Interactive Vocabulary - Amy E. Olsen 2017

Chapter 17. Personal Finance
Part IV. Health

A Healthy Wallet

They're out there! About 80% of the households in the United States have at least one credit card, and several Americans say they have close to eight cards. That is a lot of credit available, and it has led to a precarious situation for many Americans. Too many people have overextended themselves. Many American's have credit card debt that is close to $2,000, and some people owe more than $10,000. Don't be a victim of credit card debt.

Staying Out of Debt

It all begins with attitude. You have to believe that living debt free is a beneficial way to manage your life. You have to want to keep more of your money instead of paying it to credit card companies. First, figure out how much money you bring home each month after taxes. Then add up your expenses, such as rent or mortgage, car payments, gas, insurance, utility bills, food, and clothing. How much money is left is what you have to spend. Next consider the benefits of investing some of your money in savings accounts, retirement accounts, or the stock market. Then use the rest for fun. If you don't create a budget, you could end up spending a lot more for an item than you might expect. Many people are naive about how much interest charges end up costing them. For example, if you buy a $2,000 big screen television with your credit card and you pay the minimum each month (about 2% of the outstanding balance, or, in this case, $40 to start) and your interest rate is 14% (the average credit card interest rate for 2011 was about 14%), it would take you 242 months (20 years and 2 months) to pay off your debt (and that's if you bought nothing else with that card). You would have paid an additional $2,354.76 to the credit card company for that television. Now stop and think about whether you really need a big screen television or if you need it right away or whether you can make more than the minimum payment each month. Because the future can be uncertain (layoffs and injuries are two potential problems), it is reassuring not having to worry about finding the money to put toward credit card debt every month.

Getting Out of Debt

If you already have money you owe on your cards, the first recommendation most credit counselors will prescribe is to stop using your cards. You need to get a handle on your spending, and you can't do so if you keep adding to your debt. Next, talk to a reputable credit counselor if you have serious debt. Find someone you can trust. Look at all your options before you decide what to do. You will have some choices to make. You will likely need to dispose of a few of your cards. If you have eight cards or more, get rid of some of them. You only realistically need two. Next you may want to transfer any balances on high interest rate cards (more than 20%) to lower interest rate cards (less than 12%). Most importantly, you need to look at your budget and carefully think about the things you really need.

Everyone can acquire better spending habits. Credit cards have their benefits: they are convenient to use, they give you a borrowing history useful for bigger purchases (a car or a house) later on, and you can even get rewards like airline miles, merchandise, or cash. Don't give up on credit cards, but learn to use them wisely. Then you will have money to invest in savings and build toward a healthy financial future.

Predicting

For each set, write the definition on the line next to the word to which it belongs. If you are unsure, return to the reading on page I 12, and underline any context clues you find. After you've made your predictions, check your answers against the Word List on page I 17. Place a checkmark in the box next to each word whose definition you missed. These are the words you'll want to study closely.

Set One

using or giving to reach something

insecure  

ignorant

something owed 

promised more than can be delivered

□ 1. precarious (line 4) ...

□ 2. overextended (line 5) ...

□ 3. debt (line 6) ...

□ 4. investing (line 13) ...

□ 5. naive (line 15) ...

Set Two

trustworthy

to obtain

choices

not known

to give as a rule or guide

□ 6. uncertain (line 23) ...

□ 7. prescribe (line 26) ...

□ 8. reputable (line 27) ...

□ 9. options (line 28) ...

□ 10. acquire (line 33) ...

Self-Tests

1 In each group, circle the word that does not have a connection to the other three words.

1. advise   recommend oppose  prescribe

2. option   limitation  choice   alternative

3. respectable  trustworthy  reputable  dishonorable

4. sure   uncertain  hesitant  undecided

5. insecure   precarious  stable   shaky

6. remove   supply   give   invest

7. get    acquire  give   obtain

8. exceed   limit   overextend  strain

9. simple   naive   innocent  experienced

10. possession  obligation  owe   debt

2 Finish the reading using the vocabulary words. Use each word once.

Vocabulary list

acquire reputable overextend uncertain debt

options prescribed invest  precarious naive

My financial situation is (1)... right now because I'm almost broke. I spent more in the past four months than I made. I was (2)... about what I should do until last week; On Saturday I attended a financial planning class. The instructors seemed quite (3)...; I felt I could trust them as they both had more than ten years experience in financial planning. They suggested I write down every penny I spend, and then evaluate my spending habits. I started by listing my monthly expenses for rent, my car payment, and utility bills. Then I looked at other things I have recently bought like a $1,000 ring for my girlfriend for Valentine's Day. I did not need to get her such an expensive gift.

I took the class because I want to quit being so (4)...__ about money matters.

I don't want to spend my life with a fear of living in (5)... . I used to think I would (6)... in stocks; now I worry about how to keep up with my payments. I have been

concentrating on ways to (7)... more money, rather than considering how I spend the money I already make. The instructors pointed out that there are several (8)... when deciding what to do with one's money, but first a person needs to have money to invest. They (9)... practical solutions on how to use the money I already have to plan for my future. I am no longer going to (10)... myself financially. I see where I have gone too far in the past, and I am ready to work toward a healthy financial life.

3 For Set One, match each term with its synonym. For Set Two, match each term with its antonym.

Synonyms

Set One

1. naive     a. honorable

2. option    b. doubtful

3. reputable    c. inexperienced

4. prescribe    d. choice

5. uncertain    e. suggest

Antonyms

Set Two

6. overextend    f. safe

7. acquire    g. conserve

8. debt    h. misuse

9. precarious    i. give

10. invest    j. savings

Identify the two vocabulary words represented in the drawings.

4 Finish the analogies. See Completing Analogies on page 6 for instructions and practice. Use each word once.

Vocabulary list

prescribes debt  acquire naive overextend

precarious uncertain option invest reputable

1. hungry : full :: sure : ...

2. eat : a meal :: ... : knowledge

3. deadline : work late :: ... : frustration

4. math : subject :: the blue or the red : ...

5. rose : red :: a child : ...

6. chef : cooks :: doctor : ...

7. tall : big :: obligation : ...

8. devote : energy :: ... : time

9. simple : elaborate :: dishonest : ...

10. stealing a purse : villainous :: standing on the edge of a cliff : ...

Interactive Exercise

Provide two responses for each of the following questions.

1. Where would you feel uncertain about traveling?

1. ... 2. ...

2. What are you most interested in acquiring in life?

1. ... 2. ...

3. Where are people given options?

1. ... 2. ...

4. What would you prescribe as a way to succeed in college?

1. … 2. ...

5. How do people overextend themselves?

1. ... 2. ...

6. Why should people invest some of their money instead of spending it all?

1. … 2. ...

7. Where might you encounter a precarious situation?

1. ... 2. ...

8. What do people tend to be naive about?

1. ... 2. ...

9. How can people stay out of debt?

1. ... 2. ...

10. Who would you consider a reputable person?

1. ... 2. ...

Word Part Reminder

Below are a few exercises to help you review the word parts you have been learning. Fill in the missing word part from the list, and circle the meaning of the word part found in each sentence. Try to complete the questions without returning to the Word Parts chapter, but if you get stuck, look back at Chapter 14.

gen

ic

mal

ced

1. Children in some parts of the world don't have enough to eat, so they become ill from ... nutrition.

2. After World War II, the birth of the Baby Boomer ... eration began.

3. The problems we faced on vacation are beginning to re...e from my memory, and now I can go back and think about the fun parts of the trip.

4. Since the movie was described as "a cinemat... masterpiece," my aunt will want to see it. Anything relating to movies catches her attention.

Words to Watch

Which words would you like to practice with a bit more? Pick 3-5 words to study, and list them below. Write the word and its definition, and compose your own sentence using the word correctly. This extra practice could be the final touch to learning a word.