Chapter 3 Flashcards
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)
an amount of money placed at a person’s disposal by a bank; money owed
credit
type of card issued by a bank that allows users to finance a purchase
credit card
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
an interest rate charged for a customer during the early stages of a loan; the rate often goes up after a specified period of time
introductory rate
time frame that a loan agreement is in a force, and before or at the end of which the loan should either be repaid or renegotiated for another term
loan term
—— percent of Americans are living paycheck to paycheck
70
When it comes to debt, if you spread a ______ or a lie long enough, it eventually becomes accepted as the _____.
myth, truth
Debt has been _______ to us with such intensity for so long that to imagine living without it requires a complete ______ shift, a completely new way of looking at things.
marketed, paradigm
your belief system; the way you see or perceive things
paradigm
a long-term rental agreement; a form of second long-term debt
lease
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 decline in the value of property; the opposite of appreciation
depreciation
mortgage in which the interest rate changes periodically (I.e. annually); a way for banks to transfer the risk of higher interest rates to
adjustable rate mortgage (ARM)
home loan in which the sum of the monthly payments is insufficient to repay the entire loan; a final payment comes due, which is a lump sum of the remaining principal
balloon mortgage
the 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
foreclosuer
a card that often bears 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
debit card
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)
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
MYTH: If I _________ money to a friend of relative, I will be helping them
loan
TRUTH: The relationship will be strained or __________
destroyed
MYTH: By _______ a loan, I am helping out a friend or relative.
cosigning
TRUTH: The bank requires a cosigner because the person isn’t likely to _______. Be ready to pay the loan and have your credit damaged.
repay
MYTH: _________, payday lending, rent to own, title pawning, and tote the note lots are needed __________ for lower income people to help them get ahead.
Cash advance, services
TRUTH: These are horrible, greedy ripoffs that aren’t needed and benefit no one but the owners of these _________.
companies
80% of __________ in America are first-generation rich. That means they started out with nothing, did smart stuff, and became millionaires. That’s the opposite of what we’re talking about here.
millionaires
MYTH: The _______ and other forms of gambling will make me _____.
lottery, rich
TRUTH: The lottery is a ____ on the poor and on people who can’t do math.
tax
Texas Tech University did a study on the Texas lottery and found that people without a high school diploma spent an average of $____ a month playing the lottery. College graduates spend $____ a month on average.
173, 49
When studies are done on the lottery, it’s always the lower-income ZIP codes that generate the _____ revenue or sales.
highest
