Ch.3 debt myths: debt is not a tool Flashcards
The human nature to want something immediately is a sign of what?
immaturity
the faster something is paid off the more you..?
save
what does debt add to your life?
risk, no prosperity in it, and it isn’t used by wealthy people
what’s the best way to build wealth?
to become and stay debt free
should you loan money? why?
no; it strain the relationship between the lender and the borrower. You should be ready to completely lose the money you lend if you do.
what is a deficit?
it’s the difference between debt and below wholesale repo price
how does a below wholesale repo price affect?
banks, hedge funds, money market funds; you buy things in lower quantity in order to gain money back
what things are over 100% interest?
rent to own, payday loans
what is considered a rip off interest rate?
24-38%
should you buy whole life insurance? Why?
No;Premiums are generally higher than other types of life insurance
what is a premium?
the amount of money you pay regularly (e.g., monthly, quarterly, or annually) to an insurance company to maintain coverage for a specific policy, like auto, home, or health insurance
what’s the most expensive way to operate a vehicle?
car lease
what’s the average interest rate?
14%
what is car fleecing?
over time the value of the car goes down; So you pay 12,000$ over time while you down payed 10,000$ for a 22,000$ car.
How much value does a car lose over 4 years?
60%
What do millionaires do when looking/ buying a new car?
They don’t buy brand new they usually drive quality used cars, typically they’re two years old.
What is the best myth?
“build your credit”
what should you look for in a mortgage company?
one that offers underwriting
what is underwriting?
Process details of your life (lending) when looking for good mortgages
What 5 things qualify you for a conventional 15 year fixed rate loan?
paid landlord early/ on time for 2 years
been in the same career field for 2 years
good down payment
no other credit, good or bad
not trying to take too big of a loan (25% of take home pay is conservative)
What is the one thing a debit card won’t do?
put you into debt
what is visa’s zero liability policy?
maximum protection against fraudulent activity on debit and credit cards
how much more do credit card users spend compared to debit card users?
12-18%
