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.
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.
4.
Paying only the minimum amount due on a credit card bill _______.
Increases the cost and the time it takes to repay. It is best to repay higher interest rate loans faster.
5.
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.
6.
If you speak to your creditors when you start falling behind on your debts, they will refuse to work with you to make it easier to pay your debts.
False. Though it isn't guaranteed, they may revise your loan terms to make it easier for you to keep paying. It is in their interest to get at least something out of you.
7.
A disadvantage of refinancing a short-term loan to a long-term loan is that _______.
It may cost more in the long term. Taking longer to pay a short-term loan costs more over time.
8.
Which of the following is true about bankruptcy?
It should be your last resort to resolve debt problems. Chapter 7 is liquidation bankruptcy, while Chapter 13 restructures your debt.