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Financial Choices Paper
Your Task: Fix John’s financial mess!
John is leaving home to go to college. Along with an allowance from Mom and Dad, he gets a Canadian Student Loan for $13000 for one year. John lands on campus and is immediately introduced to a dizzying campus social life, which involves partying clubbing, and a big-spending friend who does not care about money.
From the $13,000, John pays course fees, activity fees, books, and accommodation. Money set aside for clothing and food are spent on partying. He doesn’t watch what he spends or pay attention to his decreasing bank balance. He thought about creating a budget before leaving home, but instead, he just spends money to do whatever he wants.
By early November, John is eating two slices of bread with porridge for every meal. His class efforts dropped, social life is bankrupt, he is getting sick all the time, and his big-spending friend has moved on. Mom and Dad’s support, a small amount, only serves to remind him how bad off he is. Once a month he lives like a king for a couple of days and spends whatever he feels like. When he doesn’t have the cash, he relies on a student credit card that has a whopping 27% interest rate and makes the minimum payment. The rest of the time, he relies on his porridge and toast.