Personal Finance Chapter 3 – Flashcards
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Which type of loan can be used for debt consolidation?
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home equity
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Which of the following is TRUE about using credit?
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When using credit, one spends more
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Kevin has the following debts: Home Equity Loan, $24,000; Visa, $1,200; Student Loan, $5,000; Car, $12,000. How should he prioritize his debt snowball?
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Visa, Student Loan, Car, Home Equity loan
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Payday lending and cash advance companies are aggressively targeting which group of people?
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military
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Why do people think that the home equity loan is a good idea?
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- there is a tax refund - it serves as a substitute for an emergency fund - its a way to consolidate debt
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Which is true about the practice of marketing credit cards to young adults?
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- Young adults are the number-one target of credit card companies in America today - Brand loyalty to your first card is incredible, so credit card companies work hard to win you over first - Colleges are losing more students to credit card debt problems than to academic failure
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True or False: The first debt in your debt snowball is the one with the highest interest rate.
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False
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True or False: The typical millionaire drives a reliable, used car.
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True
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Which is NOT true about making purchases with credit cards?
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You spend 12-18% less when using a credit card
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If 80% of millionaires are first-generation rich, then one can conclude:
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They started with nothing, did smart stuff, and became millionaires
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the way you view the world
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paradigm
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charges 400% and up for their services
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cash advance
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money loaned
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credit
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a mortgage that does not have a fixed interest rate
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ARM
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taking responsibility for someone else's loan
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cosigning
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combining several debts into one payment
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debt consolidation
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long-term rental agreement
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leasing
