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Chapter 4, section 5

Chapter 4, section 5. Debt management. I can…. Analyze a credit card account when minimum payments are made. Calculate debt-to-income ratio. What is debt?. Using someone else’s money with the promise to pay it back. Credit cards are a form of debt. Example 1 & 2, p. 154

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Chapter 4, section 5

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  1. Chapter 4, section 5 Debt management

  2. I can… • Analyze a credit card account when minimum payments are made. • Calculate debt-to-income ratio.

  3. What is debt? • Using someone else’s money with the promise to pay it back. • Credit cards are a form of debt. • Example 1 & 2, p. 154 • Check your understanding A

  4. What’s a debt-to-income ratio? • A % that indicates the percent of one’s income spent on debt. • Debt-to-income ratio=Debt payments/gross income • Example 3, p. 156

  5. How can I reduce/manage my debt? • USE CASH!!! • Avoid high interest rates! • Pay more than the minimum payment. • Pay off high interest credit cards first! • Debt counseling • Consider a consolidated loan (all your debt is combined into one loan—must find a low interest rate).

  6. Let’s practice! • P. 158-159, 7-19

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