To determine Robin's net worth and provide financial advice, we will go through several steps.
### Step 1: Calculate Total Assets
Total assets are the combined value of all the things Robin owns. In this case, the assets are:
- House: [tex]$475,000
- Computers: $[/tex]7,000
- Investments: [tex]$6,000
Sum these values to find the total assets:
\[ \text{Total Assets} = \$[/tex]475,000 + \[tex]$7,000 + \$[/tex]6,000 = \[tex]$488,000 \]
### Step 2: Calculate Total Liabilities
Total liabilities are the combined value of all the debts Robin owes. In this case, the liabilities are:
- Mortgage: $[/tex]400,000
- Student Loan: [tex]$90,000
- Line of Credit: $[/tex]4,000
- Mastercard: [tex]$12,000
Sum these values to find the total liabilities:
\[ \text{Total Liabilities} = \$[/tex]400,000 + \[tex]$90,000 + \$[/tex]4,000 + \[tex]$12,000 = \$[/tex]506,000 \]
### Step 3: Calculate Net Worth (Equity)
Net worth, or equity, is calculated by subtracting total liabilities from total assets:
[tex]\[ \text{Equity} = \text{Total Assets} - \text{Total Liabilities} \][/tex]
[tex]\[ \text{Equity} = \$488,000 - \$506,000 = -\$18,000 \][/tex]
So, Robin's net worth is [tex]\(-\$18,000\)[/tex].
### Financial Recommendations
1. Debt Reduction Plan: Robin has significant liabilities, especially the mortgage and student loan. Developing a strategic debt repayment plan, possibly with the help of a financial advisor, can help reduce high-interest debts more quickly.
2. Budget Adjustment: Although Robin's income is quite high, they are also spending a substantial amount annually. Reviewing their spending habits and cutting down unnecessary expenses can free up funds to pay off debts and increase savings.
3. Increase Savings: Setting up an emergency fund and regular savings plan can help build a financial cushion that improves net worth over time. Even small, consistent contributions can grow significantly due to the power of compounding interest.
4. Invest Wisely: If there is any disposable income after addressing immediate debts, consider investing in low-risk options or retirement funds to increase assets gradually.
By implementing these changes, Robin can work towards improving their net worth and achieving better financial stability.
