Staying Out of Debt
Scenario 1: Mark and Ryan just moved into their first apartment together and they want to buy a flat screen TV for the living room. They both work but between college tuition, books and rent their funds are running low. Mark decides to take advantage of a financing offer from a local electronics store and buys the TV on a line of credit.
Q: Is this a good or bad debt move? Why?
A: That’s a bad debt move because he is still paying tuition and for books and they said that laves there funding low.
Scenario 2: Blake just graduated college and accepted a new job as a graphic designer for a marketing firm. He wants to buy a $100,000 condo near his new job and he has saved enough money for a 20% down payment. He is planning on taking out a loan, or a mortgage, for $80,000 to purchase the property.
Q: Is this a good or bad debt move? Why?
A: This a good debt move because he has the money to buy the house but he needs a little more and he just got a new job so he can make payments every month.
Scenario 3: Nora has heard that opening a lot of credit card accounts is a good way to build credit. She currently has five credit cards, but is sometimes forgetful in paying her bills on time and usually has a balance on each card. Her favorite store is offering a $50 coupon on her next purchase, with the promise of more coupons in the future, if she opens a credit card. She decides to open the store credit card to get the discounts.
Q: Is this a good or bad debt move? Why?
A: This is a bad debt move because she has to many cards open and cannot make payments on time as it is so she is in going further into debt and destroy her credit.
What’s It Really Cost?
Brent buys a new video game console at $200 and pays for it with a credit card carrying a 25% Annual Percentage
Rate (APR). He only has to pay a minimum payment of $10 each month, which seems like a bargain because he can
use the video game console right away and make the payments over time. Help Brent figure out the true cost of his
video game console and how long it will take him to pay it of.
Q: Is this a good or bad debt move? Why?
A: That’s a bad debt move because he is still paying tuition and for books and they said that laves there funding low.
Scenario 2: Blake just graduated college and accepted a new job as a graphic designer for a marketing firm. He wants to buy a $100,000 condo near his new job and he has saved enough money for a 20% down payment. He is planning on taking out a loan, or a mortgage, for $80,000 to purchase the property.
Q: Is this a good or bad debt move? Why?
A: This a good debt move because he has the money to buy the house but he needs a little more and he just got a new job so he can make payments every month.
Scenario 3: Nora has heard that opening a lot of credit card accounts is a good way to build credit. She currently has five credit cards, but is sometimes forgetful in paying her bills on time and usually has a balance on each card. Her favorite store is offering a $50 coupon on her next purchase, with the promise of more coupons in the future, if she opens a credit card. She decides to open the store credit card to get the discounts.
Q: Is this a good or bad debt move? Why?
A: This is a bad debt move because she has to many cards open and cannot make payments on time as it is so she is in going further into debt and destroy her credit.
What’s It Really Cost?
Brent buys a new video game console at $200 and pays for it with a credit card carrying a 25% Annual Percentage
Rate (APR). He only has to pay a minimum payment of $10 each month, which seems like a bargain because he can
use the video game console right away and make the payments over time. Help Brent figure out the true cost of his
video game console and how long it will take him to pay it of.
Now, imagine that Brent charges $2,000 in car repairs and plans on paying a minimum monthly fee of $50. The card
carries a 25% Annual Percentage Rate (APR). How much are those car repairs really costing Brent and when will he
pay off the amount owed? Use the same online calculator to fill in the information below.
carries a 25% Annual Percentage Rate (APR). How much are those car repairs really costing Brent and when will he
pay off the amount owed? Use the same online calculator to fill in the information below.