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economics voc.

key terms voc quiz 2-27-15

fee charged by a credit card company for the use of their credit card Annual fee
cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a loan Annual percentage rate (APR)
home loan secured by a deed of trust or mortgage in which the interest rate will change periodically, brought on as result of high interest rates in early 1980s as a way for banks to transfer the risk of higher interest rates to the consumer Adjustable rate mortgage (ARM)
home loan in which the sum of the monthly payments to insufficient to repay the entire loans; a final payment comes due, which is a lump sum of the remaining principal balance Balloon mortgage
money owed Credit
tool used to finance a purchase Credit Card
amount of money that can be borrowed Credit Limit
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 money comes directly out of a checking account; also check card Debt Card
act of combining all debts into one monthly payment, typically extending the terms and the length of time required to repay the debt Debt Consolidation
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
 Debt Snowball
a decline in the value of property; the opposite of appreciation Depreciation
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 Foreclosure
time period during which a borrower can pay the full balance of credit due with no finance charges Grace period
credit line offered by mortgage lenders that allows a homeowner to borrow money against the equity in their home Home Equity Loan (HEL)
a long-term rental agreement, and a form of secured long-term debt Lease
temporary borrowing of a sum of money Loan
information that has been passed on but is not true Myth
your belief system; the way you see or perceive things paradigm
expense that a taxpayer is allowed to deduct from taxable income; examples include money paid as home mortgage interest and charitable donations Tax Deduction
a specific period of time Term
Look over all Chapter 4 myths
Know the rule of 72 divide the interest rate into 72, it will tell you how many years it will take to double your money EX: 72/12 = 6 years
Why do you not buy a new car? the interest rate is high
What is the reason for not having car payments? don't want debt, you want to pay cash
Who didn't believe in debt and would not allow credit to be given in his stores. Wasn't until after his death in 1971 that credit was widely accepted in the his stores. J.C. Penney
Who hated debt and would not offer credit on cars for 10 years after General Motors began offering credit? Henry Ford of Ford Motor Company
What was the first credit card called? Diners Club
BankAmericard changed its name to what? Visa
Know the debt snowball
what animal does Dave Ramsey refer to when talking about the intensity that you attack the debt snowball Gazelle
What does Dave Ramsey say about borrowing money? DONT DO IT
According to The Wall Street Journal, how many Americans are living from paycheck to paycheck? 70%
In the Sears catalog, credit was called what? "folly"
If you want to be well off finically what do you do? quit buying stuff
About what percent of college graduates have credit card debt before they even get a job? 80%
True or False: Debt consolidation saves interest and you get a smaller payment. False, Debt consolidation is a con
What saves little or no interest because you will throw your low interest loans into the deal? Debt Consolidation
What equals more time in debt? smaller payments
Who are a huge target of credit card companies today? teens
When you use cash instead of plastic, you spend how much less because spending cash hurts? 12-18% less
True or False: You need a credit card to rent a car or make purchases online or by phone. False, A debit card can do all of that
What is the adjustable rate mortgage (ARM) here for? to keep the bank from losing money. It transfers the risk of higher interest rates to you
What does Dave say about loaning money? Don't ever do it
Life happens and something else will always seem more important. Never take out more than what? a fifteen year fixed-rate mortgage
How much does a car lose in value in the first four years? 70%
What is the largest purchase most consumers make that goes down in value? buying a new car
What is the most expensive way to own and operate a vehicle? car lease
True or False: The lottery is a tax on the poor and people who can't do math. True
True or False: Cash advance, rent-to-own and tote-the-note lots are needed services for lower income people to help them get ahead. False, these are horrible, greedy rip-offs that aren't needed and benefit no one but the owners of the companies.
Why does a bank require a cosigner? because the person isn't likely to repay.
What does the cosigner need to be ready to do if the person does not pay? to pay the loan and have your credit damaged
Who though debt was a sin? great grandparents
Who thought debt was stupid? grandparents
Who borrowed on a few things? parents
Who borrows on everything? we do
Where does 15% come from? our household income
Know the Baby Steps
Know how to do a case study
What are two types of loans that are typically available to borrowers? secured and unsecured loans
When do you need a secured loan? when you are borrowing large amounts of money
unsecured loan? based on their finical resources or ability to repay the loan
Created by: a.allsup