Choose wisely. There is only one correct answer to each question.
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1.
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.
2.
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.
3.
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.
4.
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.
5.
If you borrow money to buy an item that is able to provide cash income to you, that item can be called _______.
An investment. Investments provide a return to you, such as income.
6.
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.
7.
If you file for bankruptcy, the bankruptcy will stay on your credit record for _______ years.
10. After 10 years, it will disappear.
8.
To determine how much you should pay each month on credit card bills, _______.
Use a financial calculator. Enter the number of months, interest rate, and principal balance to calculate the monthly payment.