Home > Basics > Beginner
Basics Beginner: Managing Your Debt

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
Your recurring monthly debt payments (such as credit cards) should be considered _______ in your budget.
Choose wisely. There is only one correct answer.
Ghosts of prior expenses. Although you may pay them every month, they are not current expenses. They are remnants of past expenses that you must pay off over time.
2.
When you pay back a loan, the amount of the monthly loan payments is determined by _______.
Choose wisely. There is only one correct answer.
All of the above. Principal, interest, and the term (months) of the loan determine how much each monthly payment should be.
3.
Which of the following would most likely give you additional tax savings on your loan interest?
Choose wisely. There is only one correct answer.
Home equity loan. Interest on home equity loans may be tax deductible.
4.
If you speak to your creditors when you start falling behind on your debts, they will refuse to work with you to make it easier to pay your debts.
Choose wisely. There is only one correct answer.
False. Though it isn't guaranteed, they may revise your loan terms to make it easier for you to keep paying. It is in their interest to get at least something out of you.
5.
Which of the following is TRUE about using a consumer credit counseling or debt consolidation service?
Choose wisely. There is only one correct answer.
Creditors are willing to work with these services to renegotiate or consolidate your debt. Although creditors are willing to work with you and a credit counseling or debt consolidation service, you must be wary because some are shady, charge high fees, or could damage your credit rating if they renegotiate your debt.
6.
Which type of loan typically has a lower interest rate: secured or unsecured?
Choose wisely. There is only one correct answer.
Secured. Secured loans, which are backed by collateral (such as a house or car), have lower interest rates, because having collateral lowers the risk of loss for the lender.
7.
To determine how much you should pay each month on credit card bills, _______.
Choose wisely. There is only one correct answer.
Use a financial calculator. Enter the number of months, interest rate, and principal balance to calculate the monthly payment.
8.
If you borrow money to buy an item that is able to provide cash income to you, that item can be called _______.
Choose wisely. There is only one correct answer.
An investment. Investments provide a return to you, such as income.