NAF Case Studies

Plan Your Financial Life (National Academy Foundation)

Chapter 6: Diamonds Are Forever

Fred has fallen in love with Diana so he decides it is time to buy her a diamond ring and propose marriage. After visiting three different jewelry stores, Fred spends $10,000 on a diamond ring. Last night, Fred took Diana to a fancy restaurant and presented the ring to her. Diana was very happy and thought the ring was beautiful. However, Diana is much more practical than Fred. She told him how much she loved the ring, but how it was really crazy to spend so much money on a diamond. Diana suggested that they exchange the ring for a smaller diamond that cost $2,000 and use the rest of the money to begin furnishing an apartment.

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What do you think about Diana's suggestion? What would you do if you were in this situation?