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key terms voc quiz 2-27-15
|fee charged by a credit card company for the use of their credit card
|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
|tool used to finance a purchase
|amount of money that can be borrowed
|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
|act of combining all debts into one monthly payment, typically extending the terms and the length of time required to repay the debt
|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
|a decline in the value of property; the opposite of appreciation
|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
|time period during which a borrower can pay the full balance of credit due with no finance charges
|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
|temporary borrowing of a sum of money
|information that has been passed on but is not true
|your belief system; the way you see or perceive things
|expense that a taxpayer is allowed to deduct from taxable income; examples include money paid as home mortgage interest and charitable donations
|a specific period of time
|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.
|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?
|BankAmericard changed its name to what?
|Know the debt snowball
|what animal does Dave Ramsey refer to when talking about the intensity that you attack the debt snowball
|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?
|In the Sears catalog, credit was called what?
|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?
|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?
|What equals more time in debt?
|Who are a huge target of credit card companies today?
|When you use cash instead of plastic, you spend how much less because spending cash hurts?
|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?
|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?
|True or False: The lottery is a tax on the poor and people who can't do math.
|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?
|Who thought debt was stupid?
|Who borrowed on a few things?
|Who borrows on everything?
|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
|based on their finical resources or ability to repay the loan