Choose wisely. There is only one correct answer to each question.
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1.
Which type of goods usually become worth less over time?
Consumer goods. Consumer goods are bought to be used up. Investment goods are bought to provide income or appreciation of value.
2.
You probably have too much debt if the percentage of your monthly loan payments (excluding your mortgage) to your monthly take-home pay exceeds _______.
15%. Financial advisors agree that consumer debt in excess of 15–20% is probably too much debt and should be reduced.
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.
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.
5.
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.
6.
If you file for bankruptcy, the bankruptcy will stay on your credit record for _______ years.
10. After 10 years, it will disappear.
7.
Which type of loan typically has a lower interest rate: secured or unsecured?
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.
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.