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Student Loan

Decent Essays

In this essay, using the S.M.A.R.T. planning model (specific, measurable, attainable, realistic,

and timely), I will evaluate the Alice's goals of paying off student loan, buying a house and

saving for children's education, accumulating assets, retiring, and traveling around the world in

a sailboat. I will complete my evaluation with a comment.

To achieve these goals, Alice has to identify the timing of her goals. For example paying off

student loan is a short term goal, but accumulating assets is an intermediate goal and then buying

a house (paying off the house completely) and saving for children, along with the retiring plan

are long term goals.

To consider the S.M.A.R.T. model, Alice has to be realistic. Alice has $5,250 assets …show more content…

She can achieve her short term goal of paying student loan, but she won't be able to accumulate

any assets, this option is not realistic and attainable. In order to do that, she has to increase

income and decrease expenses. To achieve her long term goals, Alice has to be able to

accumulate assets which with her current financial situation and the information that we have is

not attainable.

To evaluate Alice's situation, we know that any decision that Alice makes, will be according to

her family structure, age, health and her career choice. For example, she will consider if she will

inherit any assets from her parents (for her long term goals) and she considers herself young and

healthy and she hopes to increase her income by getting more experience at her current job.

Alice has an alternative of reducing expenses, but this option puts her life in a difficult position.

Alice can think about other alternatives, taking a second job, which has no risk involved, or go to

Las Vegas and gamble for winning the money she owes which involves a risk of going deeper

into debts if she loses. The explicit and implicit costs of getting a second job are in order …show more content…

If she chooses the second job option, she will preserves any alternative that she would consider

in the future, because there is no risks involved. However, if she chooses the trip to Vegas, if she

loses, all her alternatives will be eliminated since she would go deeper in debts. Here we realize

that a risk is not just an option, but also a cost, and any available choice that someone might

preserve is a benefit.

In conclusion, when we consider Alice's feasible choices, and then we calculate the benefits,

explicit, implicit and strategic costs of each of her choices, we realize that Alice in general is not

in a bad shape. In my opinion, she should continue the way she is without any further action till

she pays off her student loan completely. Also, she does not have to buy a new car till then. The

second job will put too much pressure on her health that may affect her ability to continue her

current carrier path. Also the Vegas trip for winning money because of the high risk involved is

completely out of the question. After a few years when she gets rid of student loan, she can

easily plan for her intermediate and long term goals. After all, she is in better position than

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