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Basics Beginner: Financing a Major Purchase

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1.
Credit cards and home equity lines of credit are similar in that they _______.
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Use revolving credit. They both typically make credit available again as you pay down your balance.
2.
A major purchase is a _______ expense.
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Variable. It is variable because you dont normally buy it on a regular basis.
3.
If you want to save for a big purchase over the long term, which of the following options is likely to fluctuate in value the least?
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Certificates of deposit. As a general rule, certificates of deposit are the least likely of these to fluctuate in value.
4.
Most experts recommend that an emergency fund have how many months worth of living expenses in it?
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Three to six. This is just a recommendation, however.
5.
Which of the following statements is true?
Choose wisely. There is only one correct answer.
Experts recommend building an emergency fund equal to three to six months worth of living expenses. An emergency fund should be your first savings priority, in case an unplanned major purchase becomes necessary. All of the other answers are false.