Personal Financial Planning Final Exam
The two main ways to earn money by investing in corporate stocks are:
Capital gains and dividends (cash or stock)
You've just been involved in a car accident at night on a dangerous section of the road (a bad curve in the road). The driver of the other car fell down as she was getting out of her car. She remained in the middle of the road and said that she couldn't stand up. What is the first action you should take?
Carefully help her to a safe location and move your car off the road so that no one else might be injured.
Herman was busy texting when he drove his car into a parked car. He caused $5,000 of damage to his car and $3,000 of damage to the parked car. Herman also had $4,000 of medical expenses for his injuries in the accident. What aspect of his auto insurance will cover the damage to Herman's car?
Part B. Medical Expenses
Your car was severely damaged when your unattached garage caught fire. The car had $8,000 of damage from the fire. How will your insurance policies cover these damages to your garage?
Part B (Unattached Structures) of your Homeowner's Insurance will cover the damage to your garage
Tau was walking on a sidewalk in town when an auto accident occurred in the street. A piece of one of the cars in the accident flew off the car and hit his parked car. This caused $4,000 of damage to Tau's car. Which of the following is most correct?
The driver of the car that caused the accident will use her auto insurance, Part A, to pay for the damage to Tau's car.
What is the primary reason that Doc White suggests that students get a credit card while they are in college and hold onto it for the rest of their life?
Their credit score will rise over time due to the length of relationship with that credit card company
wants 30,000 in taxable account after 10 years: 6% annual interest, is in 15% marginal tax bracket. yearly investment needs to be
2,200-2,300
to have 65,000 after 5 years with 7% compounded interest semi-annually you need to invest __________ every six months
5,250-5,400
Which of the following investment portfolios is not an example of proper (or good) diversification?
50 shares of Ford stock, 50 shares of General Motors stock, 50 shares of Toyota stock
You are in the 20% marginal tax bracket. You have the option of deducting $2,000 as an "adjustment to income" on the front page of Form 1040, or you can take a $600 tax credit on the back page. Which option will reduce you taxes by the largest amount
600 tax credit
Doc White's sure-fire rule for determining that you have too much risk in your investment portfolio says:
if you are waking up at night worrying about your stocks, you have too much risk.
what is a disadvantage of an online savings account
it may take a few days for you to actually get the funds when you need to make a withdrawal
Which of the following is NOT a valid method of improving your credit score?
keep your credit cards for 2-3 years then cancel them and apply for new ones
what is the fastest way to improve your financial position
reduce your spending without hurting your lifestyle too much
the impact of claiming someone as a dependent on your 1040 is
reducing your taxable income by 4,050
what causes money to have a time value
risk, inflation, and opportunity cost
why should financial plans be flexible and liquid
stuff happens
what is a w-4 form used for
to specify the number of personal exemptions you want to claim for federal income tax withholding
what does a balance sheet tell you
what you own (assets) and how you have paid for it (liabilities and net worth)
You want to have $3 million available for your retirement in a TAXABLE account. You will invest for 40 years in an account that earns an annual return of 8%. You are in the 25% Marginal Tax Bracket. How much will you need to invest each MONTH to reach your goal? Use Beginning of Period PMTS.
$1,498.91
You are having trouble making your credit card payments on time. Which of the following is a good resource for helping you manage your credit card debt by negotiating lower interest rates or reduced payments?
Consumer Credit Counseling Sevice (CCCS)
Miguel has an auto policy with the following split liability coverages: $50/$250/$75. This means that he is covered for:
$50,000/person for bodily injuries to others, $250,000/accident for injuries to others, and $75,000/person for property damage to others.
One of the easiest and most powerful investment strategies that ANYONE can use and EVERYONE should use involves investing the same dollar amount into your investments each period. This strategy is especially powerful in your 401(k) retirement accounts. The official name of this strategy is:
Dollar Cost Averaging
Hamish has a dog. While he was out walking his dog in town a little girl from the neighborhood ran over to Hamish to pet the dog. Hamish told the little girl and her parents not to pet the dog. The dog got startled and bit the little girl. The girl required medical attention. The little girl's parents want Hamish to pay for the $500 in medical bills. Which of the following is true?
Hamish's renter's insurance policy will cover up to $1,000 of the medical bills for the little girl.
You completely forgot to make your credit card payment last month. How long will this missed payment remain on your credit history?
7
estimate what percent of your salary to be take home pay
75 percent
What form of a check (or form of payment) can you get from the US Post Office or from many convenience stores, for a fee?
money order
liquidity is
money readily available when you need it
how much money should you have as personal savings after you graduate
one to two months of living expenses
What distinguishes a secured loan from an unsecured loan?
Lenders try to reduce they risk they face by requiring some type of collateral for a secured loan, whereas the lender has no collateral on an unsecured loan.
When you properly diversify your investments, you can expect:
slightly lower variation in your returns, and slightly lower levels of risk.
what is net worth
the amount something is worth minus the amount you still owe on it
Part A of a homeowner insurance policy will cover damages to which of the following assets?
the house itself and a garage that is attached to the house
what is the piece of cardboard that shows you where the money is leaking out of your wallet
daily expense tracker
diversification can also be said by
dont put all your eggs in one basket
monthly payments for a 35,000 student loan at 7% for 10 years in
$350-450
1,000 at 12% interest for 42 years will yield
$163,987
how long should you keep your federal and state income tax records
3-7 years
Carrie has a credit card problem - she spends way too much with it and now she is having trouble making her minimum monthly payments. Which of the following is NOT a good solution to Carrie's financial problems?
Every 6 months open a new credit card that offers a 6-month teaser rate of 0% APR and regularly transferring her outstanding balances from the old card to the new cards.
You want to get a variable rate loan that has an interest rate of "5% 2/7". Which of the following is true?
The highest the interest rate can be over the life of the loan is 12% APR
what are important questions a financial advisor will ask you
what do you own and what do you owe
what are the main uses of a monthly budget
1) determining how much money you will be able to save and invest each month 2) figuring out how to reduce your spending without hurting your lifestyle too much 3) estimating the maximum monthly car loan payment you will be able to afford
a CD with 10,000 for 5 years at 4% quarterly interest will yield
12,200-12,300
Which of the following is a good example of why Doc White recommends that you have 3-6 months of living expenses in an emergency fund after you graduate from college?
So you can cover the deductibles on your auto and homeowners insurance policies
biggest enemy of trying to improve financial condition
procrastination
You inherited Auntie Ethel's antique porcelain vase from the Ming Dynasty - it has been valued at $25,000. It is not covered by your basic renter's insurance (HO-4). How can you most easily (and cheaply) insure against the loss of or damage to this antique vase?
Purchase a "personal article floater" in the amount of $25,000 to specifically cover the vase.
investment assets are
assets you purchase for the purpose of accumulating wealth to satisfy your financial goals
Miguel has an auto policy with the following split liability coverages: $70/$250/$75. This means that he is covered for:
$70,000/person for bodily injuries to others, $250,000/accident for injuries to others, and $75,000/person for property damage to others.
married with two children, salaries of 65k and 60k, what is the best way to file their 1040 to get the most advantages
married filing jointly
When choosing your investments you should always try to:
match the goal/purpose of that investment to your investing goal.
you should try to what with your income taxes
maximize how much you have left over after paying income taxes rather than minimize the amount of taxes you have to pay
The "Price/Earnings" ratio is a common measure of whether the overall stock market is "undervalued" or "overvalued". The average Price/Earnings ratio tends to be in the 15-20 range historically. If the current Price/Earnings ratio is 35 you would say that the overall stock market is:
overvalued - watch for the growth in stock prices to slow down or turn negative in the upcoming months.
Which of the followingsources of consumer loans typically offers the lowest interest rates (APR) on consumer loans?
credit unions
Employers who offer pension plans to their employees have a choice of 2 main types of pensions. One of these retirement plans provides a retiree with annual payments that are based on their years of service and average ending salary. Because this type of pension is so expensive most employers are no longer offering it to their new hires. This type of plan is called a:
defined benefit plan
You've just graduated and taken a job with Al-Mart. Your benefits package includes a 401(k). You have no idea how to invest your funds in the 401(k), so you decide to use the "default investment." Which of the following mutual funds is most likely to be the default investment for a 22-year old college graduate?
A 2060 Lifecycle Allocation fund
Which of the followingsources of consumer loans typically offers the lowest interest rates (APR) on consumer loans?
Credit Unions
what is an assets under management fee
an annual fee equal to 'x' amount of the money you have invested with him
a vehicle leased in your name is NOT
an example of a tangible asset to list on your balance sheet
mortgage payments paid would not be on a
balance sheet
Doc White advises you to shoot for a credit score of at least 700 because it will help you improve your financial situation. Which of the following is NOT a way that having a high credit score can help you financially?
High credit scores indicate that you can safely have debt payments that are greater than 40% of your gross income
You want to sell your car on CraigsList. Which of the following forms of payments is the least risky for you to accept from someone you do not know?
cashiers check
What type of check is paid using funds from your personal checking account, but the bank guarantees the payee that there is enough money in your account to cover the check?
certified check
what factors guide all financial plans
flexibility, liquidity, protection, and maximizing earnings left after paying taxes
what does it mean to pay yourself first
save or invest money from your paycheck as soon as you receive it
the five steps of financial planning are
1) Evaluate your financial health. Record all expenses for a month to compare income and expenses. 2) Define your financial goals. Pay off credit card(s) by the end of this school term. 3) Develop a plan of action. Develop a budget matching income and projected expenses for the remainder of this academic year. 4) Implement the plan. Reduce expenses in problem areas so amounts do not exceed budgeted projections. 5) Review progress on the plan, reevaluate the plan, and revise the plan or start over with a new one. Based on this year, develop a revised budget for next year based on projected income and expenses.
to get your money to double in the next four years, using the rule of 72 what annual rate of return do you need
18%
to get 30,000 in a taxable account at the end of 10 years at 6% annual interest in the 15% marginal tax bracket you need to invest _____________ per year
2,200-2,300
how much do you owe in income taxes in 2017 if filing as single with 100,000 of income
20,981.75
a 60,000 car that increases by 10% in value every year will be worth ________ after 15 years
250,000-255,000
appropriate marginal tax for combined income of 180,000
28%
550 for 72 months at 7.5% interest. can afford a loan of
31,810
monthly payment to pay off standard student loans of 35,000 at 7% interest for 10 years
350-450
Goal Credit Score
700
The primary difference between a savings account and a money market account is:
A money market account typically earns a slightly higher annual return (APY) than a savings account.
Which of the following is the website that is recommended to check your credit history because it is not trying to sell you any products or services?
AnnualCreditReport
Doc White gave you advice on getting your credit history started while you are a student. Which of the following did he say was usually the easiest, most convenient way to get your credit history started?
Ask your parents to list you as an authorized used on one of their credit cards
Which of the following cash management accounts is very useful for people who have a significant amount of money because it can link to their investments, their debt/credit cards, and earn slightly higher rates of return?
Asset Management or "sweeps account"
When you apply for a consumer loan (auto loan) you need to be prepared to meet with the lender. Ideally, which of the following items should you be able to provide to the lender to prove that you can repay the loan?
Proof of income (pay stubs), a balance sheet, and a monthly budget
Which of the following can be listed as an itemized expense on Schedule A?
Property taxes on your home
What distinguishes a "secured credit card" from an "unsecured credit card"?
Secured credit cards have a credit limit that is directly related to the amount of money you have in your secured credit card account.
Your grandparents purchased $10,000 of EE Savings Bonds for you when you were born. Which of the following is the most accurate statement about these bonds?
The interest you earn on these bonds is not taxable if you use the funds for qualified educational expenses
What is the main advantage of using a Home Equity Loan to pay off your credit card balances?
You can list the interest paid on the Home Equity Loan as an itemized deduction on Schedule A of your income tax forms.
net worth is
assets minus total debt
Which of the following is an example of a "stored value card"
hokie passport
what is the enemy of compound interest making it hard to reach your financial goals
inflation
what will have the biggest impact on your credit score
pay all of your bills on time and try to carry an average balance on your credit cards between 10-30%
Late library fines and unpaid parking tickets can hurt your credit score.
true
Your savings account earns an annual rate of return of 1%. You are in the 10% marginal tax bracket. If you deposit $1,000 into your account, how much will you have in your account (after taxes) after 5 years? Beginning of Period.
1,045.82
how much will you have in a roth IRA if you invest 500 a month for the next 40 years at 7%
1,320,000
Tim and Autumn Davis are trying to figure out their current financial health. They will pay off their car loan in three years, their gross household income is $5,700 per month, and they receive $95 per month in interest income from their investments. They have listed the following items from their most recent statements. Savings account: $3,200 Checking account: $1,800 Credit card balance: $3,000 Car loan balance: $18,000 Car market value: $15,000 Furniture market value: $4,000 Stocks and bonds: $15,000 What is their current net worth?
18,000
what percent of your gross income should you invest or save each pay period
5-10%
Old Doc has a private mortgage of $400,000 on his house and he has a $50,000 auto loan through MemberOne Credit Union. He has $35,000 in federal student loans and he owes $10,000 in federal taxes. Because he got fired for throwing candy at his students, he can not make his loan payments or pay his other bills. He has no interest or ability to repay his obligations (debts, taxes, etc.). Which of the following is a course of action for poor Old Doc?
Chapter 7 Bankruptcy will allow Doc to erase his mortgage and auto loan, but it will not get rid of his federal loans and taxes. But Doc will lose some of his personal assets.
Which of the following is can NOT be listed as an itemized expense on Schedule A?
Traditional IRA contributions made during the year
You are trying to decide whether to use the $6,350 standard deduction (single filing status) or your itemized deductions (Schedule A) line 39 on your Form 1040. Here is your information: Interest on Student Loan $2,000 Interest on Home Mortgage $4,000 Interest on Credit Cards $5,000 State and Local Income Taxes Paid $2,500 Charitable Gifts (in total) $500 What is the benefit of choosing the itemized deduction instead of the standard deduction?
You can reduce your taxable income by $650 by using the itemized deductions You can reduce your taxable income by $650 by using the itemized deductions
risk return
chance of losing money you invest but also a chance of getting money back
a strong record keeping system allows you to
know exactly how much youre spending, track expenses, and know where youre spending your financial resources
always use at least three sources of info to get the 'big picture' is what financial principle
knowledge is power
what is not a legal way of reducing federal income taxes
listing only 75% of cashtips and wages as income
regularly saving a little money when you are young can
result in a large final payoff
You may decrease your credit score if you simply apply for several credit cards within a 3-4 month period (whether your applications are accepted or not) due to:
the increased number of inquiries on your credit history
Babe Ruth Rule
always have three plans for achieving your financial goals
you should do what with your financial goals during your lifetime
prioritize them, put them in writing, and modify them
post-mortem step of the financial planning process
review your progress and revise your plans to reach your goals
Credit unions are popular banking institutions because:
they offer higher interest rates on savings accounts and lower interest rates on loans
currently liabilities are
those that can be paid off in full within 12 months
why do most Americans keep financial records
to prepare their income taxes
A primary benefit of using a "CD Ladder" for your emergency funds is:
you will have money available on a regular basis when each CD matures you should earn a higher average rate of return than just using 1 short-term CD all of the above
you can afford 1,500 a month on a house loan, its for 20 years at 4%APR, what is the max loan you can get, end of pay periods
247,500
Which of the following works in a very similar manner to a credit card in that it has a stated credit limit and a flexible repayment plan?
Home Equity Line of Credit (HELOC)
As an investment category, bonds tend to be less risky than stocks. What are the two (2) primary ways to make money by investing in bonds?
Interest and Capital Gains (selling them at a price higher than you purchased them)
Which of the following is a great resource for doing research on individual stocks or mutual funds?
Morningstar.com
Katia was injured in a car accident when her brakes failed and she hit another car. The passengers in the other car had $15,000 of medical bills related to the accident. The driver of the other car does not have auto insurance on his car. The medical bills for Katia herself will be covered by:
Part B. Bodily Injury
The standard repayment period for student loans is 10 years. However, there are a lot of other options available to most students. Which of the following is a true statement about student loan repayment?
You must have some of your "grace period" remaining to qualify for the student loan consolidation program. You need to participate in the Pay As You Earn plan or the income-based repayment plans to qualify for the Public Loan Forgiveness Plan. Graduated payments allow you to make lower payments when you first graduate but the amount of the payments will increase every 2 years over a 10-year period. The income-based repayment plans require to you have "financial hardship" to qualify, but they allow you to stretch your payments over a longer time period (over 20 years). All of the above are true statements about student loans
You are about to sign a loan to buy your first car. As you are reading the loan contract (as Uncle Al strongly recommends) you see the phrase, "all interest is calculated using a discount interest rate of 8%." What does this phrase mean to you?
You should run away, screaming "no, no, I'll never take out a discount interest loan!"
There are 2 main types of student loans - subsidized and unsubsidized. What is the primary difference between subsidized and unsubsidized student loans?
You don't have to make interest payments on subsidized loans while you are at least a half-time student; if you don't make interest payments on your unsubsidized loans while you are in school the total interest that you incur will be added to the amount of your student loans once you graduate.
evaluating your financial health consists of
determining your worth, preparing a balance sheet, preparing an income statement, and determining where your money comes from and where it goes
Kavita and Raj use the married, filing jointly tax status. Their combined taxable income is $75,000. What is the appropriate marginal tax bracket (%) for them to use when they are trying to determine the after-tax returns on their investments? (You may use the 2017 Income Tax Rate Schedule to answer this question)
15%
Your taxable income (line 43 of the form 1040) is $110,000. Your filing status is Married Filing Jointly. Using the 2017 Income Tax Rate Schedule, please calculate the amount of income taxes you will owe for the year. (you may use your 2017 Income Tax Rate Schedule to answer this question)
18,977.50`
once you graduate you can claim dependents but they must have lived with you for
6 months
how can you measure tangible assets
can I touch it an use it in everyday life
monetary assets are
cash, checking and savings account balances, and monetary market funds
Which of the following is basically a "loan to a bank" for a specified period of time? For example, you write a check for $1,000 to the bank for this investment. They promise to pay you all of your original $1,000 plus a stated rate of return at the end of the investment's maturity (life).
certificate of deposit (CD)
Maria has 2 credit cards with a total credit limit of $5,000. She has had her credit cards for over 10 years. Maria typically uses her cards to pay her grocery bill, her utilities, and her car payment - this allows her to get the most "cash back points" from using her credit card. Her average monthly balance on her cards is $3,000. She tries to pay her balance in full each month. She has only been more than 30 days late one time over the past 7 years, and that was 5 years ago when she was changing jobs. Which of the following is hurting Maria's credit score the most?
credit utilization ratio (average balance/credit limit) is too high
Mahmed (age 19) is a student (and US taxpayer) who works part-time during school breaks. In 2017 he earned $4,000 from all of his jobs. His parents gave him $6,000 as a gift in 2017. Mahmed wants to start investing for his retirement after listening to some old bald guy talk about the importance of starting to invest for retirement as early in life as possible. What is the maximum that Mahmed can invest in his Roth IRA for tax year 2017?
4,000
Carmella Estevez has a homeowner's insurance policy with $125,000 of liability insurance. She is concerned about the risk of lawsuits because her property borders a neighborhood park. What can she do to increase her liability coverage? How much will Carmella's yearly premiums change as a result of increasing her liability coverage?
Carmella should raise the amount of her liability coverage from $125,000 to $300,000 or $500,000. The increase in her yearly premium for this additional coverage should be modest. She could purchase an umbrella liability policy to provide protection of $1 million or more. An umbrella policy is reasonably priced and kicks in after the liability insurance in your homeowner's and auto policy runs out and provides coverage for claims that are not covered under your homeowner's insurance.
Old Doc White advised you to do your homework before applying for a consumer loan. Which of the following is his main piece of advice on preparing to get a consumer loan?
Check your credit history at least 3-6 months before applying for the loan.
You have $5,000 that you want to invest, but you're not sure how to invest these funds. Which of the following is NOT one of the three main questions that Uncle Al (or any good financial planner) will ask you before helping you figure out what investments are best for you?
Do you want your investments to maximize your annual income taxes?
The standard repayment period for student loans is 10 years. However, there are a lot of other options available to most students. Which of the following is a true statement about student loan repayment?
Graduated payments allow you to make lower payments when you first graduate but the amount of the payments will increase every 2 years over a 10-year period. You need to participate in the Pay As You Earn plan or the income-based repayment plans to qualify for the Public Loan Forgiveness Plan. You must have some of your "grace period" remaining to qualify for the student loan consolidation program. The income-based repayment plans require to you have "financial hardship" to qualify, but they allow you to stretch your payments over a longer time period (over 20 years). All of the above are true statements about student loans
The grossest-sounding piece of investment advice that Uncle Al has given you this semester is, "take advantage of DRIPs." How does a DRIP impact your investments?
Instead of getting a cash dividend you receive additional shares in that company, which increases the compound growth of your investment.
When we talked about asset allocation for your retirement investments Doc threw out some generally accepted guidelines on what percent of your funds should be invested in international funds, real estate funds, and precious metals. Which of the following reflects Doc's guidelines?
Maximum of 10% international stocks, 10% real estate, and 3% precious metals
Herman was busy texting when he drove his car into a parked car. He caused $5,000 of damage to his car and $3,000 of damage to the parked car. What aspect of his auto insurance will cover the damage to Herman's car?
Part D. Collision
Your car was severely damaged when your unattached garage caught fire. The car had $8,000 of damage from the fire. How will your insurance policies cover these damages to your car?
Part D (Comprehensive) of your auto insurance will cover damage to your car
Deshawn wants to help pay for his grandchild's college education. He wants to invest in a financial asset that is safe and will provide income tax benefits if it is used for educational expenses. Which of the following would be a good investment option that meets Deshawn's goals?
Series EE Savings Bond
According to good old Doc White, what should you do as soon as you possibly can when you get a job?
Start participating in your company's 401(k) plan as soon as you are eligible.
Which of following is a major benefit of investing in a Roth 401(k) account with your employer? (Note: Roth = post-tax; Traditional = pre-tax)
The earnings of the account are tax-free when you withdraw them after age 59 ½.
There are two (2) main types of IRAs: Traditional and Roth. Why does Doc White recommend that you invest in a Roth IRA at your age (age 20-35)?
The earnings on the Roth IRA will be tax free when you withdraw them during your retirement years, giving you roughly 40 years of tax-free growth.
You inherited Auntie Ethel's antique porcelain vase from the Ming Dynasty - it has been valued at $25,000. Your neighbour accidentally knocked it over and chipped it. The damage will cost $500 to repair. Which of the following is the
The vase is not covered by your standard homeowners insurance policy because it is worth more than $2,500 You should have a personal article floater to cover the vase.
True or False. If you are uncertain about how you should invest the money in your retirement account, you should ALWAYS ask for help from someone who is qualified to help you. Do NOT rely on your HR (Human Resources) department for advice on how to invest your money.
True
True or False. Most of you young folks (including old Doc White) should NOT plan on getting any retirement funds from Social Security when you retire. You should plan on funding your retirement through your employer's retirement plan, 401(k)-type plans, and individual retirement accounts (IRAs).
True
Someone broke into your car and stole your backpack/computer (worth $900). They caused $1,000 of damage to your car. You have a $250 deductible on your Part D auto insurance. Which of the following is true?
Your backpack will be covered by your renters insurance policy and your auto insurance policy will pay $750 of the damages to your car. You will pay $250 out of pocket for the damage to your car.
Jei's homeowner insurance policy covers her for most everything that could damage her house, except for a few "perils" that are specifically listed as not being covered. Jei's HO policy is considered to be a(n):
all peril policy
Ernie is facing very hard financial times. He lost his job 8 months ago and he has not been able to make his monthly loan payments until now. He recently got a new job, but his lenders are demanding that he repay his loans. Ernie is thinking of declaring bankruptcy. Ernie wants to repay all of his loans, but he doesn't have enough money to do so. He thinks that he will be able to repay his loans over a 3-year period, if his lenders will be patient with him. Which form of federal bankruptcy is best for Ernie?
chapter 13 wage earner bankruptcy
True or False. You are in the 15% marginal tax bracket. You make a Roth IRA contribution of $5,000 for tax year 2017. This contribution will reduce your income taxes by $750 for 2017.
false
Investment A offers a pre-tax return of 10%. Investment B is tax-free and offers a return of 7.5%. You are in the 30% marginal tax bracket. Which of these investments will provide you with the highest return after taxes are paid?
investment b
Your employer said that you have a 3-year cliff vesting plan for your employer's retirement plan. This means that if you leave your job after 2 years you will:
not be entitled to any of the employer's funds in your retirement plan.
Doc White has preached about changing the percentage (the allocation) of stocks and bonds in your retirement account as you get older. You know, using that old "100 - Your Age" Rule as you get older. This strategy is called:
reallocating your portfolio.
By listening to Doc White's personal financial advice, you can lower your insurance premiums simply by:
revising your insurance coverage to match the age and condition of your car as it gets older. keeping your credit utilization ratio between 10-30% of your credit limit to improve your credit score increasing the deductibles (for example, from $100 to $500) on your auto insurance all of the above should lower your auto insurance premiums
Taking a cash advance on your credit card for daily living expenses may not be a wise financial decision because interest begins on the cash advance balance amount immediately.
true
True or False. Checking your own credit history will not have an impact on your credit score.
true
what is a legal and suggested method of reducing annual federal income taxes for a married couple
using the larger of your standard or itemized deductions
Only Weird Old Doc White can relate Michael Jordan and Richard Petty to credit card payments. He told you about the Michael Jordan and Richard Petty Rules to help you understand:
why making just the minimum monthly payments on credit cards is such a bad financial move.
your financial situation is insolvent when
your assets are less than your liabilities
You want to have $5 million in your retirement account at the end of your 45-year working career. Your account will earn an average rate of return of 7% annually. You currently have $0 invested for retirement. How much will you need to invest each MONTH to reach your retirement goal? Use Beginning of Period PMTs.
$1,310.71
Aisha has a 401(k) retirement plan through her employer. She earns a salary of $70,000/year. Her employer will match her contributions "dollar-for-dollar" up to 5% of her annual salary. According to good old Doc White, what is the minimum amount that Aisha should have taken out of her paychecks to contribute to her 401(k) retirement plan each year?
$3,500
Inflation will drive up the cost of living for you young folks. That means you will need to accumulate a lot of money in your retirement accounts by the time you retire. Approximately how much money will you need to have in your retirement account the day you retire (according to old Doc White)?
$3-5 million dollars
D'von works for a company that matches his 401(k) retirement contributions at a rate of "$0.50 per $1" of his contributions, up to 6% of his salary. D'von earns $60,000/year. Using Doc White's advice, what is the minimum amount of salary that D'von should contribute to his 401(k) plan each year?
$7,200
JJ has a Payday loan for $500. The Payday loan company is charging JJ 12% interest for a 1-month loan. JJ thinks he's getting a great deal - only 12%! What is the true APR of this payday loan? (Remember, APR = ANNUAL Percentage Rate)
144% (12% x 12 months/year)
Old Doc White gave you his advice for choosing the best loan for you. In general, when you have the choice of a 3-year loan or a 5-year loan, which loan does Doc recommend that you take?
5-year loan because the lower monthly payments are easier to make in bad financial times
Ashkan is 30 years old and he has a relatively low tolerance for risk in his investments. That is, he doesn't like to see his investments fluctuate wildly in value from week to week; he wants to earn a relatively consistent return from year to year. Using Doc White's advice (as in his "asset allocation flowchart"), which of the following asset allocations would you recommend for Ashkan's retirement plan?
60% stocks, 40% bonds
For a home equity loan (or line of credit), what is the maximum that most lenders will allow you to borrow?
80-85% of the equity you have in your house
Sandy's house was damaged in a hurricane. She has an HO-3 homeowner insurance policy for $200,000 on her house. The police told her that she had to evacuate her house. Sandy left town and had to live in a motel for 2 weeks. Which of the following is most correct?
Sandy's motel and living expenses while she is displaced from her home, up to $40,000, are covered by her homeowner insurance policy Part D (Loss of Use).
Sandy's house was damaged in a hurricane. She has an HO-3 homeowner insurance policy for $200,000 on her house. The police told her that she had to evacuate her house. Sandy left town and had to live in a motel for 2 weeks. Which of the following is most correct?
Sandy's motel and living expenses while she is displaced from her home, up to $40,000, are covered by her homeowner insurance policy Part D (Loss of Use).
Tau was walking on a sidewalk in town when an auto accident occurred in the street. A piece of one of the cars in the accident flew off the car and hit him in his head and shoulder. This caused $4,000 of bodily injury to Tau. Which of the following is most correct?
Tau's medical bills may be paid by Part B of his auto insurance policy if they are not covered by the driver of the car.
True or False. It will cost you roughly $240,000 for ONE year of living expenses when you retire in 40 years, if the annual inflation rate averages 4%. (Assuming a current living expense of $50,000 in today's dollars).
True, and that's a little scary
Mr. J. Pearson (the trailer guy) gave you some great life advice. One of his main tips was:
you're better off renting for a few years instead of buying a house when you graduate. work hard, play hard, make money. ethics and honesty are important. All of the above
