21st Century Student FinLit -Getting Personal SW

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28.99% will apply to charges going forward until you make six consecutive minimum payments when due. You have unleashed the beast. $15.00 fee; Normally a fee of 14.99% + 3.5% (18.49%) would apply. However, you have already triggered the Penalty APR of 28.99%. You are immediately paying nearly 30% on that cash.

making it very difficult to pay down the balance.

They are recurring costs for housing, food, health, personal needs, transportation and finance. Expense categories are housing, food, health, personal, transportation and finances. So they are missing food and transportation. Yes this is in line with the “pay yourself first” credo of personal finance. A recurring cost is one that is repeated regularly, usually on a monthly basis. Nonrecurring costs are a one-time charge; not a regular monthly expense. No it is discretionary expense, but he can consider it a high priority discretionary item. He should prioritize it so in a pinch he can reduce spending on other discretionary items in order to be able to pay his Vikings membership dues. 10. A budget is a mutually agreed upon plan for spending and saving which both partners can look to for structure and direction in building and maintaining wealth (and their relationship.) It enables better, more effective communication about money, promotes teamwork for wealth building and preserving, and reduces conflict on how money is spent. 11. A budget will warn you when you are in a danger zone so you can make spending adjustments and spotlight waste that diminishes wealth. It can provide a dose of reality, to help you know exactly where your money is going; a budget helps you prioritize expenses, plan for seasonal costs, find annual patterns to help reach financial goals, and more. It also helps a couple work as a wealth building team. 12. Discretionary expenses: Fines, fees and penalties. 13. There are lots of good ones including Mint, Wallet, HomeBudget with Sync, and Wally, BUDGT. 14. D 15. TMI? impossible! You: Budget Master or Budget Buster? JUNE INCOME ACTUAL: 2400 200 90 2690 6. 7. 8. 9.

12. D 13. He should get a credit card and make small, occasional purchases which he knows he can pay back during the grace period to avoid interest rate charges. He could also get a secured credit card. If he makes regular on-time payments in full he should improve his credit score. 14. F 15 D 16. C 17. A less than the minimum payment is like paying nothing at all. Depending on the card terms, it will trigger the penalty rate for all future charges on the card. Within one billing cycle he will be past due. If this pattern continues, his credit score will suffer and the penalty rate will apply to the entire card balance! He needs to make minimum payments consistently and stop charging on the card until his finances improve. He is charged a late payment fee every time he has a late payment! Eloise and Gunnar: Budget Masters or Budget Busters? 1. A budget 2. in; out; inflow/income; outflow expenses; even 3. Budgets provide a month by month picture of income and expenses. Analyzing multiple monthly budgets or extrapolating them to an annual budget will reveal spending patterns, seasonal expenses and seasonal increases or declines in income. She can use Excel to make a budget spreadsheet or search “free budget templates” online or even check out Pinterest. Paychecks, dividend payments, commissions, freelancing earnings, bonuses; any regular, dependable money received each month; 4. as you’ll recall, they have a basement apartment they rent to a college student, so the monthly rent they receive would be included. Mandatory expenses are the “absolutely, positively gotta pay for it” type of expenses. 5.

9.

10. You will not be charged interest on the Spring Fling deposit if you pay by the payment due date. 11. T 12. highest 13. D 14. T 15. T 16. F 17. T 18. F 19. T 20. The effect of making minimum payments,

18. A 19. T 10. B PRODUCT PREVIEW

or paying any amount less than the full balance, is that the card carries over a balance from billing cycle to billing cycle. Unpaid interest and fees accrue and are added to the balance and the card company charges interest on them.

Are You Financially Literate? Chapter 13 Quiz

1. 2.

D

Rhonda is not correct. She has a charge card, not a credit card, so if she does not pay her bill each month, she is subject to substantial fees.

3. 4. 5. 6. 7. 8. 9.

A

T

F

By June 5 By July 5

C

C 10. B 11. When making minimum payments, the card carries over a balance from billing cycle to billing cycle. Unpaid interest and fees accrue. They are added to the card balance,

Answer Key 382

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