1) What is the first step in effective debt management? a) Apply for more credit b) List all debts and understand your total obligations c) Ignore small debts d) Pay the highest-interest debt last 2) What is the “debt-to-income ratio”? a) Your total wealth divided by debt b) Monthly debt payments divided by monthly income c) Income after taxes minus expenses d) Amount of credit available 3) Which strategy focuses on paying off the smallest debt first? a) Debt Avalanche b) Debt Consolidation c) Debt Snowball d) Refinancing 4) Which strategy helps reduce the total interest paid over time? a) Paying only the minimum amount b) Debt Avalanche (paying highest interest first) c) Taking on new loans d) Using all credit cards regularly 5) What is a potential benefit of debt consolidation? a) It eliminates all debt immediately b) It combines multiple debts into one payment c) It increases your credit score instantly d) It guarantees lower interest 6) What is the best way to avoid falling deeper into credit card debt? a) Always use the card for daily purchases b) Pay only the minimum balance c) Pay the full balance each month d) Ignore interest charges 7) Which type of debt is generally considered “good debt”? a) High-interest credit card debt b) A payday loan c) A home loan or student loan (productive long-term value) d) A personal loan for vacation 8) What does it mean when your loan has a “variable interest rate”? a) The interest rate never changes b) The rate increases only c) The rate can change over time d) The loan doesn’t require interest payments 9) What is a warning sign of debt problems? a) Paying bills on time b) Using less than 30% of your credit limit c) Frequently borrowing to cover monthly expenses d) Having multiple savings accounts 10) Why is having an emergency fund important for debt management? a) It helps avoid taking on new debt during emergencies b) It increases credit card limits c) It eliminates existing debts d) It reduces your monthly insurance payments

Debt Management

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