Choose wisely. There is only one correct answer to each question.
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1.
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.
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 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.
4.
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.
5.
Your creditors may be willing to work out debt repayments rather than have you file for bankruptcy.
True. Creditors would rather receive some payment than risk not getting any payments should you resort to bankruptcy.
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.
Your recurring monthly debt payments (such as credit cards) should be considered _______ in your budget.
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.
8.
When calculating payments for debts that use different interest rates, it is most effective to use the debt with the highest interest rate.
True. This can help you pay off your total debt faster.