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Basics Beginner: Managing Your Debt

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1.
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.
2.
Monthly debt payments are current expenses that you need to pay in your budget.
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False. Monthly debt payments are ghosts of prior expenses for which you did not have enough cash to pay at the time.
3.
If you borrow money to buy an item that is able to provide cash income to you, that item can be called _______.
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An investment. Investments provide a return to you, such as income.
4.
When you pay back a loan, the amount of the monthly loan payments is determined by _______.
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All of the above. Principal, interest, and the term (months) of the loan determine how much each monthly payment should be.
5.
Which of the following types of loans would you expect to have the lowest interest?
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Short-term secured. Short-term and secured loans generally have lower rates than long-term or unsecured loans.
6.
If you are in debt, why is it important to first deal with the causes of the debt?
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It can prevent them from recurring. Though not guaranteed to, there is a good chance you can prevent future occurrences.
7.
If you file for bankruptcy, the bankruptcy will stay on your credit record for _______ years.
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10. After 10 years, it will disappear.
8.
You will usually have to pay additional costs for the privilege of consolidating your loans.
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True. Take these costs into account before you consolidate loans.