Question: Ed Weston recently lost his job. Before unemployment occurred, the Weston household (Ed; wife, Alice; two children, ages 12 and 9) had a monthly take-home income of $3,165. Each month, the money went for the following items: $880 for rent, $180 for utilities, $560 for food, $480 for automobile expenses, $300 for clothing, $280 for insurance, $250 for savings, and $235 for personal and other items. After the loss of Ed's job, the household's monthly income is $1,550 from his wife's wages and his unemployment benefits. The Westons also have savings accounts, investments, and retirement funds of $28,000.
a. What budget items might the Westons consider reducing to cope with their financial difficulties?
b. How should the Westons use their savings and retirement funds during this financial crisis? What additional sources of funds might be available to them during this period of unemployment?