1. If 80% of millionaires are first generation rich, than one can conclude:
They started with nothing, did smart stuff, and became millionaires
They fell for the debt myths that are common in society
They inherited money from their family
They are rich so they can do whatever they want with their money
2. In which type of loan would you use your house for collateral?
3. 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?
Home Equity Loan, Visa, Student Loan, Car
Visa, Car, Student Loan, Home Equity Loan
Visa, Student Loan, Car, Home Equity Loan
Cannot prioritize the debt snowball without knowing the interest rates on each debt
4. On average, payday lending, cash advance and title pawn loans cost the consumer:
400% or more annually
Nothing but the fee if you pay back the loan within 30 days
Three times the APR of an average credit card
5. Which is not true about making purchases with credit cards?
You spend 12-18% less when using a credit card
You spend 12-18% more when using a credit card
You are less likely to experience neurological "pain" when purchasing with a credit card
None of the above
6. Which is true about the practice of marketing credit cards to young adults?
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
All of the above
7. Which of the following is true about using credit?
It is the same as using cash
When using credit, one spends less
When using credit, one spends more
Using credit neurologically registers as pain
8. Which statement is not true about debt consolidation?
You end up with only one payment to manage
You end up saving money because you get a lower interest rate
Smaller payments mean more time in debt
Your lower interest loans also get rolled into the deal so you end up with minimal savings
9. Why do people think that the home equity loan is a good idea?
There is a good tax refund
It serves as a substitute for an emergency fund
It is a way to consolidate debt
All of the above
Chapter 3 Quiz: Debt
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