Juanita is saving up to buy a truck. She wants to put $4000 down and borrow the rest. That down payment will lower the monthly payment so she can easily afford a new truck. She has been saving for 18 months and has half the money. It will take her about the same amount of time to save up the other half. What should she do with the $2000 in the meantime?

Question

Juanita is saving up to buy a truck. She wants to put $4000 down and borrow the rest. That down payment will lower the monthly payment so she can easily afford a new truck. She has been saving for 18 months and has half the money. It will take her about the same amount of time to save up the other half. What should she do with the $2000 in the meantime?

• keep it in her checking account with the money she spends regularly
• purchase a government bond and postpone the purchase
• change her strategy and borrow all of the money to get the truck sooner
• invest in a treasury bill so that she can access the money when she needs it

Answer 1

It would be wise for Juanita to invest the $2000 in a treasury bill so that she can access the money when she needs it. This way, she can potentially earn some interest on the money while also ensuring that it is easily accessible when she is ready to make the down payment on the truck. Keeping it in her checking account with regular spending money may not be the best option as it may tempt her to spend it on other things. Purchasing a government bond or changing her strategy to borrow all of the money may not be the most prudent choice in this situation.