Chapter 4

According to The Wall Street Journal, how many percent of Americans are living paycheck to paycheck?

70%

When it comes to debt, if you tell a lie or spread a ___________ long enough, eventually it becomes accepted as the....

myth; truth

Myth or truth: If I loan money to a friend or relative, I will be helping them.

myth; the relationship will be strained or destroyed

myth or truth: By cosigning a loan, I am helping out a friend or relative.

myth

myth or truth: the bank requires a cosigner because the person isn't likely to pay. Be ready to pay the loan and have your credit damaged.

truth

myth or truth: cash advance, rent-to-own, title pawning, and tote-the note lots are needed services for lower income people to help them get ahead

myth

What percent of millionaires in America are first generation rich?

80

myth or truth: the lottery and other forms of gambling will make me rich

myth

Is the lottery a tax on the poor and on people who can't do math?

yes

Texas Tech University did a study on the Texas Lottery and found that people without a high school diploma spent an average of ................ a month playing the lottery. College graduates spent ........a month on average

$173; $49

When studying the lottery, what is always the one that generate the highest revenue or sales?

the lower-income ZIP codes

Myth or truth: car payments are a way of life and you'll always have one

myth

Myth or truth: Staying away from car payments by driving reliable used cars is what the typical millionaire does. That is how they became millionaires.

truth

What is the average car payment today?

$464 per month over 64 months

myth or truth: leasing your car is what sophisticated financial people do. You should always lease things that go down in value. There are tax advantages.

myth

Myth or truth: consumer reports, smart money magazine are a good calculator will tell you that the car lease is the most expensive way to finance and operate a vehicle

truth

If you own a business, you can.......... your paid-for car on taxes without paying payments for the privilege

write off

the way to .............the money lost on things that go down in value is to buy slightly ...................

minimize; used

Myth or truth: you can get a good deal on a new car

myth

myth or truth: a new car loses 70% of its value in the first 4 years. This is the largest purchase most consumers make that goes down in value.

truth

on average, a $28,000 car will be worth $8,400 in how long?

4 years

Myth or truth: I'll take out a 30-year mortgage and pay extra

myth

myth or truth: life happens and something else will always seem more important. Never take out more than a 15 year fixed-rate mortgage

truth

myth or truth: It's wise to take out an arm or a balloon mortgage if "I know I'll be moving.

myth

myth or truth: You will be moving when they foreclose.

truth

The adjustable-rate mortgage is here to keep the .................from losing money. It transfers the ..............of higher interest rates to you

bank; risk

Myth or truth: you need a credit card to rent a car or make purchase online or by phone

myth

myth or truth: a debit card does everything.

truth

Myth or truth: I pay my credit card off every month with no annual payment or fee. I get brownie points, air miles and a free hat.

myth

Myth or truth: When you use cash instead of plastic, you spend 12-18% less because spending cash hurts.

truth

myth or truth: the home equity loan is good for consolidation and is a substitute for the emergency fund.

myth

myth or truth: You don't go into debt for emergencies.

truth

Myth or truth: debt consolidation saves interest and you get a smaller payment

myth

myth or truth: debt consolidation is a con

truth

debt consolidation saves little or no ..............because you will throw your low interest loans into the deal

interest

You cannot .............your way out of debt

borrow

......payments equal more ..................in debt

smaller; time

myth or truth: debt is a tool. It should be used to create prosperity

myth

myth or truth: the borrower is slave to the lender

truth

What are the steps out of debt?

quit borrowing more money
you must save money
sell something
part-time job or overtime
use the debt snowball