UGBA 135 - Personal Finance
What is the definition of a millionaire? - correct answer Those who are financially independent, living the
life they want to lead, and are able to take care of themselves without financial help from government
sources for their entire adult lives.
What should you do if you are a victim of credit card theft? - correct answer Credit card theft is when
your credit card is missing or stolen. Contact the credit card issuer or bank immediately. Close the
account immediately. Ask for a new card on a new account. If, after all this, you find a "lost" card in an
old coat pocket or seat cushion, just destroy it so that it cannot be used.
(Current law states your loss is limited to $50 if you contact the issuer within two days of discovery.
Beyond two days of discovery, you may be liable for up to $500 in losses. Beyond 60 days after discovery,
you may be liable for the full amount of charges.)
What is an emergency fund? - correct answer An emergency fund or a security fund is a cash reserve
specifically set aside for unexpected expenses or financial emergencies, such as illness, job loss, etc. You
should have enough money in your security fund for at least 3 to 6 months' living expenses.
What is the rule of 72? - correct answer The rule of 72 is used to estimate how long it will take for a sum
of money to double at a given
interest rate, assuming interest is compounded annually. (72/interest rate %)
Each time you receive a paycheck, what is the goal percentage of what you wanna keep and save? -
correct answer 15%
The Federal Deposit Insurance Corporation (FDIC) ensures all these accounts up to 250k - correct answer
FDIC insurance covers depositors' accounts at each insured bank, dollar-for-dollar, including principal and
any accrued interest through the date of the insured bank's closing, up to the insurance limit. The
insurance provides coverage up to $250,000 per account. These accounts include CD, checking accounts,
and savings accounts. Since all member banks are equally insured, it pays to shop for rates and other
features. The FDIC also insures individual retirement accounts (IRA) and certain other retirement and
trust accounts up to $250,000 per account or up to $250,000 per beneficiary if there is more than one
beneficiary.
,FDIC insurance covers all types of deposits received at an insured bank but does not cover investments,
even if they were purchased at an insured bank. This includes checking accounts, negotiable order of
withdrawal (NOW) accounts, savings accounts, money market deposit accounts (MMDA), time deposits
such as certificates of deposit (CDs) and cashier's checks, money o
What doesn't the Federal Deposit Insurance Corporation (FDIC) cover? - correct answer
Investments/unearned income (passive income/money that works for itself). Stock and bond
investments, mutual funds, crypto assets, life insurance policies, annuities, municipal securities, safe
deposit boxes or their contents, U.S. Treasury bills, bonds or notes.
What is the meaning of being frugal? - correct answer Living within your means.
(T/F) Do banks and credit unions have different requirements? How? - correct answer True. The key
difference between banks and credit unions is that banks are for-profit institutions that provide profits to
their shareholders while credit unions are run by their members. Since credit unions are member-driven
and not for profit, members receive higher interest rates on savings, lower rates on loans and lower fees.
According to the Nightingale Survey, what percent is financially independent? - correct answer 4% are
financially independent
What is a spending plan? - correct answer A spending plan is a method for distributing your income
among the mix of things you want and need. Creating a spending plan ahead of time will allow you to
effectively manage your finances and determine where to best spend your money.
1. "I Get Paid First"
2. Live off of your earned income, unearned income gets reinvested
3. Frugality = live withing your means
4. Manage your money and you credit score
5. Invest your savings
6. Save at least 15% of your earned income
What is the biggest reason to start saving early? - correct answer Compound interest investing early in
retirement.
, What is the time value of money? - correct answer Receiving $1 today is better than receiving $1
tomorrow. Getting a lump sum today and putting it to work with compound interest is usually better
than receiving installment payments over a number of years.
What is compound interest? - correct answer Interest on interest (exponential growth)
In inflation, when interest rates go up, does your interest rate fro your savings account go up as well? -
correct answer True/yes
Where are all bankruptcies handled? - correct answer Federal court because there are certain bills you
can't get rid of in bankruptcy
What does a 401(k) plan generally provide its participants? - correct answer A retirement plan. If it is
from your employer, it usually means they will match whatever you contribute.
What is the highest FICO score? - correct answer 850
What is the most important factor in determining your FICO score? - correct answer Record of paying
bills on time over time (35%)
What is the best way to establish good credit? - correct answer The best way to establish good credit is
to borrow money and pay it back on time
What is a debt-to-credit ratio? - correct answer The total balance on your credit cards and and other
loans compared to you total credit limit
What should you do if you are a victim of identity theft? - correct answer Short answer: close and
replace all accounts that have been tampered with or you didn't open and file a police report.
Long answer:
What is the definition of a millionaire? - correct answer Those who are financially independent, living the
life they want to lead, and are able to take care of themselves without financial help from government
sources for their entire adult lives.
What should you do if you are a victim of credit card theft? - correct answer Credit card theft is when
your credit card is missing or stolen. Contact the credit card issuer or bank immediately. Close the
account immediately. Ask for a new card on a new account. If, after all this, you find a "lost" card in an
old coat pocket or seat cushion, just destroy it so that it cannot be used.
(Current law states your loss is limited to $50 if you contact the issuer within two days of discovery.
Beyond two days of discovery, you may be liable for up to $500 in losses. Beyond 60 days after discovery,
you may be liable for the full amount of charges.)
What is an emergency fund? - correct answer An emergency fund or a security fund is a cash reserve
specifically set aside for unexpected expenses or financial emergencies, such as illness, job loss, etc. You
should have enough money in your security fund for at least 3 to 6 months' living expenses.
What is the rule of 72? - correct answer The rule of 72 is used to estimate how long it will take for a sum
of money to double at a given
interest rate, assuming interest is compounded annually. (72/interest rate %)
Each time you receive a paycheck, what is the goal percentage of what you wanna keep and save? -
correct answer 15%
The Federal Deposit Insurance Corporation (FDIC) ensures all these accounts up to 250k - correct answer
FDIC insurance covers depositors' accounts at each insured bank, dollar-for-dollar, including principal and
any accrued interest through the date of the insured bank's closing, up to the insurance limit. The
insurance provides coverage up to $250,000 per account. These accounts include CD, checking accounts,
and savings accounts. Since all member banks are equally insured, it pays to shop for rates and other
features. The FDIC also insures individual retirement accounts (IRA) and certain other retirement and
trust accounts up to $250,000 per account or up to $250,000 per beneficiary if there is more than one
beneficiary.
,FDIC insurance covers all types of deposits received at an insured bank but does not cover investments,
even if they were purchased at an insured bank. This includes checking accounts, negotiable order of
withdrawal (NOW) accounts, savings accounts, money market deposit accounts (MMDA), time deposits
such as certificates of deposit (CDs) and cashier's checks, money o
What doesn't the Federal Deposit Insurance Corporation (FDIC) cover? - correct answer
Investments/unearned income (passive income/money that works for itself). Stock and bond
investments, mutual funds, crypto assets, life insurance policies, annuities, municipal securities, safe
deposit boxes or their contents, U.S. Treasury bills, bonds or notes.
What is the meaning of being frugal? - correct answer Living within your means.
(T/F) Do banks and credit unions have different requirements? How? - correct answer True. The key
difference between banks and credit unions is that banks are for-profit institutions that provide profits to
their shareholders while credit unions are run by their members. Since credit unions are member-driven
and not for profit, members receive higher interest rates on savings, lower rates on loans and lower fees.
According to the Nightingale Survey, what percent is financially independent? - correct answer 4% are
financially independent
What is a spending plan? - correct answer A spending plan is a method for distributing your income
among the mix of things you want and need. Creating a spending plan ahead of time will allow you to
effectively manage your finances and determine where to best spend your money.
1. "I Get Paid First"
2. Live off of your earned income, unearned income gets reinvested
3. Frugality = live withing your means
4. Manage your money and you credit score
5. Invest your savings
6. Save at least 15% of your earned income
What is the biggest reason to start saving early? - correct answer Compound interest investing early in
retirement.
, What is the time value of money? - correct answer Receiving $1 today is better than receiving $1
tomorrow. Getting a lump sum today and putting it to work with compound interest is usually better
than receiving installment payments over a number of years.
What is compound interest? - correct answer Interest on interest (exponential growth)
In inflation, when interest rates go up, does your interest rate fro your savings account go up as well? -
correct answer True/yes
Where are all bankruptcies handled? - correct answer Federal court because there are certain bills you
can't get rid of in bankruptcy
What does a 401(k) plan generally provide its participants? - correct answer A retirement plan. If it is
from your employer, it usually means they will match whatever you contribute.
What is the highest FICO score? - correct answer 850
What is the most important factor in determining your FICO score? - correct answer Record of paying
bills on time over time (35%)
What is the best way to establish good credit? - correct answer The best way to establish good credit is
to borrow money and pay it back on time
What is a debt-to-credit ratio? - correct answer The total balance on your credit cards and and other
loans compared to you total credit limit
What should you do if you are a victim of identity theft? - correct answer Short answer: close and
replace all accounts that have been tampered with or you didn't open and file a police report.
Long answer:
