Credit Crossroads
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.
Is this a good or bad debt move? Why?
It would be a bad debt move because making payments on college tuition, rent, and books are alot more important that a new television.
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.
Is this a good or bad debt move? Why?
in the long run it would be a good move because it puts him in a closer location to his job so he doesn't have to travel as much and it seems like he has a plan of staying there and making that his home for awhile.
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.
Is this a good or bad debt move? Why?
It would be a bad move for Nora because she is already struggling to make payments on the five accounts she already owns creating a sixth account would just add more hassle and more money going down the drain even with the coupons that she would be receiving from opening up the new account.
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.
Is this a good or bad debt move? Why?
It would be a bad debt move because making payments on college tuition, rent, and books are alot more important that a new television.
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.
Is this a good or bad debt move? Why?
in the long run it would be a good move because it puts him in a closer location to his job so he doesn't have to travel as much and it seems like he has a plan of staying there and making that his home for awhile.
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.
Is this a good or bad debt move? Why?
It would be a bad move for Nora because she is already struggling to make payments on the five accounts she already owns creating a sixth account would just add more hassle and more money going down the drain even with the coupons that she would be receiving from opening up the new account.
Debt Snowball
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.
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.