Test 1, Personal Finance, Dr. Poucher, Taylor University
Depreciation
A drop in the value of property
Sinking fund
A fund that stores saved money so that you can purchase items in full
Debt
A product aggressively marketed to consumers
Baby steps
A proven plan to financial success that involves seven chronological actions
False
A resume is the most influential factor in getting a job
Bounced checks
A sign of crisis living
Saving and paying cash
A sinking fund approach means:
Lottery
A tax on the poor and people who can't do math
True
A temporary second job can help you meet your financial goals
Zero-based budget
A type of budget in which the expenses equals the income
Myth
A widely held but mistaken belief
False
A zero based budget is only used for people who have zero debt
True
Another name for a budget is a cash flow plan
pay off all debt using the debt snowball
Baby step number 2 is:
Impulse purchase
Buying without thinking about the future consequences
Budget
Cash flow plan
Reconcile
Checking your bank statement against your account register
Consolidation
Combining separate debt payments into one single payment
True
Each year, individual tax forms are due on April 15
Envelop System
Envelopes used to pay cash for planned monthly expenses
All of the above, A saving account is too easy to access, typically a money market mutual fund averages a higher interest rate than a savings account, a money market mutual fund is accessible and generally has check-writing privileges if needed
Even though a regular savings account is suitable when you are saving your beginner emergency fund, why is money market mutual fund a better place to keep your completed emergency fund?
A sinking fund makes money grow over time by adding interest to previous interest earned
False
Dave's 80/20 rule says personal finance is 80% knowledge and 20% behavior
False
Murphy's Law is more likely to strike if you are prepared for the unexpected event that occur throughout life
False
The first thing you should save for is your retirement fund
False
Using a race analogy to describe building wealth, saving is most like a sprint
False
You should invest 10% of your household income into Roth IRAs and pre-tax retirement plans
False
Your first baby step is to pay off all of your debt
False
Non-sufficient
Fee for an overdrawn account
Diners club
First charge card in the United States
$8000 or more
For most families, a fully funded emergency fund will be about:
All of the above. Wealth building, emergency fund, purchases
For which if the following should you save?
both a and c
How is debit card like a credit card?
$1,000
How much money should a couple who makes $54,000, a year have in their beginner emergency fund if they have a $3,000 credit card bill and a mortgage
$500 or $1000 depending on your current income
How much money should you have in your beginner emergency fund by the time you hit Baby Step 2 (pay off all debt)?
Once a month
How often should you balance your checking account?
They started with nothing, did smart stuff, and become millionaires
If 80% of millionaires are first generation rich, then on can conclude:
False
If you absolutely have to loan money to help a friend or relative, co-signing is the way to go.
Food
If you are struggling financially and are behind on your bills? what should you budget first?
$1254.40
If you invest $1000 at 12% interest, how much money will be in the account after two years compounded annually?
Budget
In order to effectively manage money, you need a:
True
It usually takes three months for your budget to begin working well
True
Living without debt in today's society requires a paradigm shift
Negative
Many americans have a __________ savings rate, meaning they spend more than they make.
ARM
Mortgage loans where the interest rate is adjusted periodically
Leasing
Most expensive way to finance a car
ATM/ debit card
Must have the money in the bank in order to use
400%or more annually
On average, payday lending, cash advance and title pawn loans cost the consumer:
Military
Payday lending and cash advance companies are aggressively targeting which group of people?
Emotion and contentment
Savings is about:
Breakdown of savings form
Shows how your savings account is dispersed among savings goals
Consumer equity form
Shows your total equity or net worth
$500/$1000
The amount you put into an emergency fund for baby step 1
All of the above. A systematic process for getting out of a financial mess and into building wealth, a series of seven sequential steps that help you plan, save and manage money. a series of steps that will work in good times and in bad times.
The baby steps can be best described as:
Baby step 2
The debt snowball
Introductory letter
The first contact with a company you are interested in working for
False
The first debt in your debt snowball is the one with the highest interest rate
3-6
The number of months a fully fund emergency fund contains
Rate of return
The percentage by which your money grows as it is invested
First
The priority in which you pay yourself
All of the above
The saving habits of Ben and Arthur illustrate which principle(s) of saving?
Negative
The savings rate most Americans have (those you spend more than they make)
Wealth Building
The third reason to save money; involves investing money long term.
Money Market mutual fund
The type of account that hold your fully funded emergency fund
True
The typical millionaire drives a reliable, used car
True
There are no interest fees charged on debit card purchases
Real estate agent
This professional can help you buy a home
All of the above. Use preauthorized checking, avoid extra expenses such as gourmet coffee, pack a lunch and save the cost of eating out
To build discipline and get into the habit of saving, you should:
A money market mutual fund is the best place for your fully funded emergency fund
True
The rate of return matters when it comes to compound interest
True
Using pre-authorized checking helps you save money
True
Lump sum planning form
Used to help plan for annual expenses
Irregular incoe form
Used when you don't have a predictable monthly income
$416.66 a month into savings
Using a sinking fund approach, how much do you have to save to buy a $5000 car one year from now?
Home equity loan
Using equity in a home as collateral when borrowing money
Use the sinking fund approach and save $400 a month for ten months
What is the most sensible way to buy a $4,000 car?
Invest 15% of your income into Roth IRAs and pre-tax retirement plans
What is the next step after you have a fully funded emergency fund?
Murphy's Law
Whatever can go wrong will go wrong
True
When interviewing with a company, think of it like starting a new relationship
True
When teaching children how to handle money, start with three envelopes(give, save, spend)
False
When you graduate, it is smart to buy a house right away if the market is good
All of the above. Fear of what they might find, a budget has been used to abuse them, they never had a budget that really worked
Which is a reason why people avoid making a budget?
Your income
Which is not a key to saving money?
you spend 12-18% less when using a credit card
Which is not true about making purchases with credit cards?
Save for emergencies, invest in retirement, pay off the house.
Which is the correct of priorities for your money?
All of the above
Which is true about the practice of marketing credit cards to teenagers?
78% of Americans do not pay off their credit card balance every month
Which of the following is not a myth
Pay off debt
Which of the following is not one of the three reasons to save?
You must pay yourself first
Which of the following is true about the concept of saving?
When using credit, one spends more
Which of the following is true about using credit?
you end up saving money because you get a lower interest rate
Which statement is not true about debt consolidation?
The annual interest rate matters when making a one-time investment
Which statement is true about a one-time investment for 40 years?
When you pay with cash, you have a higher chance of negotiating a better deal
Which statement is true?
All of the above
Why do people think that the home equity loan is a good idea?
Both a and b
Why is gazelle intensity so important in getting out of the cycle of debt?
False
You need a credit card in order to rent cars and check in to hotels
True
You should teach your children about money as soon as possible
visa, student loan, car, home equity loan
kevin has the following debts: home equity loan, $24000, visa $1200, student loan $5000, car $12000. How should he prioritize his debt snowball?
home equity
which type of loan can be used for debt consolidation?
all of the above
why should you avoid lending money?
