FADL 2.3 Quiz Review - Budgeting/Debt

Why is budgeting important?

Budgeting...

• helps you control your money, pay your bills, and save for emergencies and major expenses.

• helps you identify areas where you can cut back on spending. 

• helps you build an emergency fund and save for major expenses. 

• does all of these

April realized she has taken out too much debt and it has started to negatively impact her ability to budget. She has decided to pay off this debt in full as soon as possible. All of the following would be beneficial strategies EXCEPT…

• Reducing spending by canceling some of her streaming subscriptions
• Taking extra shifts at work to increase her income
• Making more than the minimum required payment on her debt
• Applying for another credit card to use in case she runs out of cash paying off her debt

Based on the graph below, determine which statement is FALSE.

• Student loan debt has increased the most since 2003.
• Auto loans and mortgage have more than doubled (100%+ increase) since 2003.
• Aside from mortgages, auto loans are the largest source of debt for most Americans on average.
• HE Revolving (HELOC) loans fell dramatically due to the 2008 subprime mortgage financial crisis.

Match each budget to its definition.

• Zero-Based Budget

• Save when you have money coming in so you can pay bills when you don't

• "Pay yourself first" Budget

• set aside part of every paycheck for savings before you spend

• Cash Envelope Budget

• All your earnings are categorized and your income minus expenses is equal to zero

• Noodle/Squirrel Budget

• Withdraw cash for expenses, sort into envelopes, use the cash until it's gone

What was the percent increase or decrease in US credit card debt from Quarter 2 of 2015 (Q2 2015) to Quarter 1 of 2017 (Q1 2017)?

• 9.3% increase

• 9.3% decrease

• 12.5% increase

• 12.5% decrease

If you’re using the Snowball Method, order each debt from the first you would pay off to the last.

• Balance: $2,000

  Interest: 5%

• Balance: $12,000

  Interest: 15%

• Balance: $8,000

  Interest: 12%

• Balance: $5,000

  Interest: 20%

Which statement is TRUE?

• the High-Rate Method saves you more money in interest

• the Snowball Method saves you more money in interest

• the High-Rate Method helps keep you motivated

• the Snowball Method has you only pay one credit card at a time

Analyze this graph of Number of Car Loan Accounts in the US. Which of the following time spans saw the largest increase in car loans (in millions) in the US?

• 2007 to 2008

• 2012 to 2013

• 2015 to 2016

• 2018 to 2019