Basics Beginner: Managing Your Debt

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Choose wisely. There is only one correct answer to each question.

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1.
When you pay back a loan, the amount of the monthly loan payments is determined by _______.
Choose wisely. There is only one correct answer.
All of the above. Principal, interest, and the term (months) of the loan determine how much each monthly payment should be.
2.
Your recurring monthly debt payments (such as credit cards) should be considered _______ in your budget.
Choose wisely. There is only one correct answer.
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.
3.
Your creditors may be willing to work out debt repayments rather than have you file for bankruptcy.
Choose wisely. There is only one correct answer.
True. Creditors would rather receive some payment than risk not getting any payments should you resort to bankruptcy.
4.
Making a plan to eliminate your debt begins with _______.
Choose wisely. There is only one correct answer.
Setting a target date. Setting a target date will help you determine how much to pay toward the debt each month.
5.
Which type of goods usually become worth less over time?
Choose wisely. There is only one correct answer.
Consumer goods. Consumer goods are bought to be used up. Investment goods are bought to provide income or appreciation of value.
6.
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.
7.
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.
8.
Which of the following types of loans would you expect to have the lowest interest?
Choose wisely. There is only one correct answer.
Short-term secured. Short-term and secured loans generally have lower rates than long-term or unsecured loans.