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?

• 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
• keep it in her checking account with the money she spends regularly

Answer 1

I would suggest that Juanita invest the $2000 in a treasury bill so that she can access the money when she needs it for the truck purchase. This way, the money will be relatively safe and easily accessible when she is ready to make the down payment and purchase the truck. She will also continue to earn some interest on the money while she saves up the remaining amount.