medium · Certified Financial Planner General Principles
Mrs. Gallo, a self-employed consultant, has a monthly non-discretionary cash outflow of $6,000. She currently has $2,000 in a savings account and 15,000 in credit card debt with an annual interest rate of 22%. She expects a 10,000 surplus this month.
Applying Heuristic H6 and the Order of Surplus Allocation, what should be the first use of the surplus?
- Apply the entire 10,000 to the credit card balance to achieve a guaranteed 22% return.
- Increase the savings account to $6,000 to establish a one-month starter emergency reserve.
- Contribute $7,500 to a traditional IRA to lower her current-year taxable income.
- Allocate the surplus to a high-yield brokerage account to maintain liquidity for business expenses.
Sign up free to see the explanation and track your rank →
More Certified Financial Planner General Principles practice
- What is the maximum amount that can be sheltered by the annual gift tax exclusion if the p
- For 2026, which portion of their interest is deductible as an itemized deduction?
- The Solis family is concerned about 'Bond Convexity.' If interest rates rise by 2%, what w
- If interest rates rise by 100 basis points, which of the following best describes the expe
- Based on the 2026 Parameter Lock and SECURE 2.0, which statement is correct?
- The Hartwell household is reviewing a bond portfolio. If int… — Which concept explains thi
- Using the 2026 Parameter Lock, what is the maximum amount she can transfer directly from h
- Which of the following is brought back into his gross estate under the 3-year lookback rul