CONSUMER CREDIT

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					                               CONSUMER CREDIT
                            LESSON PLAN (MULTI-DAY)


                                       CONTENTS

1. OPENING QUIZ – 20 QUESTIONS ABOUT CREDIT CARDS – including answer
   sheet
2. WHAT IS CREDIT – definitions
3. HOW MUCH DOES CREDIT COST? -- examples of how much it costs to buy
   something with a credit card
4. HOW TO CREATE A BUDGET – steps to creating a personal budget
5. FINAL QUIZ – summing up
6. 8 STEPS TO HEALTHY FINANCES – summary handout

                                       LESSON

1. CREDIT—WHAT IS IT?
   a. Distribute Opening Quiz (20 Questions). Go through QUIZ questions and
      answers with students, and define terms on WHAT IS CREDIT sheet.
   b. Hand out ―WHAT IS CREDIT‖ definition sheet after discussion for students to
      keep.

2. COST OF CREDIT
   a. Go through hypothetical to demonstrate cost of credit using two scenarios
      (variables being interest rate and size of monthly payment). Discussion about
      how the cost of the item is increased by the amount of interest and fees paid.
      Discuss how long it will take to pay, noting that if you pay more each month you
      will pay off the card faster and pay less interest.
   b. Lead discussion about added costs due to annual cardholder fees, late fees, and
      default interest
   c. Should you use credit? Open discussion. Negatives – things cost more, it doesn’t
      mean you can afford things you can’t afford without a credit card, it’s not free
      money, it can burden your budget for years (long after what you bought is used
      up, broken or obsolete), and it makes it hard to save if you are paying credit card
      bills with high interest. But might need to use a credit card for emergencies,
      essentials. Never use for things you want, but don’t need.
   d. What to do if you do use a credit card
               Pay off as fast as possible. The longer you take to pay, the more you
                  pay. Go through hypothetical to show how much less expensive it is if
                  you pay quickly.
               Not all credit cards charge the same interest. If you do use a credit
                  card, try to find a card with a favorable rate.
               Make payments on time. Always pay on time to avoid late fees and
                  default interest. If you pay late you will have to pay a fee for being
                  late, and your interest rate might go up until the card is paid off.


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                 Never use unless absolutely necessary. Only use for needs, not for
                  wants.

3. HOW TO CREATE A BUDGET
   a. Distribute ―How to Create a Budget‖ handout
   b. Lead discussion -- Why make a budget? People often use credit cards to make
      ends meet. When they don’t have enough money to pay their expenses they may
      use credit. If you make a budget you will see whether your expenses are more
      than your income. So, the best way to stay out of debt is to make sure you don’t
      need to borrow or use credit cards to pay your expenses.
   c. Define what a budget is – list of expenses and list of income
   d. Refer to ―How to Create a Budget‖ handout, and lead discussion by going over
      each point in the handout:
              Keep a journal -- Engage students in discussion of what their personal
                  journals might show for expenses and income; include savings plan in
                  expenses. Be sure to list ALL expenses
              Compare Expenses with income – use flip chart or blackboard to
                  create a sample budget with expenses that exceed income. To
                  determine whether you are living within your budget, subtract
                  expenses from income to see how much the difference is.
              Balancing the budget. Engage students in discussion about what you
                  do if expenses exceed income (need to reduce expenses or increase
                  income)
              Analyze expenses – which are needs and which are wants. Engage
                  students in discussion about how to distinguish needs from wants.
                  Almost every item has a discretionary component, e.g., rent can be
                  more expensive if near the university, or cheaper if you rent a room.
                  Other items are purely discretionary, such as beer with friends.
              Reduce expenses -- Engage students in exercise of reducing expenses
                  by (1) eliminating some discretionary expenses (e.g., buying DVDs)
                  and by (2) reducing cost of some expenses (e.g., using less expensive
                  cosmetics).

4. CONCLUSION/SUMMARY –Distribute FINAL QUIZ. Go through QUIZ questions
   and answers with students to reinforce lesson.

5. Distribute handout ―8 RULES FOR HEALTHY FINANCES‖.




                                          2
                                OPENING QUIZ
                      20 QUESTIONS ABOUT CREDIT CARDS

1. Credit means

       a. You can get things at the store for cheaper
       b. You can borrow money to buy things
       c. You can pay for something later, but you don’t have to pay if you lose your
          job

2. Debt means
       a. You owe money to someone
       b. You will earn more money
       c. You are entitled to free stuff
3. Loan means

       a. Someone gave you their money to use and you have to pay it back

       b. Someone gave you their money, but you don’t have to pay it back if you’re
          too sick to work

       c. You have a bank account

4. Interest means
       a. You pay a one time fee when you get a credit card
       b. A prize you earn when you use a credit card
       c. Money you pay to use someone else’s money
5. Interest rate is
       a. A formula for figuring out how much interest you will pay when you borrow
          money
       b. How someone decides whether to give you credit
       c. Means someone is interested in your business
6. A credit card is

       a. An agreement with someone that, for a price, they will loan you money to buy
          things

       b. A way to buy things for cheaper than cash

       c. A good way to save money




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7. To get a credit card

       a. You need to fill out an application giving personal information

       b. You need to be 25 years old

       c. It means you are able to make the payments

8. You can use most credit cards

       a. To buy stuff in stores

       b. To get cash from a bankomat

       c. Both a. and b.

9. An application fee is

       a. Free stuff the credit card company gives you when you get a credit card

       b. Money you pay to apply for a credit card, but you get your money back if they
          decide not to give you a card

       c. Money you pay to apply for a credit card, even if they decide not to give you a
          card

10. You pay less interest

       a. If you use your credit card to get cash from a bankomat rather than use your
          credit card to buy something in the store

       b. If you use your credit card to buy something in the store rather than get cash
          from a bankomat

11. Default rate means

       a. You don’t have to pay your credit card if it’s not your fault that you don’t
          have enough money to pay

       b. You paid your credit card debt when it was due

       c. You pay more if you miss a payment on your credit card

12. True/False. A late payment penalty is a fee charged by the credit card company when
    it receives a payment after the date it was due.

13. True/False. A late payment penalty won’t be charged if you have a good reason for
    paying late.



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14. True/False. A late fee is the same thing as a late payment penalty.

15. A minimum payment is

       a. The most money you can pay the credit card company each month

       b. The least amount of money you can pay the credit card company each month

       c. You don’t need to know what it is

16. An annual cardholder fee is

       a. What the credit card pays you for being a good customer

       b. A fee you pay only if you use your credit card

       c. A fee you pay every year even if you never use your credit card

17. True/False. It’s a good idea to use a credit card to buy expensive things because if the
    things you buy are stolen or break, you don’t have to pay the credit card

18. If you use a credit card the Bureau of Credit History

       a. Will notify you if you miss a payment

       b. Will keep information about you confidential

       c. Will keep information about how much you buy with your credit card and
          whether you make payments on time

19. True/False. If you miss credit card payments you may not be able to get a car loan or
    a loan to buy a house later.

20. True/False. If the bank gives you a credit card it means you can afford the payments.




                                             3
                                ANSWERS TO OPENING QUIZ

Suggested lesson plan. Ask students to take the quiz, telling them that you are not
grading the quiz. After asking the students to answer the quiz, go through question by
question. Engage students in discussion regarding each question, for example, by asking
who answered ―a‖ and why, discussing the wrong answers, etc. Give students handout
―What is Credit‖ to take home after discussing quiz.

1. CORRECT ANSWER b (Credit means you can borrow money to buy things)

   Credit – When you borrow money to buy things, or you buy things and agree to pay
   for it later. Ask students for examples. (Loan to buy a car, a credit card, a loan to
   buy a house or an agreement to buy a television now and pay for it later).

   Discuss wrong answers. Credit does not mean you get things for cheaper. It means
   you pay more for things. Reason you pay more will be discussed later.

   Credit does mean that you can pay for something later, but it does not mean that you
   don’t have to pay if you lose your job. You still have to pay, no matter what the
   reason is you don’t have the money. The bank or credit card company has to be
   repaid even if you lose your job, are too sick to work or have to stay home to care for
   an elderly parent.

2. CORRECT ANSWER a (Debt is when you owe money to someone.)
   Debt – What you owe when you borrow money, or buy something on credit. For
   example when you use a bank loan to buy a car, you owe the bank a debt.

   Discuss wrong answers. Debt doesn’t mean you will earn more money. It’s not
   something you earn, but money you owe (have to pay). It does not mean you are
   entitled to free stuff.

3. CORRECT ANSWER a (A loan is when someone gives you their money and you
   have to pay it back.)

   Loan – Money you borrow from someone, and agree to pay back later.

   Discuss wrong answers. A loan needs to be repaid even if you don’t want to. When
   you get a loan from a bank or get a credit card you sign documents that say you
   promise to pay the loan.

   Getting a loan or a credit card does not necessarily mean you have a bank account.

4. CORRECT ANSWER c (Interest is money you pay to use someone else’s money)

    Interest – Extra money that you have to pay someone when they loan you money or
   let you buy things on credit.




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   When you get a loan or use a credit card you are borrowing, or using, someone else’s
   money to buy things. You need to pay the amount you borrow, plus ―interest.‖
   Example, if you borrow $100, you might have to pay $110 – the $100 you borrowed,
   plus an additional $10 of interest.
   Discuss wrong answers. Interest is not a one time fee, and it is not a prize you earn.
   It is money you pay every month until the entire credit card amount or loan is paid.
5. CORRECT ANSWER a (Interest rate is a formula for figuring out how much
   interest you will pay when you borrow money). It is a percent of the amount
   borrowed. For example an interest rate of 10%, means you pay interest equal to 10%
   of the amount you owe every year. The higher the interest rate (the bigger the
   number the higher the rate), the more you pay. For example, you pay more interest if
   the rate is 10% than you do if the rate is 5%.
   Discuss wrong answers. Interest rate is not how someone decides whether to give
   you credit. However, no bank will give you a loan or credit card unless you pay
   interest. All credit cards have interest. However, not all credit cards charge the same
   rate. Shop for the best rate if you feel you need a credit card for emergencies.
   ―Interest rate‖ does not mean someone is interested in your business.
6. CORRECT ANSWER a (A credit card is when someone agrees that, for a price,
   they will loan you money to buy things). When you get a credit card the bank agrees
   to loan you money, and you agree to pay the loan plus interest.

   Credit card – When you use a credit card, it is a loan of money from someone to you
   so you can buy something. You repay the amount of the loan, plus interest and other
   fees.

   Discuss wrong answers. A credit card is not a way to buy things for cheaper. When
   you use a credit card you pay the same price, plus interest, so it is actually more
   expensive than paying cash. A credit card is not a good way to save money because it
   is more expensive to buy things with credit cards.

7. CORRECT ANSWER a. You need to fill out an application, and usually you will
   need to show documents, such as a passport.

   Discuss wrong answers. You only need to be at 21 years old to get a credit card.
   You can get a credit card even if you can’t afford to make the payments. Just because
   a company gives you a card does not mean that you can afford it.

8. CORRECT ANSWER c. You can use most credit cards either to buy things in
   stores, or to get cash from a bankomat. If you use your card to buy stuff from stores
   you will pay interest. If you use your card to get cash from a bankomat you will pay
   interest PLUS a commission. If you want to buy something that costs $300 it less
   expensive to use your credit card in the store than it is to take the cash from a
   bankomat and use the cash to buy the item.




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9. CORRECT ANSWER c. (An application fee is money you pay when you fill out
   the application). You pay a fee just to turn in an application. If your application is
   denied (you don’t get a credit card) you do NOT get the application fee back.

10. CORRECT ANSWER b. If you use your credit card to get cash from a bankomat
    you will pay either a higher interest rate, or an extra commission. It is less expensive
    to use your credit card at the store to buy things; it is more expensive to get the cash
    from a bankomat. Some companies charge a higher rate of interest if you use a credit
    card to get cash from a bankomat than if you use it to buy something. Other
    companies charge an extra commission (usually around 0.99%), plus interest.

11. CORRECT ANSWER c (Default rate means you pay more if you miss a payment
    on your credit card). If you miss a payment the interest rate becomes higher, and you
    pay more.

   Discuss wrong answers. It doesn’t matter why you miss a payment. If you miss a
   payment for any reason, including if you lose your job, you still owe the money, and
   the interest rate will go higher.

   A default rate does not mean you paid your credit card debt when it was due. A
   default rate is charged only if you do NOT pay when due.

12. CORRECT ANSWER True. A late payment penalty is a fee charged by the credit
    card company when it receives a payment after the date it was due. You pay the
    penalty, PLUS interest.

13. CORRECT ANSWER False. It is not true that a late payment penalty won’t be
    charged if you have a good reason for paying late. If the payment is received late for
    any reason, you will have to pay the penalty.

14. CORRECT ANSWER True. A late fee is the same thing as a late payment penalty.

15. CORRECT ANSWER b (A minimum payment is the least amount of money you
    can pay the credit card company each month.) It doesn’t matter what your
    circumstances are, you have to pay at least this much.

   Discuss wrong answers. A minimum payment is the least money you must pay each
   month. You can pay more if you want, up to the whole amount of the debt.

   You do need to know what it is, and how much it is, because if you don’t pay at least
   this much you will have to pay either a late payment penalty, or default interest or
   both.

16. CORRECT ANSWER c (An annual cardholder fee is a fee you pay every year even
    if you never use your credit card) Not all credit cards charge this fee.




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   Discuss wrong answers. An annual card holder fee is money you pay; it is not
   something the credit card pays you for being a good customer. It is money you pay
   every year even if you never use your card.

17. CORRECT ANSWER false. You have to pay your credit card even if the items you
    buy are stolen later or fall apart.

18. CORRECT ANSWER c. The Bureau of Credit History is an agency that collects
    information about how much you borrow (use your credit card) and whether you
    make your payments on time. This information is shared with other credit card
    companies and banks.

   Discuss wrong answers. The information collected by the Bureau of Credit History
   is not kept confidential. If there is bad information (such as not making credit card
   payments) that information can and will be used against you.

19. CORRECT ANSWER false. The Bureau of Credit History shares information
    about your credit history with banks. If you have a history of not making credit card
    payments on time you might not be able to get another credit card, a loan to buy a car
    or a loan to buy a house.

20. CORRECT ANSWER false. Just because they will give you a credit card does not
    mean you can afford to make the payments. You need to decide for yourself if you
    can afford the payments, and if it is worth it to you to buy something with your credit
    card.




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                               WHAT IS CREDIT?

   Annual cardholder fee – A fee you have to pay every year just to have the credit
    card, even if you don’t buy anything.

   Application fee – A fee, often 30 hrv or more, you have to pay when you fill out
    the credit card application. You pay even if your application is turned down and
    you don’t get the credit card.

   Bureau of Credit History – An agency that keeps records of borrowing and
    repayment history of all borrowers, including credit card users. If you apply for a
    credit card the credit card company can look at your history of borrowing and
    repaying.

   Commission – A fee you sometimes pay for using your credit card. For example,
    if you use a credit card to get cash from a bankomat you will pay a commission,
    usually 3% to 4% of the amount of cash you get.

   Credit – When you borrow money to buy things, or you buy things and agree to
    pay for it later. Credit might be a loan to buy a car, a credit card, a loan to buy a
    house or an agreement to buy something now and pay for it later.

   Credit card – When you use a credit card, it is a loan of money from someone to
    you so you can buy stuff. You repay the amount of the loan, plus interest and
    other fees.

   Debt – What you owe when you borrow money, or buy something on credit.

   Default rate – When you miss a payment the interest rate goes higher, and you
    pay more.

   Interest – Money that you have to pay someone when they loan you money or let
    you buy things on credit.

   Interest rate – A formula for figuring out how much interest you have to pay.
    The higher the interest rate, the more you have to pay.

   Late fee/Late payment penalty – A fee you have to pay if you don’t make a loan
    or credit card payment on time. You pay this plus interest.

   Loan – Money you borrow from someone, and agree to pay back later.

   Minimum monthly payment – The minimum amount you have to pay every
    month on your credit card.




                                          1
                        HOW MUCH DOES CREDIT COST?


Now you know what a credit card is, what interest is, what late fees are, and what
default interest is. The question then is: Should you use a credit card? One way to
decide is to look at how much more it costs when you buy something on credit.

                                     I.     EXAMPLES
Example # 1

Igor just got credit from the Happy House Electronics Store. Happy House will charge
him an interest rate of 19%. Igor is really happy, because there are same things he really
wants, but can’t afford. So he goes shopping and buys:

      Fancy new mobile phone -- $300
      Computer -- $600
      Flat screen TV -- $1100

He spent $2000, but he’s not worried because Happy House told him that the minimum
payment he needs to make every month will only be $80.


HOW MUCH WILL IGOR PAY?

Assume Igor makes the minimum payment every month

      It will take 118 months to pay, or almost 10 years!
      He will pay interest of $1,217, plus the $2000 he borrowed for a total of
       $3217.28.

He lost the fancy new cell phone after 2 years, but still had to pay for almost 8 more
years. The computer became obsolete and fell apart after 5 years, but he still had to pay
for almost 5 more years. The television was stolen after 7 years, but he still had to pay
for almost 3 more years.

WHAT IF IGOR CAN’T PAY?

If Igor misses a credit card payment or pays after the due date, a late fee is added to the
next month’s payment and the interest rate may be raised to the default rate. It will take
him even longer to pay, and he’ll pay more interest. If he misses more payments, the
bank might sue him in court, or might take his property. The credit card company will
report to the Bureau of Credit History, making it difficult or impossible for Igor to get a
credit card or loan in the future.




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Example # 2

Oksana wanted a big wedding, with a beautiful dress, and a nice dinner for her family and
friends at a restaurant. There are so many expenses she hadn’t thought of, like flowers,
the photographer, and decorations. Her parents can’t afford to pay. Oksana’s husband
was against using a credit card, but Oksana decided to use her new credit card for
wedding expenses for a total of $1000. Her credit card charges 20% interest. She also
has a $25/year annual fee that the credit card company adds to the bill each year.

HOW MUCH WILL OKSANA PAY?

Assume Oksana pays $25 a month

      It will take 6 years and 9 months to pay
      She will pay interest of $833, plus the $1000 she borrowed for a total of $1833

Oksana will be paying a long time for her wedding. Assume she and her husband have a
child a year after they are married. They still will be paying for their wedding when their
child starts school.

Now assume Oksana pays $50 a month

      It will take 2 years and 3 months to pay
      She will pay interest of $245, plus the $1000 she borrowed for a total of $1245

Okasana will pay off her credit card much faster and pay lots less interest if she makes a
bigger monthly payment. If you must use a credit card, pay it off as fast as you can.

                                     II.     WEBSITES

There are several websites you can visit to help you calculate how much you will pay if
you use a credit card.         Some examples are bankrate.com, capitalone.com,
whatsthecost.com, and practicalmoneyskills.com. These sites are easy to use and will
tell you exactly how long it will take to pay off your credit card, how much interest you
will pay. Look at one of these sites before using your credit card to help you decide if it’s
really worth it.




                                             2
                           HOW TO CREATE A BUDGET

Follow these steps to create and balance a personal budget:

   1. Keep a journal for one to two months. Write down everything you spend money
      on, and all the money you make.

   2. Compare your expenses (what you spend money on) with the money available to
      pay your expenses (income from a job or money from relatives).

   3. If your expenses are more than the money available to pay your expenses
      determine how much you need to reduce your expenses by subtracting your total
      income from your total expenses.

   4. Determine which expenses are needs and which are wants. Be honest—take a
      realistic look at your habits, interests, and activities and determine whether you
      can really afford your lifestyle.

   5. Make choices about what spending to reduce or eliminate. Stop spending money
      on things you want, but don’t need. Start NOW. Don’t wait until week or next
      month to start spending less.

   6. Make adjustments to your budget as your income increases or decreases, and as
      your needs change, such as, for example, if the cost of heat goes up, or if you get
      a raise at work.




                                            1
                                       FINAL QUIZ

21. When you use a credit card

       a. You have to pay the cost of what you buy, plus interest

       b. You get a discount on everything you buy

       c. You will pay less interest if you make smaller monthly payments

       d. You get free money

22. True/False. All credit cards charge the same rate of interest.

23. If you miss a payment on your credit card

       a. The credit card company won’t raise the interest rate if the reason you didn’t
          pay is that you were too sick to work.

       b. If you make a double payment next month, there is no penalty.

       c. The credit card company can raise the rate even if the reason you didn’t pay is
          that you were too sick to work.

24. True/False. The best way to manage your credit card is to make the smallest possible
    payment every month.

25. True/False. It’s better to use a credit card for things like televisions and computers
    than it is to pay cash.

26. True/False. A minimum payment is designed to help you pay off your credit card
    with the least amount of interest.

27. Credit card companies like which person the most?

       a. Someone who pays the total bill every month before the due date.

       b. Someone who charges a lot on the credit card and pays it off every month.

       c. A person who misses payments but always catches up in a month or two.

28. True/False. You should use credit cards for things you want but cannot afford to pay
   cash for.

29. True/False. You should use a credit card for things you want even if you have the
    cash because it’s cheaper.

30. True/False. It’s not smart to pay more than the minimum payment required by the
    credit card company.


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31. True/False. If a company gives you a credit card they figured out for you that you
    can pay for things you buy with the credit card in a reasonable time.

32. By using a credit card

       a. You can afford to buy more things.

       b. You save money because instead of paying the whole amount now, you pay
          only a small amount every month.

       c. It shows you are clever.

       d. You pay more than if you paid cash.

33. A budget

       a. Helps you figure out what you can afford.

       b. Should list only the things you want to buy but can’t afford.

       c. Should not be done more than once a year.

34. True/false. You only pay interest on your credit card if you miss payments.




                                            2
                                 ANSWERS TO QUIZ 2


1. CORRECT ANSWER a. When you use a credit card you don’t get discounts or free
   money. The smaller the monthly payment you make, the more interest you will pay
   before the card is paid off.

2. CORRECT ANSWER false. All credit cards do not charge the same interest. If you
   are going to get a credit card shop for one with the best rate.

3. CORRECT ANSWER c. The credit card company will raise your rate of interest if
   you ―default‖ (don’t pay). They don’t care why you can’t pay. Even if the reason is
   you were too sick to work, they will raise the interest rate or charge you a penalty. If
   you miss a payment one month, and make a double payment the next month, you will
   still pay higher interest and/or a penalty.

4. CORRECT ANSWER False. If you make the smallest payment possible, it will take
   longer to pay off the card and you will pay more interest. The best way to manage
   your credit card is to make the largest possible payment every month.

5. CORRECT ANSWER False. If you pay cash, you will pay no interest. If you pay by
   credit card it will be more expensive because you will have to pay interest. Never use
   a credit card to buy things like televisions that you want but don’t need.

6. CORRECT ANSWER False. If you make only the minimum payment you will pay
   more interest. You should pay the most you can every month.

7. CORRECT ANSWER c. Credit card companies make money by charging interest.
   If they don’t collect interest, they don’t make money. Therefore, credit card
   companies don’t like people who pay off their credit cards every month because they
   don’t make any profit from those people. They love people who pay, but who pay
   late, because they can charge higher interest, and late fees.

8. CORRECT ANSWER False. You never should use credit cards for things you want
   but cannot afford to buy with cash.

9. CORRECT ANSWER False. It’s more expensive to buy things with a credit card
   because you have to pay interest, and sometimes fees such as an annual fee, in
   addition to the price of what you buy.

10. CORRECT ANSWER False. It’s not smart to pay only the minimum payment
    required by the credit card company, because it will take longer to pay off the card
    and you will pay more interest. If you make bigger payments, you will pay the card
    off faster and pay less interest.




                                            3
11. CORRECT ANSWER False. If a company gives you a credit card they think you
    will probably pay it back, but they don’t care if you can pay it in a reasonable time.
    In fact, the longer it takes to pay it back, the happier the credit card company is,
    because you will pay the company more money. It is your responsibility to figured
    out if you can pay for things you buy with the credit card in a reasonable time.

12. CORRECT ANSWER d. You always pay more if you pay by credit card. Having a
    credit card does not mean that you save money or can afford to buy more stuff.
    Usually, using a credit card is foolish, not clever.

13. CORRECT ANSWER a. A budget helps you figure out what you can afford. By
    listing everything you need to spend money on, you can determine if you have
    enough money to buy things you want, but don’t need. You should adjust your
    budget as your income and expenses change, even if it’s every couple of months.

CORRECT ANSWER False. You pay interest, even if you don’t miss payments. The
only way to avoid paying interest is to pay the entire credit call in full every month.




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                    8 RULES FOR HEALTHY FINANCES

1. CREATE A BUDGET —Make a list of everything you spend money on
   (including credit card payments if you have them) and compare it with money you
   have available to pay your expenses.

   Examples of expenses include rent; electricity, gas and water; food; cleaning
   supplies; beauty supplies (cosmetics, hair dye); personal hygiene (toothpaste,
   shampoo); clothing; recreation (movies, meals and beverages in cafes); telephone
   cards; transportation; cigarettes and alcohol; gifts; school books and supplies.
   Available money includes money from a job and contributions by relatives.

2. BALANCE YOUR BUDGET -- The only way to stay out of debt is to balance
   your budget. Your budget is balanced if you make as much money or more
   money than you spend. If you spend more than the money you have available to
   pay your expenses you will go into debt. You can balance your budget by either
   increasing the amount of money you make, or decreasing your expenses. To
   decrease your expenses decide what you need (food, medicine), and stop spending
   on what you want (meals in cafes, new cell phone).

3. START SAVING – Spend less than you earn and save the rest. You need
   savings for emergencies and for big expenses you know you will have (for
   example, a wedding). You will go broke using a credit card for these expenses.

4. KNOW THE DIFFERENCE BETWEEN NEEDS AND WANTS – To
   balance your budget and start saving you need to know the difference between
   needs and wants. You must spend money for needs (medicine if you are ill, rent),
   but you do not need to spend money on wants (cigarettes, taxis).

5. LOOK FOR WAYS TO SPEND LESS – You can spend less by either
   eliminating expenses, or by looking for a cheaper price. For example if you color
   your hair, you can eliminate the expense by not coloring your hair. You can
   reduce the expense by coloring it yourself rather than going to a hair salon.

6. PAY WITH CASH, NOT A CREDIT CARD – You will pay more for anything
   you buy with a credit card. Only use a credit card if you don’t have the cash for
   essential purchases (needs) or emergencies. Never use a credit card to buy stuff
   you want, but don’t need.

7. IF YOU USE A CREDIT CARD, ALWAYS PAY ON TIME – If you pay late
   you will have to pay extra fees and maybe more interest.

8. IF YOU USE CREDIT, PAY OFF QUICKLY – If possible, pay off the entire
   balance right away. If the pay the whole amount due the first month, you pay no
   interest. Never make just the minimum payment. The smaller the payments, the
   longer it will take you pay the debt, and the longer it takes you to pay the debt, the
   more interest you will pay.



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