Personal Finance (Chapter 6)

What action corresponds to the advice "Pay Yourself First?"

• Wait until the end of the month to determine how much to save

• Directly deposit 20% of your paycheck into your savings account

• Spend your regular paycheck and save your bonus check

• Take two jobs and use one job for your expenses and one job for your wants

Which of these costs would be the MOST difficult to adjust if you were looking to reduce your expenses?

• Dining out at local restaurants

• Loan payment on a new car

• Expenses for new clothes

• Postponing purchase of the big-screen TV

You set a goal of creating a $16,000 emergency fund. You earn a salary of $40,000 per year and decide to save 20% of your gross pay. How long will it take for you to achieve your goal?

• 6 months

• 1 year

• 2 years

• 3 years

Which of the following items will NOT reduce your gross pay?

• Investment income

• State taxes

• FICA (Social Security)

• Federal taxes

• Medicare

What would be TWO signals that you have a budget deficit? Check two:

• The unpaid balance on your credit card increases every month

• Your savings account balance grows every month

• You overdraw your checking account on a consistent basis (at $34 cost per overdraft)

• Your checking account balance grows every month

You are so excited to get a car before you go off to college. What are the costs usually associated with a car assuming that you have to take out a loan to acquire it?

• Car payment to pay off a loan

• Auto insurance

• Car maintenance

• All of the above

While shopping for groceries you are comparing the cost of three cereals that you like... Cereal A costs $3.20 for a 16 oz. box, Cereal B costs $5.00 for a 32 oz. box and Cereal C costs $2.50 for a 10 oz. box. Which cereal has the lowest unit cost?

• Cereal A

• Cereal B

• Cereal C

Isaiah works for the summer at a technology company and has a salary for the summer of $3,000. After federal and state taxes and Social Security/Medicare taxes are deducted, his take-home pay is $2,500. Which of the statements below is correct?

• His gross pay is $2,500 and net pay is $3,000

• His gross pay is $3,000 and net pay is $2,500

• His gross and net pay are $3,000

• His net pay and gross pay are $2,500

You are putting together your first post-graduation budget. Your take-home or net pay will be $2,500 per month. You estimate your monthly costs to be rent of $800, car payment of $350, car insurance of $150, car maintenance of $50, entertainment of $500, food expense of $250, cable bill of $75, mobile phone of $100, student loan payment of $100 and other expense of $300. How would you describe your budget after analyzing all of your income and expenses?

• You have a surplus of $175

• You have a deficit of $175

• You have a deficit of $2,675

• You have a surplus of $2,500

You are interested in renting an apartment for your sophomore year in college. You meet with the landlord, complete the application and after checking your credit background and references, the landlord approves your application. In most cases, you will need to provide the landlord with _________ at the time you sign the lease in order to get the apartment.

• First month's rent

• First and last month's rent

• First and last month's rent + a security deposit to cover any damages to the apartment

• $1,000 deposit