Personal Finance Chapter 4

Almost _____% of Americans are living paycheck to paycheck. 70
When it comes to debt, if you tell a lie or spread a _____ long enough, eventually it becomes accepted as the _____. The truth is, debt is a product – the most successfully marketed product in history. Myth ; truth
Debt has been ______ to us with such intensity for so long that to imagine living without it requires a complete _______ shift – a completely new way of looking at things. Marketed ; paradigm
The first myth is the belief that you have to build _____. The credit industry wants you to believe this. Credit is NOT necessary to survive. The truth is there is ____ good reason to go into debt. Credit ; no
The second myth is that you can spend money on whatever you want while in _____ and pay for it later when you’re making more _____. College ; money
The third myth is that you need a _____ car. You should buy the car you can afford – with cash. New
Don’t fall for these myths. _____ debt, save for emergencies and large purchases, and learn to say no, even when people around you won’t. Avoid
Myth : If I _____ money to a friend or relative, I will be helping them. Loan
Truth : the relationship will be strained or _______. Destroyed
Myth : By ______ a loan, I am helping out a friend or relative. Cosigning
Truth : The bank requires a co-signer because the person isn’t likely to ______. Be ready to pay the loan and have your credit damaged. Repay
Myth : ______ _______, payday lending, rent – to – own, title pawning, and tote – the – note lots are needed ________ for lower income people to help them get ahead. Cash advance ; services
Eighth percent of ________ in America are first – generation rich. That means they started with nothing, did smart stuff, and become millionaires. That’s the opposite of what we’re talking about here. Millionaires
Myth : The _______ and other forms of gambling will make me ______. Lottery ; rich
Truth : the lottery is a _____ on the poor and on people who can’t do math. Tax
Texas tech university did a study on the Texas lottery and found that, of those who play the lottery, people without a high school diploma spent an average of $____ a month playing the lottery. College graduates spent $____ a month on average. 173 ; 49
Myth : ____ payments are a way of life, and you’ll always have one. Car
Truth : Staying away from car payments by driving reliable used cars is what the typical _______ does. That is how they became millionaires. Millionaire
Myth : _______ your car is what sophistical financial people do. You should always lease things that go down in value. These are tax advantages. Leasing
Truth : consumer reports, smart money magazine and a good calculator will tell you that the car _____ is the most ______ way to Finance and operate a vehicle. Lease ; expensive
If you own a business, you can _____ ______ your paid – for car on taxes without making payments for the privilege. Write off
The way to ______ the money lost on things that go down in value is to buy slightly ______. Minimize ; used
Myth : you can get a good deal on a ____ car. New
Truth : a new car loses ____% of its value in the first four years. This is the largest purchase ,pst consumers make that goes down in value. 70
Myth : I’ll take outs 30-year mortgage and pay _____ on it. I promise! Extra
Truth : life happens and something else will always seem more important. Never take out more than a ____-year fixed mortgage rate. 15
Myth : You need a _____ ______ to rent a car or make a purchase online or by phone. Credit card
Truth : A _____ card does all of that. The only thing you can’t do with a debit card that you can do with a credit card is go into debt! Debit
Myth : I pay my _____ _____ off every month with no annual payment or fee. I get brownie points, air miles, and a free hat. Credit card
Truth : When you use cash instead of plastic, you spend ________% less because spending cash hurts. 12-18
Myth : I’ll make sure my ______ gets a credit card so he or she can learn to be responsible with money. Teenager
Teens are a huge ______ of credit card companies today. Target
Debt is a _____. It should be used to create prosperity. Tool
Truth : the ______ is slave to the lender. Borrower
When surveyed, the Forbes 400 were asked, “What is the most important key to building wealth?” _____% of replied that becoming and staying ____-free was the number one key to wealth building. 75 ; debt
Myth : you need to take out a credit card or car loan to “build up your ______ ______.” Credit score
Truth : The ______ score is an “I love _____” score and is not a measure of winning financially. In fact, it can often mean the opposite. FICO ; debt
Identity theft is the fastest growing _____-______ crime in North America today. White collar
Place a _____-______ alert on your credit bureau report. Fraud victim
File a ______ report and keep a copy of the report for your personal records. Police
Remember, this is ______. You owe ______ and should pay nothing. Theft ; nothing
Contact the fraud-victim division of the three main credit reporting companies and furnish _________. Documentation
Be persistent. This will take some time. You now have a new ______. Hobby
Credit report A detailed report of an individual’s credit history
Loan term Time frame that a loan agreement is in force, and before or at the end of which the loan should either be repaid or renegotiated for another term.
Depreciation A decrease or loss in value
Credit score A measure of an individuals credit risk ; calculated from a credit report using a standardized formula
Debt Snowball Preferred method of debt repayment ; includes a list of all debts organized from smallest to largest balance ; minimum payments are made to all debts except for the smallest, which is attacked with the largest possible payments
Annual percentage rate Cost of borrowing money on an annual basis ; takes into account the interest rate and other related fees on a loan
Credit card Type of card issued by a bank that allows users to finance a purchase
Annual fee A yearly fee that’s charged by the credit card company for the convenience of the credit card
True or false : you must establish credit in order to buy a house False
True or false : if you are a victim of identity theft, you are only responsible for laying back half of the debt. False
Which of the following is not a factor in deterring a FICO score? A. Paying cash for all purchases B. Getting a personal loan from a bankC. Using credit cards D. Taking out a mortgage on a house A. Paying cash for all purchases
Which of the following is not a good idea for getting out of debt?A. Quit borrowing moneyB. Get a part-time job or work overtimeC. Borrow money from your parents to pay off the debt D. Sell something C. Borrow money from your parents to pay off the debt
Which of the following things cannot be done with a debit card but can be done with a credit card?A. Rent a carB. Purchase something onlineC. Go into debtD. Purchase an airline ticket C. Go into debt
Why is an adjustable rate mortgage (ARM) a bad idea? You want a fixed rate mortgage
Explain why financing a car is a bad idea. You end up paying more for your car because of interest
Describe the negative consequences of taking on debt. What effect can debt have on your future? You could go bankrupt and never be able to get out of debt
What are some things you can do to protect your personal information? Check your checkbook and make sure your billing statements arrive on time
Explain how the debt snowball works. You pay the least expensive debt until all of it is paid off

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