Dave Ramsey Chapter 4 & 5 Review
41 Questions
100 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What determines a FICO Score?

  • Type of debt
  • Duration of debt
  • New debt
  • All of the above (correct)

    • What can be done with a credit card that can't be done with a debit card?

    Go into debt

    FCRA requires creditors to notify consumers if they deny credit based on a credit report.

    True

    What is the Drive Free Method?

    <p>Planning your purchase in advance using the sinking fund method and putting your savings in a mutual fund.</p> Signup and view all the answers

    What is the most cost-effective option for purchasing a home?

    <p>15 Year Fixed-Rate Mortgage</p> Signup and view all the answers

    You should have a ______% down payment on a mortgage.

    <p>10</p> Signup and view all the answers

    What does the Debt Snowball method involve?

    <p>Paying off your debts from smallest to largest.</p> Signup and view all the answers

    What is a Paycheck Garnishment?

    <p>A court-ordered attachment from a paycheck</p> Signup and view all the answers

    The Lottery Myth suggests that gambling can lead to wealth.

    <p>True</p> Signup and view all the answers

    Having a credit card means you have financially arrived.

    <p>False</p> Signup and view all the answers

    What does a Credit Score represent?

    <p>The risk of not repaying your debt.</p> Signup and view all the answers

    Information is removed from your credit report after ______ years.

    <p>7</p> Signup and view all the answers

    Bankruptcy stays on your credit report for ______ years.

    <p>10</p> Signup and view all the answers

    What defines a Loan Term?

    <p>Time frame that a loan agreement is in force.</p> Signup and view all the answers

    What does APR stand for?

    <p>Annual Percentage Rate</p> Signup and view all the answers

    What is Depreciation?

    <p>A decrease or loss in value.</p> Signup and view all the answers

    What is an Annual Fee?

    <p>A yearly fee charged by the credit card company.</p> Signup and view all the answers

    What is a Lease?

    <p>A long-term rental agreement on a car.</p> Signup and view all the answers

    What does it mean to be Upside-down in terms of debt?

    <p>When a person owes more on an item than it's worth.</p> Signup and view all the answers

    What is a Credit Card?

    <p>A card issued by a bank that allows users to finance a purchase.</p> Signup and view all the answers

    What is a Secured Loan?

    <p>A loan that requires collateral to guarantee the loan.</p> Signup and view all the answers

    What is an Unsecured Loan?

    <p>A loan based solely on a person's creditworthiness.</p> Signup and view all the answers

    What is an Introductory Rate?

    <p>A rate charged at the beginning of a loan that will generally increase over the term of the loan.</p> Signup and view all the answers

    The total estimated student loan debt outstanding is over ______.

    <p>$1 Trillion</p> Signup and view all the answers

    The average repayment period for a student loan is ______ years.

    <p>10</p> Signup and view all the answers

    What is the Fourth Foundation?

    <p>Pay cash for college.</p> Signup and view all the answers

    Percentage of college students that graduate with student loans is ______%

    <p>66</p> Signup and view all the answers

    The average millionaire reads ______ non-fiction book every month.

    <p>One</p> Signup and view all the answers

    You should fill out the FAFSA ______ while in college.

    <p>Yearly</p> Signup and view all the answers

    What does FAFSA stand for?

    <p>Free Application for Federal Student Aid.</p> Signup and view all the answers

    What is a Scholarship?

    <p>A form of financial aid that does not need to be repaid; given for academics, athletics, left-handedness, etc.</p> Signup and view all the answers

    What is Work Study?

    <p>A program that allows students to work part-time while continuing their studies.</p> Signup and view all the answers

    What is a Grant?

    <p>A form of federal or state financial aid that does not need to be repaid; based on need.</p> Signup and view all the answers

    What is Community College?

    <p>A two-year government-supported college that offers an associate degree.</p> Signup and view all the answers

    What is On-the-job-training?

    <p>Usually a professional trainer serves as the course instructor and uses a combo of hands-on activities and classroom training.</p> Signup and view all the answers

    What is Trade School?

    <p>Allows students to learn basic professional skills without having to take general education courses.</p> Signup and view all the answers

    What are Certifications?

    <p>May be free or low-cost; found online, at community colleges, or government programs.</p> Signup and view all the answers

    Who is an Entrepreneur?

    <p>A person that starts their own business.</p> Signup and view all the answers

    What does Cash-flow mean?

    <p>Pay as you go.</p> Signup and view all the answers

    The academic and financial choices you make after high school could affect your life for ______ years.

    <p>40</p> Signup and view all the answers

    What should you do when evaluating which college to attend?

    <p>Comparison shop.</p> Signup and view all the answers

    Study Notes

    Credit Score & Debt Management

    • FICO Score derives from factors like type, duration, and new debt.
    • Debt Snowball method involves paying off debts starting from the smallest to the largest.
    • Credit Score indicates risk level of not repaying borrowed money.
    • Bankruptcy remains on credit report for 10 years; negative information removed after 7 years.

    Loan Types & Mortgages

    • A 15-Year Fixed-Rate Mortgage is the most economical choice for home purchasing.
    • Down payment for a mortgage should be at least 10%.
    • Secured Loans require collateral; Unsecured Loans are based on creditworthiness alone.
    • APR reflects the annual cost of borrowing money.

    Financial Myths & Realities

    • Lottery Myth: gambling won't make you wealthy.
    • Credit Card Myth: approval for a credit card does not signify financial success.
    • "Upside-down" refers to owing more on an item than its market value.

    Student Debt & Financial Aid

    • Student loan debt exceeds $1 trillion in the U.S.
    • Average student loan repayment period is 10 years.
    • 66% of college graduates incur student loan debt during their studies.
    • FAFSA needs to be filed yearly to assess financial aid eligibility.
    • Scholarships and Grants are forms of financial aid that do not have to be repaid.

    Education Options & Opportunities

    • Community Colleges offer two-year degrees and are state-supported.
    • Trade Schools provide vocational training without general education requirements.
    • Work Study programs enable part-time jobs for college students.
    • Certifications can enhance job qualifications and can often be obtained at low or no cost.

    Financial Literacy & Future Planning

    • Cash flow principles emphasize living within financial means.
    • Choices made post-high school can impact financial situation for up to 40 years.
    • Comparison shopping is recommended when selecting a college to ensure value for money.

    Studying That Suits You

    Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

    Quiz Team

    Description

    Test your knowledge of key concepts from Dave Ramsey's teachings in Chapters 4 and 5. This quiz includes important financial terms like FICO score and strategies for managing debt effectively. Prepare to enhance your understanding of personal finance fundamentals.

    More Like This

    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser