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Foundations of Personal Finance Final > Study Guide > Flashcards

Study Guide Flashcards

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1
Q

Even though a regular savings account is suitable when you are saving $500 for your beginner emergency fund, why is a money market mutual fund a better place to keep your completed emergency fund?

A
  1. A saving account is too easy to access.
  2. Typically, a money market mutual fund averages a higher interest rate than a savings account.
  3. A money market mutual fund is accessible and generally has check-writing privileges if needed
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2
Q

Savings is about:

A

Saving money is about emotion and contentment

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3
Q

Which is not a key to saving money?

A

Your income

what is:

  1. Making savings a habit
  2. Discipline
  3. Focus
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4
Q

The Baby Steps can best be described as:

A
  1. A systematic process for getting out of a financial mess and into building wealth
  2. A series of seven sequential steps that help you plan, save, and manage money.
  3. A series of steps that will work in good times and in bad times.
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5
Q

On average, how long will it take before your budget begins to work effectiverly?

A

3 months.

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6
Q

How often should you balance your checking account?

A

Once a Month

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7
Q

If 80% of millionaires are first-generation rich, then one can conclude:

A

They started with nothing, did smart stuff, and became millionaires

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8
Q

On average, payday lending, cash advance, and title pawn loans cost the consumer:

A

400% or more annually

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9
Q

Which statement is not true about debt consolidation?

A

You end up saving money because you get a lower interest rate

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10
Q

Which is true about the practice of marketing credit cards to young adults?

A
  1. Teens are the number-one target of credit card companies in America today
  2. Brand loyalty to your first card is incredible, so credit card companies work hard to win you over first
  3. Colleges are losing more students to credit card debt problems than to academic failure
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11
Q

Why do people think that the home equity loan is a good idea?

A
  1. There is a tax refund
  2. It serves as a substitute for an emergency fund
  3. It’s a way to consolidate debt
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12
Q
  1. Kevin has the following debts: Home Equity Loan, $24,000; Visa, $1,200; Student Loan, $5,000; Car, $12,000. THE QUESTION: How should he prioritize his debt snowball?
A
  1. Visa, Student Loan, Car, Home Equity Loan
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13
Q

Which type of loan can be used for debt consolidation?

A

Home Equity

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14
Q

As you grow, you will improve most in the areas you are _____ in:

A

Strongest

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15
Q

When looking for a job, find something that blends your:

A
  1. skills
  2. personality traits
  3. dreams
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16
Q

During college you have two goals: stay in school and:

A

stay out of debt

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17
Q

Which is true in terms of singles and couples when it comes to money?

A

Singles are more prone to impulse buying than couples because they don’t have to be held accountable.

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18
Q

In which of the following ways are men and women different when relating to money?

A
  1. Men view the emergency fund as boring; women view it as security.
  2. Women view the emergency fund as the key to their financial plan; men view it as not being sophisticated enough.
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19
Q

In which of the following ways are men and women different when relating to money?

A
  1. Men view the emergency fund as boring; women view it as security.
  2. Women view the emergency fund as the key to their financial plan; men view it as not being sophisticated enough.
  3. Women like to hunt down deals when shopping; men like to negotiate.
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20
Q

We’re happiest and most fulfilled when we’re:

A

both serving and giving

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21
Q

Which is not true about giving?

A

The minimum you should give is 25% of your income.

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22
Q

Which of the following is not part of power over purchase when making a significant purchase?

A

That’s not good enough

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23
Q

Why is there a direct correlation between the number of hours you watch TV and the amount of money you spend?

A

Advertising

24
Q

What concept is best explained by the statement, “Money spent here cannot be spent there”?

A

Opportunity cost

25
Q

By asking yourself, “Why am I buying this product?” you are examining your:

A

Buying motives

26
Q

“90-Days-Same-As-Cash” means:

A

You have 90 days to pay for an item before interest fees accrue

27
Q

Which of the following is not one of the three keys to finding a bargain?

A

Fast talking

28
Q

With which technique will you most likely hear, “I have to check with my manager”?

A

Good Guy, Bad Guy

29
Q

When should you send a cease and desist letter to creditors?

A

Only in the most extreme situations

30
Q

Which is not part of the Federal Fair Debt Collections Practices Act?

A

Requires creditors to correct any inaccuracies on your account

31
Q

Which of the following is not forgiven under a bankruptcy?

A

Student loans

32
Q

In which case are you most likely to get sued if you are behind in paying bills?

A

If you are making no payments

33
Q

In general, a good way to save on insurance premiums is to:

A

Increase your deductible

34
Q

Which is a type of insurance to avoid?

A

Mortgage insurance

35
Q

Which of the following is not a true statement about an HSA?

A

Answer:It is a good plan for people who have a lot of medical expenses.

What is a true statement:

  1. It is tax-sheltered.
  2. It is a savings account for medical expenses.
  3. HSA stands for Health Savings Account.
36
Q

Which of the following statements is not true about cash value life insurance?

A

Cash value is essential for anyone over 65.

37
Q

Which is not true about investments?

A

Always invest only for tax savings purposes

38
Q

A collection of money from different investors, which is used to purchase stocks, bonds, or other investments and is managed by a fund manager, is called:

A

Mutual Funds

39
Q

The most aggressive mutual funds tend to be from:

A

Companies that are a little younger and growing

40
Q

What is the best option if you begin losing money in your mutual fund?

A

Leave it alone and continue to invest money in the fund

41
Q

The primary difference between the Roth IRA and a traditional IRA is:

A

The Roth IRA grows tax free; the traditional IRA doesn’t.

42
Q

Under which condition are you not able to make a tax-free withdrawal from your Roth IRA?

A

Career change and temporary drop of income

43
Q

What is the best option for your retirement plan when you leave a company?

A

Do a direct transfer into an IRA.

44
Q

When seeking a financial counselor to help you with your investments, always go with:

A

A financial counselor with the heart of a teacher who explains everything to you

45
Q

You are ready to buy a home under the following conditions

A
  1. You have an emergency fund.

2. You have at least 10% down.

46
Q

If you must take out a loan, be sure to:

A

Get a fixed rate

47
Q

Which is an advantage of taking a 15-year mortgage vs. a 30-year mortgage?

A

The difference you save in interest is significant.

48
Q

When buying a home:

A
  1. Buy in the bottom price range of the neighborhood.
  2. Make at least a 10% down payment.
  3. Overlook bad landscaping and outdated cosmetic issues.
49
Q

Which is not a horrible mortgage option?

A

Conventional

50
Q

Which is not a characteristic of an accelerated loan?

A

The interest rate adjusts periodically

51
Q

Which is not true about owner financing?

A

The fees are extremely expensive.

52
Q

Why do ARMs appear to be a good mortgage option?

A

The initial interest rate is lower, so people are able to buy the house they want.

53
Q

If you are buying a house outside of a standard subdivision, what should you get?

A

Land survey

54
Q

Which is not a good reason by itself to purchase a home?

A

It’s a tax deduction

55
Q

Know the description for each of the following:
Large-Cap:
Small-Cap:
Mid-Cap:

A

Large-Cap - Growth and Income Funds

Mid-Cap - Growth Funds

Small-Cap - Aggressive Growth Funds

56
Q

Know which types of insurance is necessary.

A
  1. Renters insurance
  2. cars insurace
  3. Health Insurance

maybe as well:

  1. Term Life Insurance
  2. Identity Theft Insurance
  3. Occupational Disability

Foundations of Personal Finance Final (1 decks)

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