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Basics Beginner: Managing Your Debt

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1.
Which of the following are ways to lower your monthly debt payments?
Choose wisely. There is only one correct answer.
All of the above. These are all ways to reduce your monthly debt payments.
2.
Making a plan to eliminate your debt begins with _______.
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Setting a target date. Setting a target date will help you determine how much to pay toward the debt each month.
3.
Which of the following is TRUE about using a consumer credit counseling or debt consolidation service?
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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.
Which of the following would most likely give you additional tax savings on your loan interest?
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Home equity loan. Interest on home equity loans may be tax deductible.
5.
Monthly debt payments are current expenses that you need to pay in your budget.
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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 borrow money to buy an item that is able to provide cash income to you, that item can be called _______.
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An investment. Investments provide a return to you, such as income.
7.
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.
8.
If you are in debt, why is it important to first deal with the causes of the debt?
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It can prevent them from recurring. Though not guaranteed to, there is a good chance you can prevent future occurrences.