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Senior Year > Personal Financial Management - Chapter 4 > Flashcards

Personal Financial Management - Chapter 4 Flashcards

(54 cards)

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0
Q

Co-signing

A

Taking responsibility for someone else’s loan

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1
Q

Cash advance

A

Charges of 400% and up for their services

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2
Q

Loaning money to a friend or relative

A

Strains / destroys relationships

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3
Q

You take responsibility for a loan that probably won’t get paid back if you…

A

Co-sign a loan

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4
Q

80% of…

A

Millionaires are first generation millionaires –> they started with nothing

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5
Q

What services are only out to benefit the owners of their company? (4)

A

Cash advance

Rent-to-own

Title pawning

Tote-the-note-lots

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6
Q

The lottery and gambling are…

A

Forms of taxes that target the poor and people who can’t do math

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7
Q

The typical millionaire drives…

A

Reliable used cars in order to avoid car payments

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8
Q

What is the average car payment per month over how many months?

A

$464/per month for over 64-months

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9
Q

Leasing (3)

A

The most expensive way to operate and finance a vehicle

Can write-off your paid-for car on taxes, if you own a business, without paying payments

Can minimize money lost on things that go down in value by buying slightly used

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10
Q

A new car loses…

A

70% of its value in its first 4 years

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11
Q

Never take out more than a __ __ ___ rate mortgage

A

15 year fixed

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12
Q

It’s never wise to take out an ___ or ____ _____ if you know you’ll be moving, because…. (2)

A
  • ARM or a balloon mortgage

- they will foreclose, the ARM transfers the risk of higher interest rates to you

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13
Q

A debit card card…

A

Can do whatever a credit card can do but is better (can rent a car and can make a purchase online, or by phone)

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14
Q

You spend ___ to ___ less when using ____ rather than ____ (3)

A

12-18%

Cash

Plastic

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15
Q

Teens are a huge target of… (2)

A

Credit card companies

About 80% of college graduates have credit card debt before they even get a job

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16
Q

The home equity loan is BAD for…

A

Consolidation and isn’t a substitute for the emergency fund

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17
Q

Debt consolidation is bad because… (3)

A

It saves little or no interest

You can’t borrow your way out of debt

Smaller payments = more time spent in debt

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18
Q

The borrower is a ___ to the lender

A

SLAVE

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19
Q

The fastest growing group of bankruptcy filers consist of…

A

People under 25 years old

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20
Q

Car payments are…

A

NOT a way of life

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21
Q

You don’t need to build your credit score by…

Study These Flashcards
A

Applying for a credit card

22
Q

Best way to beat debt?

Study These Flashcards
A

Quit borrowing money and live on less than what you make

23
Q

Reasons people think a home equity loan is good (2)

Study These Flashcards
A

Tax refund

Substitute for emergency fund

24
Pay off debts....
SMALLEST TO LARGEST
25
What appreciates and what depreciates? (2)
The value of your house appreciates The value of your car depreciates
26
First charge card in the U.S.?
Diners club
27
JC penny =
James cash penny ---> didn't like debt
28
The first debt in the debt snowball is the one with the highest interest rate
False
29
78% of Americans...
Don't pay off their card every month
30
Why do people go into debt when they know that they will have to pay more for an item once they figure interest?
You spend 12-18% more than if you use cash
31
Why are teens such a major target of the credit card industry?
Adults have all the credit card offers they can get, so they advertise to teens.
32
Why is it better to buy a used car instead of a brand new vehicle?
The car loses value when you leave the lot so you pay more than its worth
33
Annual fee
Fee charged by a credit card company for the use of their credit card
34
Annual percentage rate (APR) (2)
Cost of borrowing money on an annual basis Takes into account the interest rate and other related fees on a loan
35
Adjustable rate mortgage (ARM) (3)
Home loan secured by a deed of trust or mortgage in which the interest rate will change periodically (I.e. Annually) Typically adjusted based on a published index such as the treasury bill or LIBOR Brought on as a result of high interest rates in the early 1980s as a way for banks to transfer the risk of higher rates to the consumer
36
Balloon mortgage (2)
Home loan in which the sum of the monthly payments is insufficient to repay the entire loan A final payment comes due, which is a lump sum of the remaining principal balance
37
Credit
Money owed/loaned
38
Credit card
Tool used to finance a purchase
39
Credit limit
The maximum amount of credit a lender will extend to a customer
40
Debit card (3)
Type of card, often bearing the seal of a major credit card company issued by a bank and used to make purchases unlike a credit card, the $ comes directly out of a checking account (aka a check card)
41
Debt consolidation
Act of combining all debts into one monthly payment, typically extending the terms and the length of time required to repay the debt
42
Debt snowball (3)
Preferred method of debt repayment Includes a list of all debts organized from smallest to largest balance Minimum payments are made to all debts except for the smallest, which is attacked with the largest possible payments
43
Depreciation (2)
A decline in the value of property Opposite of appreciation
44
Finance charge
The total dollar amount you pay to use credit
45
Foreclosure
The process by which the holder of a mortgage sells the property of a homeowner who has not made interest and/or principal payments on time as stipulated in the mortgage contract
46
Grace period
Time period during which a borrower can pay the full balance of credit due with no finance charges
47
Home equity loan (HEL) (2)
Credit line offered by mortgage lenders that allows a homeowner to borrow money against the equity in their home Uses your home as collateral to borrow money
48
Introductory rate (3)
A temporary interest rate Advertised as a low APR to entice customers to apply for a credit card After the introductory period, the interest rate will increase to the regular APR
49
Lease
A long-term rental agreement, and a form of secured long-term debt
50
Loan term
The length of time you have to pay off a loan
51
Myth
Information that's been passed on but isn't true
52
Paradigm (2)
Your belief system The way you see or perceive things
53
Tax deduction
An expense that a tax payer is allowed to deduct from taxable income

Senior Year (31 decks)

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