Dave Ramsey Personal Finance EXAM(Graded A+ actual test)

consumer - Answer-a person or organization that uses a product or service credit - Answer-the granting of a loan and the creation of debt; any form of deferred payment debt - Answer-an obligation of repayment owed by one party to a second party; in most cases this includes repayment of the original loan amount plus interest economy - Answer-a system by which goods and services are produced and distributed financial literacy - Answer-the knowledge and skillset necessary to be an informed consumer and manage finances effectively interest - Answer-a fee paid by a borrower to the lender for the use of borrowed money; typically calculated as a percentage of the principal (original loan amount) loan - Answer-a debt evidenced by a "note," which specifies the principal amount, interest rate and date of repayment personal finance - Answer-all of the decisions and activities of an individual or family regarding their money, including spending, saving, budgeting, etc. income, assets, and liabilities - Answer-what three things are your financial situation 20% head knowledge and 80% behavior - Answer-winning at money is ___% head knowledge and ___% behavior no - Answer-was credit prior to 1917 common? yes - Answer-did debt become common after 1970?to be broke - Answer-what is "normal" for an American family? NO - Answer-can we buy happiness? 1. be comfortable with basic math 2. learn the language of money 3. learn how to manage your behavior with money - Answer-what are the three steps you need to do to become money smart? 1. survival 2. comfort 3. secure - Answer-what three things can you feel financially? yes - Answer-is it important to know your money personality? spender or saver - Answer-what are the types of money personalities? compound interest - Answer-interest paid on interest previously earned; credited daily, monthly, quarterly or semiannually emergency fund - Answer-five hundred dollars in readily available cash to be used only in the event of an unexpected emergency interest rate - Answer-percentage paid to a lender for the use of borrowed money; percentage earned on invested principal the Five Foundations - Answer-the five steps to financial success are called sinking fund - Answer-saving money over time for a large purchase1. Save a $500 Emergency Fund 2. Get out of Debt 3. Pay Cash for Your Car 4. Pay Cash for College 5. Build Wealth and Give - Answer-what are the Five Foundations