Q:

1.When paying down debt, it is best to _____. (1 point) pay as much as possible toward the debt at the beginning of the month pay as much as possible toward the debt at the end of the month pay part toward the debt and part toward a savings account at the beginning of the month pay part toward the debt and part toward a savings account at the end of the month2.Debt is usually expected in any of the following cases EXCEPT ____. (1 point)purchase of housecredit card purchasespurchase of careducational loans

Accepted Solution

A:
1) The best way to pay off a debt is to pay as much as you can at the beginning of the month in order to decrease the interests you would pay on the principal during that month.
Putting money in a saving account, although it allows you to earn money, does not decrease the interest on the principal, resulting in a loss of money.
Therefore, the correct answer is A) pay as much as possible toward the debt at the beginning of the month.

2) You get into debt when you buy something you can not afford at the moment of the purchase.
By definition, credit cards and student loans consider a debt.
Between a house and a car, it is more logical that you have the money to buy a car rather that to buy a house, which is usually much more expensive.
Therefore, the correct anser is C) purchase of a car.