Reducing Your Spending

Ready to test your knowledge? You'll have ten multiple choice questions to answer. Click on each question to reveal the question and multiple choice answers. After you've completed answering all ten questions, click "Grade Me!" at the end of the quiz to see how you did.

Question 1

If you spend $4.25 a day on carry-out coffee, how much will you spend on carry-out coffee annually?

(A) $425.00	Correct Incorrect
(B) $5,125.25	Correct Incorrect
(C) $244.15	Correct Incorrect
(D) $1,551.25	Correct Incorrect

At $4.25 per cup over a span of 365 days, you will spend $1,551.25, or an average of $129.70 per month. Brewing your own coffee and bringing it from home costs significantly less.

Question 2

Which of the following are true regarding extended warranties?

(A) Extended warranties and service contracts save you maintenance costs over time.	Correct Incorrect
(B) Extended warranties and service contracts make the salesman a lot of money, and rarely pay off for you.	Correct Incorrect
(C) Companies that provide extended warranties lose money.	Correct Incorrect
(D) Extended warranties always cover the full replacement or repair of the item they cover.	Correct Incorrect

In deciding whether an extended warranty is right for you, you´ll have to understand the current warranty available on your vehicle, appliance or other household item, the reliability record of that item, what is covered by the extended warranty and whether a deductible applies. Keep in mind that extended warranty companies offer these products with the belief that they will come out ahead financially. That means that most consumers will not benefit financially from them. Having an extended warranty can bring you peace of mind. They can also save you from out-of-pocket expenses that you might otherwise not be able to afford. But for the most part, you are better off shopping around for the most reliable product you can find and maintaining it properly throughout its life.

Question 3

What do experts recommend that you do to reduce your weekly grocery spending?

(A) Shop with a list.	Correct Incorrect
(B) Use coupons for items that you have on your shopping list.	Correct Incorrect
(C) Review the price per unit tags on items to get the most for your money.	Correct Incorrect
(D) All of the above.	Correct Incorrect

Careful planning before you shop can save you both time and money. Shopping with a list keeps you focused on buying only the things you need and limits the impulse buys that can inflate your grocery bill. Finding coupons for frequently used items or brands similar to your preferred choice can help reduce your grocery bill further. Also, once you´re in the store, focusing on the price per unit, rather than the size of the package can help you avoid deceptive packaging practices.

Question 4

What percentage of your monthly gross income do experts recommend that you spend on housing?

(A) Between 25 and 35%	Correct Incorrect
(B) Less than 20%	Correct Incorrect
(C) Less than 50%	Correct Incorrect
(D) Less than 70%	Correct Incorrect

As a rule of thumb, most experts put the number at between 25% and 35%. Standard housing ratios, used to determine what monthly mortgage payment a household can afford are at 28 percent for Fannie Mae or Freddie Mac backed mortgages. Like most things, there should be some flexibility used in making this determination. As an example, individuals with very high annual incomes will tend to have much more disposable income to put towards rent or a mortgage payment.

Question 5

If you were to replace a single standard incandescent light bulb with a compact fluorescent light (CFL) bulb what would the expected annual electrical cost savings be?

(A) $6.00 per bulb.	Correct Incorrect
(B) $0.79 per bulb	Correct Incorrect
(C) $1.95 per bulb.	Correct Incorrect
(D) $29.95 per bulb.	Correct Incorrect

A CFL light bulb uses one third to one fifth the electrical power of a standard incandescent bulb. An average CFL bulb will use only 13 to 15 watts compared to 60 watts for the standard light bulb. So for a bulb that is used for four hours per day, with a cost per kilowatt of $0.10, the savings will be roughly $6.00. The 60 watt bulb would cost $8.76, while the 15 watt bulb would be $2.19.

Question 6

Which of the following are many consumers eliminating from their household budget as a result of technological advances and the advent of new services?

(A) Cable or satellite television.	Correct Incorrect
(B) Home phone lines.	Correct Incorrect
(C) CD and DVD purchases.	Correct Incorrect
(D) All of the above.	Correct Incorrect

With the advent of new streaming video services and mobile phone proliferation, ´cord cutting´ is a popular savings opportunity for budget conscious home owners and renters. Streaming video offerings such as Netflix, Amazon Prime and Hulu can often replace most cable offerings and DVD rentals. Landline phones are becoming a ´nice to have´ when most individuals are carrying a mobile phone.

Question 7

What is the difference between name brand and generic medication?

(A) Brand medications have higher quality ingredients.	Correct Incorrect
(B) Generic medications are not approved by the FDA.	Correct Incorrect
(C) Name brand medications are more effective.	Correct Incorrect
(D) Only the price you pay and the name on the label.	Correct Incorrect

Generic medications are defined as "a drug product that is comparable to a brand/reference listed drug product in dosage form, strength, quality and performance characteristics, and intended use." According to the Food & Drug Administration, health care professionals and consumers can be assured that FDA approved generic medications meet the same rigid standards as the original brand name medication.

Question 8

How much should you be paying in interest charges on your credit card each month?

(A) Nothing. You should pay off the card balance each month.	Correct Incorrect
(B) Less than $250	Correct Incorrect
(C) Less than $50.	Correct Incorrect
(D) Less than $100.	Correct Incorrect

Monthly interest charges on your credit card are based on the outstanding loan balance and interest rate on your card. Experts recommend that you pay off your account balance each month so that you do not incur monthly interest charges.

Question 9

What single action can save the average consumer the most money from your home energy bills?

(A) Turn off the lights when you leave the room.	Correct Incorrect
(B) Turn down the thermostat for heating your home.	Correct Incorrect
(C) Unplug electronics when not in use.	Correct Incorrect
(D) Run appliances in the evening when energy costs are lower.	Correct Incorrect

For most homeowners and renters, reducing the heating bill provides the greatest opportunity for savings. Turning down the thermostat is the easiest way to grab these savings. But you might also benefit from increasing the efficiency of your home by caulking or weatherstripping windows and doors or upgrading the insulation in your home.

Question 10

Which of the following are good ways to reduce your transportation costs?

(A) Take advantage of telecommuting/telecommunications technology.	Correct Incorrect
(B) Don't drive aggressively, drive at the speed limit.	Correct Incorrect
(C) Use carpooling, public transit or other non-motorized options	Correct Incorrect
(D) All of the above.	Correct Incorrect

It´s pretty simple, the less energy you use in commuting to and from work, or around town, the more you´ll save on transportation costs. Reducing the number of trips you make into the office, ride-sharing as part of a car pool or the use of public transportation and taking it easy when you are behind the wheel are all ways for you to reduce your transportation costs.

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Information presented in the Northwest Financial Wellness Center is provided for educational purposes only and is not related to actual Northwest products or services. Northwest makes no representations as to the accuracy, completeness or specific suitability of any information presented. Information provided should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. Northwest recommends you consult a professional for any specific guidance you are seeking.

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