Choose wisely. There is only one correct answer to each question.
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1.
You will usually have to pay additional costs for the privilege of consolidating your loans.
True. Take these costs into account before you consolidate loans.
2.
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.
3.
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.
4.
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.
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.
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.
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.