Dave Ramsey Chapter 4 & 5 Review

A numerical representation of your creditworthiness based on your financial history. It's used by lenders to assess the risk of loaning money to you.

A credit card allows you to borrow money and pay it back later, accumulating interest and debt. A debit card directly deducts money from your account.

The Fair Credit Reporting Act, ensuring accuracy and fairness in credit reporting. It allows you to dispute inaccurate information on your credit report.

A plan to save for a car purchase in advance using the sinking fund method, investing savings in a mutual fund for potential growth.

A 15-year fixed-rate mortgage is generally considered the most cost-effective option due to lower interest rates and shorter repayment period.

The initial amount of money you pay upfront for a home purchase, typically around 10% of the home's price.

A debt reduction strategy where you pay off your smallest debts first, gaining momentum and motivation to tackle larger loans.

A legal process where a portion of your paycheck is automatically withheld to pay a debt, usually due to court order.

The belief that gambling can lead to wealth, often ignoring the high odds of losing and the potential for financial hardship.

This statement is false. Having a credit card doesn't equate to financial success. Financial success is based on responsible money management, not just owning a credit card.

A credit score reflects the risk of you not repaying your debts. A higher score indicates lower risk, making you more attractive to lenders.

Information on your credit report is typically removed after 7 years, except for bankruptcies, which stay for 10 years.

The duration of a loan agreement, specifying the time frame within which you have to repay the debt.

Annual Percentage Rate, representing the total cost of borrowing money, including interest and fees.

The decrease or loss in value of an asset over time due to age, wear, and tear, or obsolescence.

A yearly fee charged by credit card companies for the privilege of using their card.

A long-term rental agreement for a car, allowing you to use it for a specific period for a monthly fee.

Being upside-down in debt means owing more than the value of the asset you're paying for. For example, owing more on a car than it's worth.

A card issued by a bank that allows users to finance purchases, essentially borrowing money that needs to be repaid with interest.

A loan that requires collateral, an asset you pledge to the lender to secure the loan. If you default, the lender can seize the collateral.

A loan granted based solely on your creditworthiness, without requiring any collateral.

The initial interest rate offered at the beginning of a loan, often lower than the standard rate, which typically increases after a specified period.

The total amount of money borrowed by students for educational expenses, currently exceeding $1 trillion in the United States.

The average time students take to repay their student loans is 10 years, a significant part of their early adult life.

Paying cash for college, meaning financing your education without loans, relying on savings and scholarships.

About 66% of college students graduate with student loans, showcasing the widespread reliance on loans for education financing.

The average millionaire reads at least one non-fiction book per month, demonstrating the importance of continuous learning and personal development.

The Free Application for Federal Student Aid (FAFSA) should be completed annually while in college to qualify for financial aid.

Free Application for Federal Student Aid, a form used to determine your eligibility for grants, loans, and work-study programs.

A form of financial aid that doesn't need to be repaid, awarded based on academic achievements, athletic abilities, unique talents, or various criteria.

A program allowing students to work part-time jobs while continuing their studies, earning money and gaining practical experience.

A form of financial aid from the federal or state government that doesn't need to be repaid, usually based on financial need.

A two-year institution of higher education, often government-funded, offering associate degrees and vocational training.

A hands-on learning method where professionals provide training in a practical setting, combining classroom instruction and real-world experience.

Focused on teaching technical and vocational skills, allowing students to learn specific trades without extensive general education requirements.

A credential demonstrating proficiency in a specific skill or field, often achieved through training or testing, potentially free or low-cost.

A person who starts and manages their own business, taking risks and seeking profits in a competitive market.

The movement of money into and out of a business or individual's account, indicating income and spending patterns.

Decisions made after high school, regarding education and career paths, can have a long-lasting impact on your future for decades.

Evaluating and comparing different colleges based on cost, programs, location, and reputation to find the best fit for your needs.