Choose wisely. There is only one correct answer to each question.
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1.
Monthly debt payments are current expenses that you need to pay in your budget.
False. Monthly debt payments are ghosts of prior expenses for which you did not have enough cash to pay at the time.
2.
Debt is always a bad thing.
False. Provided we use it wisely and pay it back, debt can provide us with many much-needed things, including assets that can rise in value.
3.
Which of the following would most likely give you additional tax savings on your loan interest?
Home equity loan. Interest on home equity loans may be tax deductible.
4.
Which of the following is TRUE about using a consumer credit counseling or debt consolidation service?
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.
5.
If you are in debt, why is it important to first deal with the causes of the debt?
It can prevent them from recurring. Though not guaranteed to, there is a good chance you can prevent future occurrences.
6.
Which of the following types of loans would you expect to have the lowest interest?
Short-term secured. Short-term and secured loans generally have lower rates than long-term or unsecured loans.
7.
A good way to reduce your monthly debt payments is to pay only the minimum amount due on credit card statements.
False. Paying the minimum amount due on credit card statements will only increase the time and money paid on a debt.
8.
Making a plan to eliminate your debt begins with _______.
Setting a target date. Setting a target date will help you determine how much to pay toward the debt each month.