Personal Finance Module 3

Approximately how much does the budget shown by the bar graph above allocate to Agriculture for FY 2019?

$50 Billion

Match the appliances that may need to be purchased to their prices. 1. HVAC (Heating and air conditioning) 2. Hot water heater 3. Dishwasher 4. Garbage disposal 5. Refrigerator 6. Refrigerator

1. $3,000-$15,000 2. $250-$1,500 3. $300-$1,000 4. $100-$400 5. $600-$3,000 6. $400-$1,200

Match each of the following terms with the correct explanation. 1. Inheritance Tax 2. Estate Tax 3. W-2 Form 4. Tax Credit

1. A State Tax on inheritance 2. A Federal Tax on inheritance 3. A form shows the amount of taxes withheld from your paycheck for the year and is used to file your federal and state taxes 4. A dollar-to-dollar reduction in your actual tax bill

Match the type of tax-deferred account to its definition below. 1. IRAs 2. 401(k), 403(b) and 457 plans 3. College 429 Plan 4. HSA 5. Thrift Savings Plans

1. Can be Traditional or Roth 2. The most common types of employer-sponsored retirement savings plans - named for the Internal Revenue Service tax codes that govern them. Employers sometimes will match employees' contributions up to a certain amount or percentage. 3. These are plans usually offered by states that allow you to earn interest on money set aside for future college tuition and expenses. 4. A Health Savings Account allows you to set aside money in an interest-bearing account that is deducted from your paycheck and managed either by your employer or third party organization. 5. Retirement savings and investment plans that offer Federal employees the same type of savings and tax benefits that many private corporations offer their employees under 401(k) plans.

Match the definitions to the type of bankruptcy. 1. This allows people that have a steady income to keep some property such as a car and home. The court approves a repayment plan that allows the use of future income to pay off debts. 2. This is known as straight bankruptcy and involves liquidating all assets that are not exempt. Anyone filing for this kind of bankruptcy must satisfy a "means test" that investigates their income closely.

1. Chapter 13 Bankruptcy 2. Chapter 7 Bankruptcy

For each kind of loan, choose the appropriate use or description. 1. Loans offered to college students and their parents. Some are subsidized so no interest accrues until the student graduates. These loans can be federally funded or from private financial institutions. 2. Loans offered by financial institutions at lower interest rates that are issued for the purchase of a house or real estate property. 3. Loans that are either personal loans or second mortgages issued to borrowers to help pay off several other credit accounts by combining them into one loan. 4. Short-term loans with high interest rates and fees that tend to reflect poorly on your credit rating. 5. Loans based on borrowed money from an existing account such as a retirement or investment plan that has to be paid back before using the account for retirement.

1. Student Loans 2. Mortgages 3. Consolidation Loans 4. Payday or Car Title Loans 5. Insurance/Retirement Account Loans

Match the type of taxed account to its definition below. 1. Savings Account 2. Money Market Account 3. Dividends from Stocks and Bonds 4. Certificate of Deposit

1. This type of account will be through your bank typically, and earns very little interest income 2. Similar to a Savings Account, however, you can write checks from this type of account 3. Payments made by a company to the owners of a company's stock or bond 4. A product offered by financial institutions (usually banks) that offers a higher interest rate in exchange for the customer agreeing to leave a lump-sum deposit untouched for a period of time (6 months, 1 year, 18 months, etc.)

Match up the tax-deferred plan to the people who are able to participate in the different plans. 1. 401(k) 2. 403(b) 3. 457 4. TSP 5. IRA

1. for people who work for public or private for-profit companies 2. for people who work for tax exempt or non-profit organizations 3. for people who work for state or local governments, schools, and universities 4. for people employed by the federal government 5. for people who want to put their money into a tax-deferred account at a bank or through their employer

Match the word(s) on the left to the definition(s) on the right. 1. regular earnings 2. income tax 3. Social Security tax 4. overtime pay 5. YTD (year-to-date)

1. pay received for a person's regularly scheduled hours 2. a government tax based on a person's personal income 3. a government tax used to help fund retirement benefits and disability payments 4. pay received by a person for work done past their required schedule (usually paid at a higher rate) 5. totals for earnings and deductions for the year

How much of a down payment will you be expected to put down toward the appraised value of the home you plan to purchase?

10-20%

If you put less than _____ down you will be required to carry Private Mortgage Insurance (PMI) until you have paid down your mortgage principle to a suitable balance.

20%

What is a W-4 Form?

A form used by your employer to withhold the correct income tax from your salary

False

A real estate agent

When you have a credit card, it comes with certain stated policies and privileges. Select all that pertain to being a credit card customer:

APR interest rates tend to be between 8-24%. Most cards have a grace period of 25-30 days where no interest is charged on purchases. Some credit cards come with rewards points or cash-back programs. There is a minimum payment due based on your account balance and percentages. Annual fees are assessed yearly by some credit card companies, especially for premier accounts. Late fees can/will be assessed if your payment is past due.

What is a lease?

An agreement between an owner and a tenant that outlines the obligations of both parties regarding renting an apartment or house

Using the above example of a W-4 tax form for the Internal Revenue Service (IRS), answer the following questions. 1. What is the purpose of the W-4 form? It is for your employer, so that they can withhold the correct income tax from your salary. 2. What withholding status did this person choose? 3. How many total allowances did this person list? (Line H) 4. How many allowances did this person choose to claim on this form? (Line 5) 5. Do the number of allowances a person claims on the W-4 form have to match the number of exemptions that are claimed on their 1040 tax return form?

Answer 1: It is for your employer, so that they can withhold the correct income tax from your salary. Answer 2: Married, but withhold at a higher single rate Answer 3: 4 Answer 4: 2 Answer 5: No, this is simply information your employer needs for withholding purposes.

You are comparing two properties to determine if it is better to buy or rent a property using the price-to-rent (P/R) ratio. The first home you consider is on the market to buy for $293,000. The second home is for rent for $1400/month. The P/R ratio is _________(round to the nearest decimal point - for example, 15.6). Using this number, is it better to rent or to buy? _________

Answer 1: 17.4 Answer 2: rent

Determine if each of the following is an advantage or disadvantage of renting: 1. There are no property taxes to pay and insurance is generally cheaper 2. Your privacy is not as safe or private 3. You can move quicker than from a home you own 4. You are limited to what changes you can make

Answer 1: advantage Answer 2: disadvantage Answer 3: advantage Answer 4: disadvantage

Using the guidelines for using debt discussed in the lesson, determine if the following scenarios are good debt decisions or bad debt decisions: 1. Scenario 1: I am moving into my college dorm room and want to get a new TV. Myparents won't pay for it. I want to put it on my credit card and go into debt tobuy it. 2. Scenario 2: I am a student who wants to major in economics and get a job as a teacherafter school. I have been admitted to a school that costs $40,000 per year and willneed to take loans out to pay for $5,000 of the cost per year. 3. Scenario 3: I'm moving to a new city and want to buy a house. I want to buy a $200,000house and put $50,000 down, meaning I will be $150,000 in debt. The house is in agood part of town with strong real estate values, historically.

Answer 1:bad debt decision Answer 2:good debt decision Answer 3:good debt decision

Proverbs 22:7 says the _____is a slave to the ________.

Answer 1:borrower Answer 2:lender

Proverbs 22:7 tells us "The rich rules over the poor, and the is the slave to the .

Answer 1:borrower Answer 2:lender

There are two basic kinds of credit cards. The typical credit card is based on a/an ________ that is set by the sponsoring financial institution , and it is linked to your credit rating or personal request. The second kind of credit card is a_______ and it is more like a _________ because it is directly tied to a checking or savings account. All limits for this card are based on your __________ instead of an approved limit.

Answer 1:credit limit Answer 2:the sponsoring financial institution Answer 3:credit rating Answer 4:secured card Answer 5:debit card Answer 6:account balance

Bankruptcy is an option for those deep in debt. Consequences can be __________. The court grants a _________ that exempts those filing for bankruptcy from paying certain debts. A bankruptcy filing can stay on your credit report for ________ and can have a negative impact __________

Answer 1:long-lasting and far-reaching Answer 2:discharge Answer 3:ten years Answer 4:when you apply for other credit or getting a job

Financial issues are never really a problem, but are symptomatic of issues.

Answer 1:money Answer 2:heart

One way to manage debt that is out of control is by considering a debt consolidation loan. These types of loans can be a _______ or a ________ . Although these may help with high debt, they also require some sort of ________ that could be ________ if you are unable to make your payments. In addition to interest, you may be required to pay ___________ , the cost of which is based on the amount you borrow and is added to the cost of your loan. Unlike other loans, these types of loans usually provide some _______

Answer 1:second mortgage Answer 2:home equity line of credit Answer 3:collateral Answer 4:repossessed Answer 5:points Answer 6:tax advantages

To close the deal for a new home certain steps have to be taken. Put the following steps into the correct order for finalizing a purchase: 1. Have a home energy audit and a radon test. 2. Determine your down payment and monthly mortgage payment. 3, Close escrow, sign all closing documents and take possession of your new home. 4. Have a home inspection, including insect inspection, electrical wiring, and other safety tests. 5. After any corrections have been made based on the home inspection, have a final walk-through to make sure any issues have been taken care of before signing the final paperwork.

Answer 1:second or third Answer 2:first Answer 3:last Answer 4:second or third Answer 5:fourth

Match the responsibilities to the kind of landlord. 1. This person is the owner of the house. 2. This person represents a corporation that owns ten apartment complexes in town. 3. This person is a designated legal representative who can sign legal paperwork. managing agent 4. This person takes appropriate actions for both the landlord and the renter. 5. This person is personally responsible for any repairs and actions to take care of the rental property. single owner

Answer 1:single owner Answer 2:managing agent Answer 3:managing agent Answer 4:managing agent Answer 5:single owner

For each type of investment or savings option listed, choose either taxed or tax-deferred depending on typical government and IRS regulations. 1. savings account 2. 457 plan tax-deferred 3. CDs (certificate of deposit) 4. 401(k) plan 5. stock dividends taxed 6. money market accounts taxed 7. 403(b) plan tax-deferred 8. bond dividends 9. Federal TSP (Thrift Savings Plan) 10. Roth IRA

Answer 1:taxed Answer 2:tax-deferred Answer 3:taxed Answer 4:tax-deferred Answer 5:taxed Answer 6:taxed Answer 7:tax-deferred Answer 8:taxed Answer 9:tax-deferred Answer 10:tax-deferred

Choose all procedures and steps related to buying an automobile.

Choose a vehicle that best suits your needs and budget. Take a test drive. Check out the reputation and reliability of the dealer and car manufacturer. Make sure you read and understand any documents before you sign them. Research options for financing and don't always depend on the dealer for the best offer. Choose insurance coverage that is correct for your car.

What date indicates the end of the tax year?

December 31

Choose the tax revenue categories that are allocated less than 5% of the budget.

Excise taxes Customs taxes Unemployment taxes

The federal agency responsible for disaster relief is known as:

FEMA (Federal Emergency Management Agency)

Tenants are protected against discrimination by the ___________________.

Fair Housing Act

Credit card interest rates never go above 10%.

False

If you are renting from a single owner landlord, that person is required to live in the same city in which you are renting.

False

In Ron Blue's video about credit cards, he states that when you use a credit card as opposed to cash, you will spend 34% less than if you just spend cash.

False

In debt situations, compounding works in your favor.

False

In the Ron Blue video within the lesson, Mr. Blue makes it clear that after running the numbers, leasing is always a better financial decision than buying a car.

False

It is mandated that all Fire and Rescue workers are paid.

False

It is okay to take possession of a car before all of the paperwork has been completed.

False

It is part of God's plan for us to live an individual life, away from others.

False

One of the very last steps to buying a house is to take a close look at your financial health.

False

Sarah transfers her credit card balance from one credit card to another. She does this several times to avoid paying interest and in hopes that she can earn reward points. This is a great plan for Sarah to improve her credit score.

False

The cost of utilities is often included in the price when you purchase your home.

False

When choosing to apply for a new credit card, things like airline points and cashback rewards should be considered of high priority.

False

You are not required by law to pay taxes.

False

What Federal department is responsible for enforcing laws related to consumer credit?

Federal Trade Commission

_________ wages are the amount you are paid for your work before any taxes or benefits are taken out of your paycheck. You will not receive this amount in your bank account.

Gross

Tony gets a credit card, and immediately buys a new TV and video gaming system. He cannot pay off the balance on his credit card during the first month after his purchases and is therefore charged interest at 23% APR. Tony continues to pay the minimum payment on his credit card each month until the balance is paid off. What will be the outcome for Tony when his credit card is paid off?

He will have paid for the TV, the video gaming system, and a large amount of interest due to the fact that he only paid the minimum payment each month.

Which of the following deductions that the employee has voluntarily signed up to have deducted? Choose all that apply.

Health Insurance Life Insurance Stock Plan 401K and other retirement/investment plans Union or organizational dues

Based on the pie chart of Federal Tax Revenue Collections pictured above, what is the largest category that is collected?

Individual income tax and tax withholdings

What is the credit utilization ratio?

It is a ratio of the amount of debt you owe to the amount of debt you have been approved for.

When should you receive your W-2 Form from your employer?

January 31st

Which of the following are services paid for with tax money? (Choose all that apply)

Libraries Law Enforcement Fire and Rescue Disaster Relief Education

Before considering buying a house, you should make sure you are in sound financial shape. Choose from the list below some of the things you should do in order to be prepared to purchase a house.

Look into special financing for first-time home buyers and explore federally subsidized loans. Be aware of your credit rating and take steps to improve it. Shop for interest rates that are available and identify any necessary pre-qualifications.

What are some steps a renter should take in order to make sure the best choices are made when considering a place to live?

Make sure all forms are complete and references available if asked. Purchase renter's insurance to cover any personal property against damage, loss, and theft. Know your privacy rights and any curfews in effect. Get everything from monthly payments to renter/landlord responsibilities in writing. Keep communication open between you and the landlord or managing agent.

Paying taxes is a biblical principle. In what book of the Bible does Jesus tell us to render to Caesar what is Caesar's?

Matthew

What are some types of taxes that you may pay in your lifetime? Choose all that are correct.

Medicare taxes Sales taxes Income taxes Property taxes Social Security taxes

______ pay is the amount of money you actually get to take home, otherwise known as "take-home pay."

Net

Do creditors always report activity on your account and all new accounts to the three credit reporting bureaus?

No, so some of your credit history may be missing from one or all three.

Which of the following are types of taxes? Choose all that apply.

Property Tax Excise Tax Income Tax Social Security Tax

Choose all that may be considered disadvantages of renting versus buying a home:

Rent payments build no equity Rent payments can change every time the lease is renewed You are limited to what changes you can make

If you are buying a used car, what are some actions you might want to take before purchasing a vehicle?

Research any records pertaining to recalls or accidents related to the specific vehicle. Have a mechanic inspect the vehicle for any possible mechanical problems. Look for pricing for similar models on the internet or other dealerships. Ask about any warranties or dealer-sponsored guarantees.

When choosing the right organization to volunteer for, you should consider the following: (Choose all that apply)

Reviews found online concerning the organization The "About" page on their website The accomplishments and track record of the organization

All of the following people should receive W-2 Forms EXCEPT:

Serena, who is a freelance wedding photographer

Based on the bar graph above that shows spending by the Federal Government, what are the top four categories that require the highest amount of money from the budget?

Social Security Administration Treasury Health and Human Services Defense Military Programs

What is FICA?

Social Security taxes that provide benefits for retired or disabled workers

These types of loans are offered to students and their parents. They can originate either with the federal government or a private financial institution.

Student Loan

When choosing the right organization to be a part of, what information is important to check beforehand?

The "About" page on their website Their contact information and Tax ID Number Internet research and reviews Their financial information Accomplishments and track record The organization's transparency

What company is the leading source for most lenders researching credit information on a person applying for a loan or some type of credit?

The Fair Isaac Corporation

According to Ron Blue, the best type of mortgage to get is:

The shortest one with the lowest interest rate

Which is a guideline that can be used to determine if debt is ever a wise decision?

There is a guaranteed way to repay

From the list below, choose the three leading credit reporting bureaus that lenders access to check credit scores.

TransUnion Experian Equifax

Social Security taxes, also known as the "Federal Insurance Contributions Act" tax, provide benefits for retired workers and their dependents and for disabled workers and their dependents.

True

Tax-deferred means you pay the owed taxes at a later time, not when the money is earned.

True

To avoid disputes or misunderstandings with your landlord, get everything in writing.

True

When shopping for a house, there are tips you can use to help your effort be more successful. Choose all of the tips below that are effective in making your search for a new home an easier process.

Use online mortgage calculators and amortization schedules to help you with working out possible payments. Think about the future, including both the needs of your family and possible income increases. Look for houses in your price range and budget. Decide on areas where you would like to live and visit these at different times of day to observe traffic patterns and other factors. Choose a good real estate agent. Give the real estate agent a detailed list of what you want in a house (number of bedrooms, baths, levels, yard, and other specifics).

What type of form will show the amount of taxes withheld from your paycheck for the year, and is used to file your state and federal taxes?

W-2 Form

How do a savings account and money market account differ?

You can write checks from a money market account, but cannot from a savings account

What are the four guidelines to consider when determining if debt is a wise decision?

You have peace of mind via "gut check" questions There is unity with important relationships regarding the decision There is a guaranteed way to repay The economic reward is greater than the economic cost

What is a credit score?

a "snapshot" of a person's creditworthiness at one point in time

If personal debt gets out of hand and something needs to be done, what is one of the best sources you can go to for help?

a reputable credit counseling organization

When it comes to tax time, planning is essential. Proverbs 21:5 says "The plans of the diligent lead surely to ____________, but everyone who is hasty comes only to poverty."

abundance

1 Thessalonians 5:18 says to "give thanks in ______ circumstances."

all

To determine net pay, you subtract _________ from _________ .

answer 1: deductions answer 2: gross pay

Tax-deferred accounts _________________________.

are taxed later when a person has retired and is in a lower tax bracket

Secured debts are usually connected to some sort of ___________________.

asset like your car or house

A department store-sponsored card offers special incentives to shop with the store, but it also carries higher interest rates. These cards _______________________.

cannot be used anywhere you want since they are sponsored by a specific store

Of all the types of credit offered to consumers, which ones are the worst because of their fees, interest rates, and effect on your credit rating? Choose two.

car title loans payday loans

Proverbs 22:7 says the borrower is a slave to the lender. It is best to purchase a car with ________ to avoid going into debt and paying interest fees.

cash

When test driving a potential new car, it is important to do the following things (choose all that apply):

check for smooth right and left turns drive at differing speeds make sure the vehicle doesn't pull to the right or left

What three things should you avoid doing so your credit score won't be affected?

closing credit accounts transferring a credit balance from one credit card to another not using credit cards

A ____________ is defined as a group of people living in the same place or having a particular characteristic in common.

community

When you are facing a credit problem or become behind in your payments, it is best to ___________________.

contact your creditors in order to work out payments or change terms

What kind of credit is the most favorable to have on your credit report?

credit backed by assets or equity such as a house mortgage or car loan

A credit score is a "snapshot" of your ____________________ at one point in time.

creditworthiness

What two sections make up the "Owe" portion of the pie diagram?

debt taxes

What are the two parts of the pie diagram that make up the "Owe" section?

debt taxes

What are some items that the Federal Government uses citizen tax money to pay for? Choose all that apply.

defense medicare social security roads

Getting into debt can ________ God an opportunity to provide for our needs.

deny

When purchasing a car, you should avoid paying for extras such as:

extended warrenties credit insurance rustproofing rustproofing

When you do not pay off a credit card in full each month, you may potentially pay hundreds or thousands of dollars in ______________ fees.

financing

The Bible tells us that debt may violate two biblical principles: Don't presume upon the __________ , and God is our _________.

future provider

Both kinds of bankruptcy may help stop procedures related to _____________________.

garnishments utility shut-offs foreclosures repossessions

Paying taxes is a way to live a ____________ life for the provision that God has given us.

grateful

Financial issues are often symptomatic of ___________ issues, not really money issues.

heart

A home equity line of credit is a form of revolving credit in which our _________ serves as collateral.

home

In order to begin managing your debt, it is important to start with a manageable budget. What are the things most financial advisors consider essential for daily living? Choose all applicable answers.

housing health care education insurance food

When should you contact your creditors if you are having any problems meeting your debts?

immediately

If you pay off your credit card balance during the allowed grace period each month, you should not be charged any ____________.

interest

A _____ is an agreement that outlines the obligations of the owner and the tenants of a house or apartment.

lease

A tax deduction is a dollar amount that the IRS allows you to subtract from your adjusted gross income, or AGI, making your taxable income _________________ .

lower

What tax deductions are considered statutory (those mandated by law)?

medicare social security federal state

A _______________ is a loan from a financial institution to purchase a house.

mortgage

What are some advantages of buying a home? Choose all that apply.

mortgage payments are tax deductions you tend to take more pride in things you own you can make any changes you like

When we grow in relationship with ______________, we grow in relationship with God.

others

The costs for public education are mainly for what?

payroll expenses related to public school employees

A community is defined as a group of _____________ living in the same place or having characteristics in common.

people

Other than your monthly rental payment, what are some of the things you may have to pay for while living in a rental property? Choose all that apply.

pets utilities laundry facilities parking spaces extra storage

What are some services within a community that are paid with tax revenue? Select all correct answers.

police department fire and rescue departments library public schools sanitation/waste removal

What areas fall under Law Enforcement and are paid for in part or whole by tax revenue? Choose all that apply.

police/sheriff's department courts and judges correctional facilities animal control

Tom wants to ensure his new house is landscaped well. What are some things he may need to consider when planning for landscaping costs for his home?

purchasing a lawn mower maintaining tools planting and caring for trees and flowers irrigation

The Equal Credit Opportunity Act prohibits credit discrimination based on _______________. Choose all that apply.

race or color your religion gender age

Most people participate in tax-deferred savings and investments accounts for ______________________.

retirement and travel

HOA fees cover which of the following? (Choose all that apply)

sewer water garbage landscaping maintenance insurance

Tenant rights, laws, and any protection afforded both tenants and renters are determined at what government level?

state

Part of our ________________ journey is taking good care of the blessings God bestows upon us, including caring for our housing.

stewardship

Unsecured debts are debts that are not tied to any collateral or major personal property that can be repossessed or processed for foreclosure. Choose all below that fall into this category.

store credit accounts personal signature loans medical bills credit card debt

As a citizen of the United States, you are required to pay _________.

taxes

An Inheritance Tax is a State Tax.

true

Public libraries are funded through tax dollars.

true

The "About Page" of an organization's website can help you learn valuable information about that organization.

true

Some options add to the value of a car like air conditioning and an automatic transmission. Choose from below items that add costs, but are not really worth the extra dollars.

upholstery finishes rustproofing (most cars have a 5 to 10-year warranty against rust) extended warranties by third-party sellers auto club memberships

It is illegal for debt collectors to _______________________.

use abusive or deceptive practices to collect debt you owe

In the video by Ron Blue, he advises individuals to do the following if they are in a financial crisis situation: (Choose all that apply)

use cash to pay off debt' make a budget cut back on expenses to the bare minimum

Choose all items listed that are potential costs associated with owning a home.

utilities such as electricity, gas, water, cable, and others HOA fees, garbage collection fees, and landscaping fees maintenance and repairs not covered in the closing settlement hazard insurance and/or PMI (Private Mortgage Insurance) property taxes -- either paid yearly or assessed through escrow payments

In Ron Blue's video that discusses if it is right or wrong to have a credit card, he says that it is not wrong to have credit cards, and it is not wrong to use credit cards, but it is not always the ____________________.

wisest thing economically to do.

What is the portion of an employee's wages that is not included in their paycheck because it goes directly to federal, state, and local taxes?

withholding

Leasing a car could be a good option for you if _______________________. Choose all applicable answers.

you want to drive a car that is under the warranty of the manufacturer you need a lower payment you prefer to trade cars often your yearly mileage is less than 10,000 miles you want to drive a better car for less money