Sami, 34, and Ronald, 31, want to buy their first home. Their current combined net income is $65,000 and they have two auto loans totalling $32,000. They have saved approximately $12,00 for the purchase of their home and have total assets worth $55,000 which are mostly savings for retirement. Ronald has always been cautious about spending large amounts of money, but sami really likes the idea of owning their own home. They do not have a budget but they do keep track of their expenses, which amounted to $55,000 last year including taxes. They pay off all credit card bills on a monthly basis and do not have any other debts or loans outstanding. Other than that, they do not spend a great deal of time tracking their finances.

1. What financial statements should Sami and Ronald prepare to begin realizing their home purchase goal? What records should they use to compile these statements?

2. Use the worksheets or simply calculate their net worth and income surplus. How does their net worth compare to other "thirty-some things"?

3. Calculate and interpret their month's living expenses covered ratio and their debt ratio.

4. What other information would be necessary or helpful to develop more complete statements? Give as much detail as possible.

5. What six- to eight- step process should Sami and Ronald undertake to develop a budget?

6. Why might adopting Principle 6: Waste Not, Want Not- Smart Spending Matters be important to Sami and Ronald, given their goal of home ownership?