Susan Wong

After Susan Wong graduated from State University with a degree in Operations Research, she went to work for a computer systems development firm in the Washington, D.C., area. As a student at State, Susan paid her normal monthly living expenses for apartment rent, food, and entertainment out of a bank account set up by her parents. Each month they would deposit a specific amount of cash into Susan's account. Her parents also paid her gas, telephone, and bank credit card bills, which were sent directly to them. Susan never had to worry about things like health, car, homeowners', and life insurance; utilities; driver's and car licenses; magazine subscriptions; and so on. Thus, while she was used to spending within a specific monthly budget in college, she was unprepared for the irregular monthly liabilities she encountered once she got a job and was on her own.
In some months Susan's bills would be modest and she would spend accordingly, only to be confronted the next month with a large insurance premium, or a bill for property taxes on her condominium, or a large credit card bill, or a bill for a magazine subscription, and so on the next month. Such unexpected expenditures would result in months when she could not balance her checking account; she would have to pay her bills with her bank credit card and then payoff her accumulated debt in installments while incurring high interest charges. By the end of her first year out of school she had hoped to have some money saved to begin an investment program, but instead she found herself in debt.
Frustrated by her predicament, Susan decided to get her financial situation in order. First, she sold the condominium that her parents had helped her purchase and moved into a cheaper apartment. This gave her enough cash to clear her outstanding debts with $3,800 left over to start the new year with. Susan then decided to use some of the operations research she had learned in college to help her develop a budget. Specifically,