Five years have passed and Jamie Lee, 34, is considering taking the plunge: Not only is she engaged to be married, but she is also deciding on whether to purchase a new home.

Jamie Lee's cupcake café is a success! It has been open over a year now and has earned itself rave reviews in the local press and from its regular customers, who just cannot get enough of her delicious cupcakes. One such customer, who stopped by on a whim in the café's first week of business, is Ross. After a whirlwind courtship, Ross, a self-employed web page designer, proposed and Jamie Lee agreed to be his wife.

The bungalow that Jamie Lee has been renting for the past five years is too small for the soon-to-be newlyweds, so Jamie Lee and Ross are trying to decide if they should move to another rental or purchase a home of their own. They agreed to visit their local banker to get an idea of how much home they can afford with their combined incomes.

Current Financial Situation

Assets (Jamie Lee and Ross combined): Checking account, $4,300 Savings account, $55,200 Emergency fund savings account,

$19,100 IRA balance, $24,000 Cars, $12,000 (Jamie Lee) and $20,000

(Ross)

Liabilities (Jamie Lee and Ross combined): Student loan balance, $0 Credit card balance, $0 Car loans, $8,000

Income:

Jamie Lee, $45,000 gross income ($31,500 net income after taxes)

Ross, $70,000 gross income ($59,000 net income after taxes)

Monthly Expenses (Jamie Lee and Ross combined):

Utilities, $160 Food, $325 Gas/Maintenance, $275 Credit card payment, $0 Car loan payment, $289 Entertainment, $300

1. Using "Your Personal Financial Plan" sheet 22, compare the advantages and the disadvantages of renting a home or apartment to those of purchasing a home.