Pre-Discharge Financial Management Course

2.

Select the best way to express a financial goal.

Save for a rainy day.
Goals should be specific and in writing.
Goals don't need to be written down.
Goals can be specific or vague but they need to be discussed and written down.

Correct Answer

A. Goals should be specific and in writing.

Explanation

This answer is correct because it emphasizes the importance of having specific financial goals that are written down. By being specific, individuals can have a clear target to work towards and can track their progress more effectively. Writing down goals also helps to solidify them and increases the likelihood of achieving them.

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3.

Select the best definition of net income.

Net income is "take home pay."
Net income is the amount left over after just income tax withholding are taken from your gross pay.
Net income is the total amount of money it costs your employer for you to work for them.
Net income only applies to people who make their living by fishing.

Correct Answer

A. Net income is "take home pay."

Explanation

The correct answer is "Net income is 'take home pay.'" This definition refers to the amount of money that an individual receives after all deductions, such as taxes and other withholdings, have been subtracted from their gross pay. It represents the actual income that the individual can use for personal expenses and savings.

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4.

What are periodic expenses, which are also called "hidden costs?"

Money spent of literature and magazines.
Expected expenses that occur at least once a year but not every month.
These are the same as emergency expenses.
These are your regular monthly expenses.

Correct Answer

A. Expected expenses that occur at least once a year but not every month.

Explanation

Periodic expenses, also known as "hidden costs," are expected expenses that occur at least once a year but not every month. These expenses are not part of regular monthly expenses and can include things like annual insurance premiums, property taxes, or yearly subscriptions. They are called "hidden costs" because they may not be immediately obvious or accounted for in a monthly budget, but they still need to be planned for and budgeted accordingly.

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5.

When there is not enough money to take care of an emergency and pay the bills, the best course of action would be:

Write a check for the emergency if you have overdraft protection.
Get a payday loan to take care of the emergency.
Try to set up a payment plan for the emergency expenses.
Pay for the emergency and worry about the rest later.

Correct Answer

A. Try to set up a payment plan for the emergency expenses.

Explanation

Setting up a payment plan for the emergency expenses is the best course of action when there is not enough money to take care of an emergency and pay the bills. This allows for the expenses to be paid off in manageable installments, reducing the immediate financial burden and providing a structured approach to addressing the emergency. Writing a check with overdraft protection or getting a payday loan may provide temporary relief, but they can lead to additional financial complications and high interest rates. Paying for the emergency and worrying about the rest later can cause further financial strain and potential long-term consequences.

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6.

Select the best definition of Discretionary Income.

Money that is "left over" after all regular expenses are paid.
Money you can "waste" every month.
Money used for luxuries such as dining out at expensive restaurants.
Describes the condition when your regular expenses are larger than your income.

Correct Answer

A. Money that is "left over" after all regular expenses are paid.

Explanation

Discretionary income refers to the money that remains after all necessary expenses, such as bills and groceries, have been paid. It represents the amount of money that individuals have the freedom to spend or save as they choose, without any obligation or necessity. This leftover income can be used for various purposes, including indulging in luxuries like dining out at expensive restaurants, but it is not limited to wasteful spending. It provides individuals with financial flexibility and the ability to make choices regarding how they allocate their resources.

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7.

What is the recommended limit of net monthly income to spend on all vehicle expenses?

25% of your net income.
It's normally OK to spend 35% of your net income on all vehicle expenses.
It's normal to spend more that 50% of your net income for vehicles.
All vehicle expenses should be limited to 20% of your net income.

Correct Answer

A. All vehicle expenses should be limited to 20% of your net income.

Explanation

The recommended limit of net monthly income to spend on all vehicle expenses is 20%. This means that it is advisable to allocate a maximum of 20% of your net income towards expenses related to your vehicle. This ensures that you have sufficient funds for other essential expenses and savings. Spending more than this recommended limit may put a strain on your overall financial situation.

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8.

What's the best way to describe a good attitude towards saving money?

Savings is always first, whether or not you know if you regularly spend more than you make.
You should be committed to spending less than your net income, before you try to start saving.
Saving doesn't matter because unexpected expenses come up all the time.
You can always borrow for whatever you need after your credit is restored.

Correct Answer

A. You should be committed to spending less than your net income, before you try to start saving.

Explanation

The best way to describe a good attitude towards saving money is to be committed to spending less than your net income before you start saving. This means prioritizing saving and making sure that your expenses are lower than your earnings. It emphasizes the importance of living within your means and being disciplined with your spending habits. By adopting this attitude, individuals can ensure that they have a solid financial foundation and are able to save effectively for their future.

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9.

Which item below does not belong on the list of "deby that may be necssary?"

Payment for children's health insurance premiums.
A home mortgage.
A car loan.
Debt for live saving or quality of life changing medical procedures.

Correct Answer

A. Payment for children's health insurance premiums.

Explanation

The correct answer is "Payment for children's health insurance premiums." This item does not belong on the list of "debt that may be necessary" because it is not a debt that typically requires borrowing money. Health insurance premiums for children are usually paid on a regular basis, and they are not considered a form of debt like a home mortgage or a car loan. The other options on the list involve borrowing money to make necessary payments, while the payment for children's health insurance premiums does not require borrowing.

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10.

Select the response below that is incorrect concerning credit scores.

Credit scores are based, in part, on household income.
Credit scores are used to help predict how well someone would pay back their next loan.
Credit scores can be used in the employment application and decision process.
Credit scores can be used by a landlord to decide whether to rent an apartment.

Correct Answer

A. Credit scores are based, in part, on household income.

Explanation

Credit scores are not based on household income. Credit scores are calculated based on various factors such as payment history, credit utilization, length of credit history, types of credit used, and new credit applications. Household income is not a direct factor in determining credit scores.

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Pre-discharge Financial Management Course

When restoring your credit after a bankruptcy, which of the following steps is not important?

Quiz Preview

Select the best way to express a financial goal.

Select the best definition of net income.

What are periodic expenses, which are also called "hidden costs?"

When there is not enough money to take care of an emergency and pay the bills, the best course of action would be:

Select the best definition of Discretionary Income.

What is the recommended limit of net monthly income to spend on all vehicle expenses?

What's the best way to describe a good attitude towards saving money?

Which item below does not belong on the list of "deby that may be necssary?"

Select the response below that is incorrect concerning credit scores.