Credit Score
Which of the follow is a good way to improve your credit score?
A. Having a long credit history
B. Pay off credit whenever you want
C. Applying for new credit often
A. Having a long credit history
"The age of your oldest and newest accounts—and the average age of all the accounts in your credit report—can affect your scores. Both open and closed accounts can count toward the average age of your accounts. You can increase the average age of your accounts by (sparingly) opening new accounts."
- Synchrony
What are 3 things (other than food and housing) that you should account for in your monthly budget?
entertainment, transportation, debt, health, pets, emergency funds, loan payments, taxes, wants, etc.
Name 1 reason someone may need life insurance.
Someone else depends on their income, upon death other people would take on their debts, not enough savings or assets to cover all their obligations
What is collateral?
An asset or property of value that a borrower pledges to a lender as security for a loan.
Roughly, what should your emergency fund cover?
Several months worth of bare necessity living expenses
Is it better to pay the minimum on credit card debt or more than the minimum?
It's better to pay more than the minimum.
"When you only cover the minimum every month, you end up paying more in interest. The minimum payment exists to ensure that interest fees are covered, with only a small amount going toward the actual balance."
- Land of Lincoln Credit Union
What is zero-based budgeting?
Plan your spending by taking your total monthly income and allocating it to budget categories until you have $0.
What does comprehensive car insurance cover?
Any type of prevent outside of your control, not counting accidents. (theft, vandalism, damage from falling objects, etc.)
What kind of debt should you prioritize when paying it off?
A. Credit card debt
B. High interest debt
C. Student loan debt
B. High interest debt
What is a 401k?
an employer-sponsored retirement savings plan with special tax benefits
Roughly, what counts as a fair - very good credit score?
580 - 799
Fair: 580-669
Good: 670-739
Very good: 740-799
What does it mean to "pay yourself first"?
You first thing you pay towards in your budget plan is your savings account.
What is term life insurance?
A type of life insurance that only lasts for a certain amount of time
What is the difference between secured and unsecured debt?
Secured debt is covered by collateral while unsecured debt is not.
What is the 60/20/20 rule?
Save 60% of your income for essentials, 20% for savings and investing, and 20% for wants.
True or False:
It's a good practice to use a credit card for both wants AND needs.
False.
Too many "want" purchases with a credit card can lead to debt. It's best to only use a credit card for needs such as groceries or gas.
What counts as a want in a budget plan?
Entertainment, eating out, discretionary shopping, travel, upgrades.
Name 1 thing home insurance typically doesn't cover.
Flooding and related damage, water or sewage backup, termite damage, rodent and pest damage, earthquakes, acts of war
What is the snowball method when it comes to paying off debt?
When you start paying off the smallest debts first to build momentum.
What is an example of impulse buying?
buying food that isn't on your shopping list, last minute concert tickets because a friend is going, splurging on a shirt because it looks cool, buying a video game just because it's on sale, etc.
How long do you have to pay credit dues before they are considered late payments?
30 days
True or false:
If you amount of income changes, you should alter your budget to accommodate it.
True
True or false:
Hazard insurance is the same thing as home insurance.
What does APR stand for?
Annual Percentage Rate (dealing with interest rates)
What does "time horizon" mean in investing terms?
A. The number of years before you expect to need the money you’re investing.
B. How you divide your assets up across all of your investments
A. The number of years before you expect to need the money you're investing