WorksheetsChapter 4, Lesson 6: Avoiding Debt is Important
Total questions: 15
Worksheet time: 8mins
According to the lesson’s main idea, what is the best way to win with money?
Earning a high income as soon as possible
Avoiding debt of any kind to reduce financial risk and stress
Using credit cards to build a credit score
Investing before saving an emergency fund
The text says 78% of Americans live paycheck to paycheck. What point is this statistic used to support?
Most people are secretly wealthy and financially secure
Most people only look like they’re living the American Dream but are stressed about debt
Most people prefer paying cash for big purchases
Most people avoid loans and credit card use
Which statement best reflects The Second Foundation described in the lesson?
Save $500 for emergencies before anything else
Get out of debt and stay out by paying off what you owe as quickly as possible
Open multiple credit lines to improve your credit score
Invest in the stock market to beat inflation
Which step is identified as part of The First Foundation when starting to get out of debt?
Save a $500 emergency fund before throwing extra money at debt
Consolidate all loans into one long-term payment
Ask a friend to cosign for a new car loan
Ignore small debts and focus only on large ones later
The passage advises that choosing to avoid debt may feel like swimming against the current. Which example from the text illustrates this idea?
Receiving free cash from a scholarship
Seeing easy financing, credit card offers, and buy-now-pay-later promotions everywhere
Finding a higher-paying job after graduation
Opening a savings account at a local bank
According to the lesson, what is one practical option if you currently have a car payment and want to get out of debt faster?
Refinance the loan to extend the term and lower the monthly payment
Sell the car to eliminate the debt and save up to pay cash for an affordable used car
Skip a few payments to build your emergency fund first
Lease a newer car with a promotional rate
According to the Debt Snowball Method, what is the first step you should take when organizing your debts?
List debts from smallest to largest, regardless of interest rates
List debts from highest to lowest interest rate
Combine all debts into one consolidation loan
Pause all payments until you can pay one off in full
In the Debt Snowball Method, why do you apply the payment from a paid-off debt to the next smallest debt?
It avoids late fees on credit cards
It creates a snowball effect that speeds up payoff of remaining debts
It lowers your credit score temporarily to reduce interest
It qualifies you for more new loans
Which action aligns with the Debt Snowball Method after listing debts?
Pay extra on the largest debt while skipping smaller ones
Attack the smallest debt first while making minimum payments on the others
Distribute extra money equally across all debts
Stop paying debts with low interest rates
What is a key idea from the section on generosity and money?
Generosity should wait until all debts are gone
Debt increases your ability to give freely
Generosity is a lifestyle that changes hearts and moves you away from money owning you
Giving has no connection to who you are or your values
Why does the text argue that giving matters even while getting out of debt?
Because giving guarantees higher investment returns
Because debt steals your ability to be as generous as you want, and giving shapes your heart
Because charities require donors to be debt-free first
Because giving lets you avoid making minimum payments
According to the passage, what is the main benefit of living debt-free?
Having access to more credit cards
Hope for your future because debt is an obstacle that holds you back
Being able to buy luxury items without saving first
Guaranteed higher income from your job
Which item did Americans most often say is worth going into debt for, based on the list provided?
Vacation
Housing
Electronics
Dining
Choose the best first step when trying to get out of debt, as recommended in the steps list.
Apply for a new loan with a lower interest rate
Quit borrowing more money
Ignore small debts and focus only on future expenses
Close your bank account to avoid fees
Which action from the passage represents applying a practical strategy (not just an idea) for reducing debt?
Viewing debt as a useful financial tool for emergencies
Selling something to generate cash for payments
Waiting for income to increase on its own
Using credit cards for rewards points
