Year-end sales are tempting, but how should you purchase those coveted items? From shoes to houses, is it best to wait, borrow or buy? Take the quiz to find out.
1. The item on your list is a necessity and must be purchased now.
2. Your credit utilization ratio is:
a. Low—between 0 and 15 percent
b. Moderate—between 16 and 25 percent
c. High—more than 25 percent
d. I don’t know
3. You have enough money in the bank to purchase the item.
4. When it comes to buying with credit, which is more important to you?
a. Zero interest until I can repay the balance
b. Making minimum payments/not maxing out my credit card
c. Getting what I need immediately
5. You have the option of making fixed monthly payments with a reasonable interest rate.
6. When it comes to loans and credit in 2014, you:
a. Applied for none
b. Applied for one or two
c. Applied for several new credit cards and a few loans
7. If purchased with a loan or credit, the item will affect your debt-to-income ratio:
c. I don’t know
8. Your credit score is:
9. The majority of people cannot purchase the item you need without a loan (e.g., home, car, college education):
10. Purchasing the item will:
a. Meet a need essential for living
b. Improve your life in a measurable way
c. Satisfy a material desire or need
1) a-3, b-0; 2) a-3, b-2, c-1, d-0; 3)a-3, b-1; 4) a-3, b-2, c-1; 5) a-3, b-1; 6) a-3, b-2, c-0; 7) a-3, b-2, c-0; 8) a-3, b-2, c-1, d-0; 9)a-1, b-0; 10)a-3, b-2, c-1
Wait (0-11 points)
Whether you have financial problems or simply don’t know the facts, one thing is certain: you need to wait before making another purchase. Buying items without a budget or understanding of your credit score is a recipe for disaster. Avoid future mistakes by determining:
Borrow (12-19 points)
You’ve done your research when it comes to this purchase, and you have the financial skills necessary to make a wise decision. A few pieces of advice:
- Avoid high interest rates
- If possible, stick to loans that outline fixed terms and conditions
- Create a plan to strengthen your savings account in the next few months
- Consider the pros and cons of saving and spending vs. borrowing
Buy (20-28 points)
Look at you, credit expert! You take an active interest in all things monetary and your credit score reflects it. We’re confident you’ll choose to borrow when it benefits your portfolio and to buy when to doesn’t. Either way, your world is full of choices. Keep it up!