PERFINLIT SEMESTER EXAM a
| A | B |
|---|---|
| Setting aside money to have on hand for unexpected expenses and events | emergency fund |
| What is the guideline for the maximum amount you should owe each month for loan payments (not including a home loan payment)? | 10 percent of monthly net income |
| Which is not a type of credit? | Car registration |
What is the guideline for the maximum amount you should owe?
The 20/10 rule of thumb limits consumer debt payments to no more than 20% of your annual take-home income and no more than 10% of your monthly take-home income. This guideline can help you limit the amount of debt you carry, which is important for your financial health and your credit score.
What is a guideline for the maximum amount you should o each month for loan payments not including a home loan payment?
According to this rule, a household should spend a maximum of 28% of its gross monthly income on total housing expenses and no more than 36% on total debt service, including housing and other debt such as car loans and credit cards. Lenders often use this rule to assess whether to extend credit to borrowers.
How much should you charge on a credit card?
A good rule of thumb is to always stay below about 25 percent of your credit limit, which means you should not charge more than about $75 at one time and you should make a payment before charging again.
How can I live off cash only?
Here are a few practical tips for managing your cash-based personal economy:
- Use the “Envelope System”
- Don’t Forget About Money Orders.
- Know Your Daily ATM Limit.
- Ask for Smaller Bills.
- Choose a Creative Stash in Your Home.
- Save Up Pocket Change for Your Bank.
