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Basics Beginner: Managing Your Debt

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1.
A disadvantage of refinancing a short-term loan to a long-term loan is that _______.
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It may cost more in the long term. Taking longer to pay a short-term loan costs more over time.
2.
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.
3.
Which of the following are ways to lower your monthly debt payments?
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All of the above. These are all ways to reduce your monthly debt payments.
4.
Your creditors may be willing to work out debt repayments rather than have you file for bankruptcy.
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True. Creditors would rather receive some payment than risk not getting any payments should you resort to bankruptcy.
5.
Paying only the minimum amount due on a credit card bill _______.
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Increases the cost and the time it takes to repay. It is best to repay higher interest rate loans faster.
6.
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.
7.
Which type of goods usually become worth less over time?
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Consumer goods. Consumer goods are bought to be used up. Investment goods are bought to provide income or appreciation of value.
8.
When calculating payments for debts that use different interest rates, it is most effective to use the debt with the highest interest rate.
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True. This can help you pay off your total debt faster.