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April Is Financial Literacy Month—Can You Answer These 15 Questions?
CredAbility, Guest Blogger
How well do you understand the basics of money management? Take this quiz from CredAbility to see if you are making the best use of your money.
2. What percentage of your income should you spend on your monthly mortgage payment?
A. Whatever the bank says I qualify for
B. No more than 25 percent of my gross pay or 35 percent of my take-home pay
C. No more than half of my paycheck
D. Whatever I am comfortable with
3. Social Security taxes have been reduced for 2011. How should you redirect this extra money?
A. Go out to dinner once a month
B. Buy lottery tickets
C. Build an emergency fund or pay down credit card debt
D. Stash the money in a mattress for a rainy day
4. You owe $5,000 on a credit card that has an interest rate of 18 percent and a minimum payment of 2 percent of the balance. If you don’t purchase another thing and make only minimum payments, how long will it take you to pay off the balance?
A. 8 years, 6 months
B. 17 years, 9 months
C. 25 years, 7 months
D. 39 years, 4 months
5. You recently lost your job. Which expenses should you eliminate immediately?
B. Medical insurance premiums
C. Monthly credit card payments
D. Restaurant meals
6. If you save $100 a month from age 25 to age 40 or save $250 a month from age 40 to age 60, and both accounts pay interest of 7 percent, which will have a larger balance when you are 60?
A. Saving $100 a month from age 25 to age 40
B. Saving $250 a month from age 40 to age 60
C. Both accounts will have about the same balance
7. You checked your free credit report at www.annualcreditreport.com and found an error. How do you correct it?
A. I don’t need to; if it’s wrong, it’s no big deal
B. Just let creditors know if I apply for new credit
C. Contact the credit bureaus directly
D. File a small claims lawsuit against the company
8. You purchase a $20,000 car with 10 percent down and take out a loan with a 10 percent interest rate for sixty months. About how much will your monthly payments be?
9. Under IRS guidelines, what is the maximum you can contribute to your 401(k) in 2011?
A. Up to 20 percent of my salary
B. Up to $1,000 a month
C. Up to $16,500
D. As much as I want
10. If a person age 62 or older obtains a reverse mortgage, he or she is still responsible for paying property taxes and insurance.
11. How long can negative information stay on your credit report?
A. Negative information is not included on my report
B. Three years
C. Seven years
12. A fifteen-year mortgage typically requires higher monthly payments than a thirty-year mortgage, but you will pay less interest over the life of the loan.
13. If a thief takes your credit card and uses it, how much could you be responsible for paying?
A. Nothing, if I report the card stolen before any charges are made
B. Up to $50 if charges are made before I report the loss
C. All charges made before I report the card stolen
D. Both A and B
14. If you take out a $150,000 mortgage for thirty years at 5 percent, your payment will be about $805 per month. If you pay $100 extra each month, how much faster will you pay off your mortgage?
A. 2 years, 6 months
B. 4 years
C. 6 years, 5 months
D. 8 years, 2 months
15. How much should you have in an emergency savings account?
B. Three months of living expenses
C. Six months of living expenses
D. An emergency savings account? Isn’t that what credit cards are for?
Who should you call if you find yourself facing a financial crisis?
B. A good therapist
C. A certified credit counselor with a nonprofit organization
Of course, the answer to the bonus question is C—the key to reclaiming your financial independence is recognizing the need for help and getting it. At CredAbility, certified counselors will help you evaluate your financial situation and find the solution that best suits you. To speak with a certified counselor about your options for a debt-free life, contact CredAbility at 1-800-251-2227 or online at www.CredAbility.org.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.