Problem
6. Spending Wisely Larry's personal balance sheet shows \( \$ 1,200 \) in credit card debts; a savings account of \( \$ 550 \); and personal property amounting to \( \$ 3,700 \) in rare stamps. Recently he was promoted at his part-time job. Because of that and because he made an effort to reduce his expenses, he had a positive cash flow of \( \$ 600 \) last month. He asks what you think he should do with the surplus cash. Present Evaluate Larry's possible choices and come up with a specific plan of action for his use of the surplus.
Solution
Step 1 ：Calculate net worth: $3,700 + $550 - $1,200 = $3,050
Step 2 ：Pay off credit card debt: $600 - $1,200 = -$600
Step 3 ：Increase savings account: $600 - $1,200 + $1,200 = $600
