Question 16 • [PERFIN] Personal Finance, Sem 2 (26-27)
Olya would like to find a way to reduce her current debt. The table below shows Olya’s monthly income, expenses and net income. Monthly BudgetAmountIncomeWages$2,750.00ExpensesRent$850.00 Utilities$236.54 Entertainment$410.00 Food$220.00 Cell Phone$114.98 Credit Card #1$56.79 Credit Card #2$38.45 Car Insurance$120.00 Car Payment$260.00 School Loan$250.00Net Income $193.24 After evaluating Olya’s monthly budget, which of the following would not be an option to help reduce her debt?
Answer
A
Olya could spend less on entertainment each month and put the money towards her credit card payment.
B
Olya could skip a month or two paying for her school loan and put the money towards her credit card debt.
C
Olya could try to save money on her utility bills by investigating money saving plans offered by the utility company.
D
Olya could spend less on food each month and put the money towards her credit card payment.
Explanation
Skipping payments on the school loan is not a sound way to reduce debt; it can lead to late fees, damage to Olya’s credit, or other penalties, while the loan balance may continue to grow. The other choices suggest reducing optional or household expenses and using the savings to pay down credit card debt. Therefore, the choice that would not be an option is “Olya could skip a month or two paying for her school loan.”
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