Question

Ima Safer, who recently graduated from college and got a full time job, has prepared her first personal budget and found a pleasant surprise. After taking into account her expected monthly income and all of her ordinary expenses, including the monthly payment on her credit card, she should have some money left over. If Ima is like most young people who are just starting out, the best thing for her to do with the extra money would be to:_______.

A. use it to open her own business.
B. pay off any charges against her credit card account or other high interest debts.
C. use it to make a down payment on a house.
D. put it into a savings account that earns a guaranteed rate of return.

Answer 1

Answer: B. pay off any charges against her credit card account or other high interest debts.

Explanation: If Ima Safer a recent graduate finds she has leftovers after taking into account her income and expenses, like most young people whi are just starting out, it would be in her best interest to pay off any charges against her credit card account or other high interest debts. put it into a savings account that earns a guaranteed rate of return. This is because the use of credit cards produces high interest costs, and together with all other high-cost debts might set her off significantly. It is therefore best to do this as quickly as possible as opposed to putting it in a savings account that earns interests at a lower rate.

In order to start a business or make down payment for a house, Ima would need to raise more capital.