Foundations In Personal Finance: Money In Review Chapter 4

Debt consolidation Combining debt into one payment
Co-signing Taking responsibility for someone else’s loan
Leasing Long-term rental agreement
Cash advance Charges of 400% and up for their services
Paradigm A different way of looking at something
Home equity loan Using your home as collateral to borrow money
Credit Money loaned
Debt consolidation is wise False
You need a credit card to rent a car False
Buying used cars is a good way to minimize depreciation True
The typical millionaire drives new cars False
The elderly are the number one target of credit card companies False
Co-signing a loan is a good way to help a friend or relative False
The lottery is a tax on the poor and on people who can’t do math True
Home equity loans are a good way to consolidate debt False
It is never wise to take out an ARM or balloon mortgage True
Paying off the balance of your credit card each month is an acceptable use of credit False
The best way to teach teenagers about money is to get them a credit card False
It is best to attack your debt by consolidating many payments into one False
Carrying cash results in an increase of spending versus paying with credit False
Why do people go into debt when they know they will have to pay more for an item once they figure interest? •aren’t willing to wait•don’t feel that pain when using a credit card•instant gratification
Why are teens such a major target of the credit card industry? •adult market is saturated •brand loyalty
How do cash advance and car title companies keep people in the cycle of debt? •they’re located where there are poor people•give you what you want when you want it
Why is it better to buy a used car instead of a brand new vehicle? New cars depreciate value faster.
Why does debt consolidation typically not save money? The interest rate is either the same or higher, so there won’t be a positive impact.
Explain how the debt snowball works. Pay off debts lowest to highest and put whatever the minimum monthly payment was towards your next debt.
What are the five steps to get out of debt? 1 quit borrowing2 save money3 sell something4 work part-time or overtime 5 use the debt snowball
How can lending money cause problems in a relationship? •may strain or destroy the relationship•slave and master vs. friends or relatives

Leave a Reply

Your email address will not be published. Required fields are marked *