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Capstone > Ch. 4- Dangers of Debt > Flashcards

Ch. 4- Dangers of Debt Flashcards

1
Q

Annual Fee

A

fee for the use of a credit card

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2
Q

Annual Percentage Rate

A

cost of borrowing money on an annual basis

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3
Q

ARM/ Balloon Mortgage

A

home loan where the sum of the monthly payments is insufficient to repay the entire loan

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4
Q

Credit

A

money owed

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5
Q

Credit Card

A

tool used to finance a purchase

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6
Q

Debit Card

A

a card that takes money directly out of a checking account

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7
Q

Debt Consolidation

A

combining all debts into one monthly payment

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8
Q

Debt Snowball

A

method of debt repayment, list debts smallest to largest, pay smallest first

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9
Q

Depreciation

A

decline in the value of property

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10
Q

finance charge

A

any fee representing the cost of credit

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11
Q

Foreclosure

A

holder of the mortgage sells the property of a homeowner who can’t pay payments on time

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12
Q

Grace Period

A

time period where borrower can pay full balance of the credit with no finance charges

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13
Q

Home Equity Loan

A

borrowing money against the equity in their home

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14
Q

Introductory Rate

A

a lower interest rate for the first initial months of a loan, later it goes up to normal

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15
Q

Lease

A

long-term rental agreement-form of long-term debt

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16
Q

Loan Term

A

a loan repaid in payments over a length of time

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17
Q

Myth

A

info that has been passed on but isn’t true

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18
Q

Paradigm

A

your belief system

19
Q

Tax Deduction

A

expense that a taxpayer can deduct from taxable income

20
Q

T/F Debt Consolidation is wise

A

false

21
Q

T/F The typical millionaire drives new cars.

A

false

22
Q

Who is the number one target for credit card companies?

A

teenagers

23
Q

T/F co-signing a loan is a good way to help a friend out.

A

false

24
Q

T/F The lottery is a tax on the poor and people who can’t do math.

A

true

25
Q

T/F Home equity loans are a good way to consolidate a debt

A

false

26
Q

T/F It is never wise to take out an ARM or balloon mortgage

A

true

27
Q

T/F Paying off the balance of your credit card each month is an acceptable use of credit.

A

false

28
Q

T/F It is best to attack your debt by consolidating many payments into one

A

false

29
Q

Why are teens the number one target for credit card companies?

A

you stay loyal to your first card, college students don’t have much money

30
Q

How do cash advance and car title companies keep people in the cycle of debt?

A

leasing; making people think these things are necessary

31
Q

Why does debt consolidation typically not save money?

A

doesn’t save interest, smaller payments equals a longer time in debt

32
Q

Explain how the debt snowball works.

A

make a list of debts smallest to largest, pay the minimum to all except the smallest, pay as much as possible to knock off the smallest one

33
Q

What are the 5 steps to get out of debt?

A

1) Quit borrowing money
2) Save money
3) Sell something
4) Part-time job/overtime
5) Debt snowball

34
Q

What percentage of Americans are living paycheck to paycheck?

A

70%

35
Q

Our great grandparents thought debt was ________.
Our grandparents thought it was _________.
Our parents ________.
We _________.

A

sin, stupid, borrow on a few things, borrow on everything

36
Q

What percentage of America’s millionaires are first-generation rich and what does that mean?

A

80% they started out with nothing then did smart stuff to get there

37
Q

What is the difference between poor and broke?

A

poor is a state of the mind and broke is a place

38
Q

According to the study, people without a high school diploma spent how much a month playing the lottery? How much do college graduates spend?

A

173; 49

39
Q

What is the average car payment today?

A

$464/month over 64 months

40
Q

What is the most expensive way to finance and operate a vehicle?

A

leasing

41
Q

How much of a new car’s value does it lose within 4 years?

A

70%

42
Q

You usually spend how much more when paying with cards not cash?

A

12-18%

43
Q

The fastest-growing group of bankruptcy filers consist of people in what age group?

A

under 25

44
Q

Charges of 400% and up for their services

A

Cash advance

Capstone (7 decks)

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