriate the total cost into a period of twenty four months; so as to determine how much they will term as expenses per month in purchasing the items. Dividing $ 17,400 by 24 months, $ 725 is the new, additional monthly expense. From the old budget, it was estimated that total monthly expenses totaled to $ 2778. With the purchase of the new items, the old monthly budget will expand. The items that are to be purchased using loan can be