DEBT MANAGEMENT CHAPTER 4, SECTION 5. I CAN… Analyze a credit card account when minimum payments are made. Calculate debt-to-income ratio.

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Presentation transcript:

DEBT MANAGEMENT CHAPTER 4, SECTION 5

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 Check your understanding A

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

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).

LET’S PRACTICE! P , 7-19