Managing Debt

Ready to test your knowledge? You'll have ten multiple choice questions to answer. Click on each question to reveal the question and multiple choice answers. After you've completed answering all ten questions, click "Grade Me!" at the end of the quiz to see how you did.

Question 1

Which of the following would be considered "bad" debt?

(A) The mortgage on your home.	Correct Incorrect
(B) An education loan.	Correct Incorrect
(C) Clothing, purchased with a credit card.	Correct Incorrect
(D) A small business loan.	Correct Incorrect

Question 2

When considering a 0% APR credit card balance transfer offer, you should:

(A) Know the number of months that the 0% APR will be in place for the balance transfer amount.	Correct Incorrect
(B) Know the APR that will go into effect after the promotional period has ended.	Correct Incorrect
(C) Know the fee that will be charged, usually a percentage of the amount transferred, should you choose to accept the balance transfer offer.	Correct Incorrect
(D) All of the above.	Correct Incorrect

Question 3

Under a "debt-snowball" repayment strategy, you:

(A) Pay off the debts with the lowest loan balances first and make only the minimum payments on other loans until the lowest balance is paid off.	Correct Incorrect
(B) Pay off the debts with the highest interest rates first and make only the minimum payments on other loans until the loan with the highest interest rate is paid off.	Correct Incorrect
(C) Continuing spending using credit, until you have maxed out all of your available credit.	Correct Incorrect
(D) File for bankruptcy.	Correct Incorrect

Question 4

In today's economy, if you receive a lump sum payment, such as a tax refund, inheritance or employment bonus, it makes the most financial sense to:

(A) Spend it on the family vacation you've always dreamed of.	Correct Incorrect
(B) Use the lump sum to pay down the principle loan balance on your highest APR loan.	Correct Incorrect
(C) Vegas, baby. Vegas!	Correct Incorrect
(D) Save it by putting it in a nice secure CD or Savings account.	Correct Incorrect

Question 5

You can calculate your debt to income ratio by:

(A) Adding up all of your outstanding loan balances and dividing by your annual income.	Correct Incorrect
(B) Adding up all of your monthly payments for debt obligations and dividing the total by your total household income.	Correct Incorrect
(C) Adding up all of your monthly debt obligations and subtracting them from your total monthly income.	Correct Incorrect
(D) By determining the number of years it will take to pay off all of your loans.	Correct Incorrect

Question 6

The Fair Debt Collection Practices Act (FDCPA) is a federal law that protects consumers from creditors. It forbids your creditors, or those collecting on their behalf from:

(A) Impersonation or claims of affiliation with the government, including the use of a badge or uniform or other official insignia.	Correct Incorrect
(B) Repeated calls with the intent to annoy or harass you, and the use of obscene or abusive language.	Correct Incorrect
(C) Communication at unusual or inconvenient places and times or through third parties without debtor consent.	Correct Incorrect
(D) All of the above.	Correct Incorrect

Question 7

If you take out a $20,000 car loan at 4.9% APR for a 60-month term, you will have a monthly payment of $376.51. If each month you add $50.00 to that monthly payment, how many months sooner will you pay off your car loan?

(A) 7 months earlier.	Correct Incorrect
(B) 2 months earlier.	Correct Incorrect
(C) 12 months earlier.	Correct Incorrect
(D) 18 months earlier.	Correct Incorrect

Question 8

Most financial experts, and lenders, advise that your total monthly payments for loan obligations, excluding your mortgage payment, represent what percentage of your monthly income?

(A) 28 percent	Correct Incorrect
(B) 10 percent	Correct Incorrect
(C) 50 percent	Correct Incorrect
(D) 36 percent	Correct Incorrect

Question 9

Under which of the following circumstances would it be financially beneficial to borrow money to buy something now and repay it with future income?

(A) When something goes on sale.	Correct Incorrect
(B) When the interest on the loan is greater than the interest obtained from a savings account.	Correct Incorrect
(C) When buying something on credit allows someone to get a much better paying job.	Correct Incorrect
(D) It is always more beneficial to borrow money to buy something now and repay it with future income.	Correct Incorrect

Question 10

Which of the following will help lower the cost of a major purchase?

(A) Paying off the purchase over a long period of time.	Correct Incorrect
(B) Agreeing to pay the current rate of interest on the purchase for as many years as possible.	Correct Incorrect
(C) Making a larger down payment at the time of purchase.	Correct Incorrect
(D) Making a smaller down payment at the time of purchase.	Correct Incorrect

	Correct	Incorrect
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