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Since the major portion of Pam’s income is based on commission, her earnings vary from one

month to the next. This situation makes it difficult for her to establish a realistic budget. During
lean months, she has had to resort to using her credit card to make ends meet. In fact, her credit
card debt, $3,470, is at a fairly high level. In addition, she has not been able to save much for
various unexpected expenses and for her long-term financial security.
During the year, Pam has had tax withholding greater than her actual tax liability. As a result,
Pam is expecting a fairly large tax refund. In the past, she has always used tax refunds to finance
major purchases (a vacation or furniture) or pay off credit card debt. Currently, she is also
considering saving some of the money.
Questions
1. Q1. How might Pam budget for fluctuations in her income caused by commission
earnings?
2. Q2. What are financial actions and revised goals Pam might want to consider at this time?
3. Q3. Assume Pam's federal tax refund is $1,100. Given her current situation, what should
she do with the refund?
4. Q4. Based on her current and future life situation, what tax planning activities might Pam
consider?
Life Situation Financial Data
Single Monthly income $2,600
Age 22 Living expenses $2,180
Starting a career Assets $8,200
No dependents
Liabilities $3,470
Emergency fund $530

For each question, answer with 2-3 paragraphs in MLA format. Include proper citations and
work cited.