UNIT 1

What is the approximate amount of debt that the average college graduate accrues? $29,000 $40,000 $13,000 $35,000

$29,000

People in the eighteen-to-twenty-four age bracket spend nearly what percentage of their monthly income just on debt repayment? 30% 10% 20% 25%

30%

Approximately how many American households or individuals declared chapter 13 bankruptcy in 2009? 150,000 550,000 750,000 350,000

350,000

The best money-management strategy is which of the following? Pay your debts on time to assure loan companies that you're a good risk. Do not spend more money than you can pay back each month. Keep a list of all your debt. Keep a list of all your income.

Do not spend more money than you can pay back each month.

Which is the main reason some people choose to file a chapter 13 bankruptcy? A chapter 13 bankruptcy is not recorded on your credit report. The courts encourage people to file for chapter 13. There are no negative consequences to this form of bankruptcy. It is a more conservative approach to bankruptcy.

It is a more conservative approach to bankruptcy.

Why should you care if others are filing for bankruptcy? It slows down the economy. Most people can't spend the money that they want to. The economy improves. none of the above

It slows down the economy.

Pick the scenario that best represents the most positive financial outcome. Madeline has one credit card with a $500 maximum limit. Using her credit card will help her establish a good credit rating to show loan institutions that she is financially responsible. She does not pay any financial costs because she pays the entire amount she borrowed on that card each month so she does not incur interest. When the time comes that she desires to purchase a car, she will be a good candidate to receive a loan. Brett and Wendy are newlyweds that have accumulated loans totaling $5,000 for their wedding and honeymoon costs. They have a plan to pay off those loans in one year and another plan to save for a down payment on a new car. Tracey attends a private college where tuition is rather expensive. Before attending, she works at a part-time job and is able to save up enough money to pay for her books and supplies. However, she still has to figure out a way to pay for the expensive tuition, room, and board. She qualifies for a student loan, so she takes out the maximum amount possible, which exceeds the amount she actually needs. Kevin and Jackie have incurred over $60,000 in credit card debt, have a house payment that is $1,595 a month, and own two cars. Their combined income is $55,000 a year. Thirty percent of their income is being spent to pay for their home (house payment and utility bills), and another 30% is being spent toward debt payments. However, they are able to pay more on their credit card payments than the minimum amount due.

Madeline has one credit card with a $500 maximum limit. Using her credit card will help her establish a good credit rating to show loan institutions that she is financially responsible. She does not pay any financial costs because she pays the entire amount she borrowed on that card each month so she does not incur interest. When the time comes that she desires to purchase a car, she will be a good candidate to receive a loan.

How many people filed for chapter 13 bankruptcy in 2009? Over 350,000 550,000 750,000 none of the above

Over 350,000

What is the main purpose for a Chapter 7 bankruptcy? to make sure your creditors know you have no money to easily get out of debt to start over with your finances To liquidate your assets and pay your debts.

To liquidate your assets and pay your debts.

A Chapter 7 bankruptcy involves which of the following? You get a fresh start on your finances. You get to keep all your assets. Your bankruptcy is recorded on your credit report for twelve years. none of the above

You get a fresh start on your finances.

A chapter 7 bankruptcy involves which of the following? Your bankruptcy is recorded on your credit report for twelve years. You get a fresh start on your finances. You get to keep all your assets. You get another chance to incur debt.

You get a fresh start on your finances.

What is not the best way to solve your financial problems? accumulating debt creating a budget earning money spending less than you earn

accumulating debt

Going into debt can be caused by which of the following? spending more money than you make buying big ticket items without planning on how to pay for them taking money from your savings to pay for your grocery items all of the above

all of the above

Good money management is important for which of the following reasons: learning how to make wise financial decisions understanding that loans cost more money than the amount actually borrowed being able to invest in a savings account all of the above

all of the above

Good money management is important for which of the following reasons? learning how to make wise financial decisions understanding that loans cost more money than the amount actually borrowed being able to invest in a savings account all of the above

all of the above

Understanding and implementing sound money-management principles contributes to which of the following? financial success staying out of debt distinguishing needs from wants all of the above

all of the above

Which of the following financial groups is subject to financial consequences? those with a high amount of debt those who are unaware of how interest works those who don't take the time to learn about money all of the above

all of the above

Which of these would contribute to going into debt? spending more money than you make buying big ticket items without planning on how to pay for them taking money from your savings to pay for your grocery items all of the above

all of the above

What was the average college debt of graduating seniors in 2012? approximately $24,000 under $10,000 over $40,000 approximately $29,000

approximately $24,000 under $10,000 over $40,000 approximately $29,000

Which of the following is the best time to plan for retirement? when you are in your forties or fifties as soon as possible when you are in your twenties or thirties when you graduate from college

as soon as possible

Which of the following is the best key component of financial literacy? being knowledgeable about credit and debt trying to earn more money to alleviate financial concerns having the financial freedom to buy what you want, when you want it knowing how much interest is charged on a loan

being knowledgeable about credit and debt

According to the lesson, the average American household has accumulated how much credit card debt? between $10,000 and $12,000 between $15,000 and $16,000 more than $20,000 below $10,00

between $15,000 and $16,000

A chapter 11 bankruptcy is filed by which of the following? businesses individuals families none of the above

businesses

Which of the following best describes sound financial literacy? gaining knowledge about how to handle your finances learning how to maximize your debt constant worry about your financial future keeping track of all your income

gaining knowledge about how to handle your finances

What is the best definition of financial literacy? knowing how to earn the most amount of money you can knowing about money understanding the reasons for saving money understanding how money is manufactured

knowing about money

Which of the following is not a key component of financial literacy? setting goals paying the minimum amount due on your credit cards each month examining your income and expenses establishing a budget

paying the minimum amount due on your credit cards each month

Excessive debt does not contribute to which of the following? increased health and stress family instability self-sufficiency possible bankruptcy

self-sufficiency

How long will a chapter 7 bankruptcy usually remain on your credit report? fifteen years five years one year ten years

ten years

Define debt. the ability to pay toward your monthly expenses the ability to pay with cash income the state of owing money to someone or something

the state of owing money to someone or something

When is the best time to start learning money management principles? throughout your lifetime, to be ready to implement when you have money to manage once you are married so you and your spouse can plan together in high school in college

throughout your lifetime, to be ready to implement when you have money to manage

What is the best purpose for keeping track of your money? to understand why people have to have jobs to stay aware of what your parents earn to make sure you do not spend more than you earn to know when you need to start learning about financial literacy

to make sure you do not spend more than you earn

Which of the following contributes to making sound financial decisions? understanding financial literacy making purchases using credit wondering how to manage money filing for bankruptcy

understanding financial literacy

When is the best time to start learning about money management? when you are in college when you start earning money when you are young when you are in high school

when you are young

When is the best time to apply for a credit card? when you have enough income to pay your debts when you need the money when your parents can make your payments when you are eighteen years old

when you have enough income to pay your debts

Who is in charge of your financial future? you your bank your credit union your parent(s)

you

Who should be most responsible for your finances? you your educators financial institutions your parents

you