Financial planning cover letter - Essay Example

Debbie $ Mike 17th July Dear client, Ref: Financial Advice on Meeting Your Goals. I appreciate this opportunity to advice you on the easiest way to pay your debts and hence manage to meet your goals of RESP for your son and enrolling for a life insurance cover. Further information is contained in the attachment and it would be advisable for you to refer as you read through this letter.From the attachment you will find: your current cashflow statement; the revised statement in which you will pay for RESP, life insurance, consolidated loan, emergency fund and also save some amount of your income and an appendix on which I have done the relevant calculations.

Your current debts include your truck loan of $25,000, car loan of $18,000, credit card balances of $2,100 and student loan balances of $8,000. Considering your cash inflow and expenses it is possible to repay all the debts in a period of four years by paying $112.74 instead of the current $91.92 in Mike’s Student loan, $67.64 instead of the current $55.15 on Debbie’s student loan, paying 64.08 instead of the minimum $58.63 on the credit cards and maintaining the current payments on the truck and car monthly payments.

To repay the debts in 4 years you will have to pay a total of $1243.50 per month.Considering the minimum debt payment rates, you are currently incurring a cost of $1243.50 per month given the high interest rates on your debts, that is, 4% on student loans, 19% on both credit cards, 6.5% on the truck loan and 9.5% on the car loan. A consolidated loan would have a lower interest rate and would cost you $1,245.53 per month and hence result in a $38.53 savings per month and hence it would be advisable to take the consolidated loan and pay for all your debts since this will enable you save more money.

It will also cost you less in 4 years paying for the loan as compared to your current debts. With all your debts paid and only paying the interest rate on the consolidated loan you will have achieved one of your major goals. Another strategy in meeting your goals will be to reduce your expenses on Internet, clothing, entertainment, restaurant, and miscellaneous expenses. From the revised cashflow you can easily see the new recommended rates on the above expenses where savings of; $250 are made on clothes, $425 on entertainment, $105 on restaurant and $175.

42 on miscellaneous expenses resulting to $955.42 savings per month.The new debt payments system and the savings on expenses will enable you meet your goal of paying RESP for your son amounting to $210, save $400, Pay a life insurance policy of $250, and pay an emergency fund of $156.39 monthly. I therefore gladly inform you that it is possible to meet your financial goals, of paying your existing debts, paying RESP for your son and taking a life insurance cover, as explained above and well highlighted and calculated in the cashflow attachment and appendix.

Kindly let me know incase you are interested in discussing this issues further. It was nice working with you and look forward to offering my financial advice in future if need be. Best regards,