FiCep Part 1 Questions and Correct Solutions | Graded to Pass!!!

What are the housing market conditions that can indicate a real estate "bubble"? - Housing values are rising faster than consumer income What five sources influence most consumers' financial practices? - Parents, Lenders, learned patterns, creditors, society/peers What is the best tactic for helping members who are in the "earn/spend/earn/spend" cycle? - Each paycheck must be divided up for specific categories such as savings and debt What are the six steps of the financial counseling process? - 1. Gather personal and financial data 2. Establish clear financial goals and objectives 3.Process and analyze info 4.Develop a comprehensive spending plan 5. Implement the plan 6. Monitor, evaluate, and adjust as needed What are the four steps in the process of change? - 1. Recognize the need for change 2. Introduce new ideas and collect information 3. Revise the plan to integrate new information 4. Make changes part of everyday habits What are the "four c's" sometimes used to determine whether a member is a good candidate for credit? - Capacity Credit History Character Collateral What are the steps for gaining board support for a financial counseling program? - 1. Gather info and prepare a financial statement 2. Identify the objectives of the financial counseling program 3. Analyze current positions and consider alternatives 4. Develop an action plan 5. Solicit support for the program 6. Present the program to the board 7. Revise and resubmit if needed What are the ten vital skills for consumers? - 1. Plan (including setting goals, determining action steps, and creating measurable objectives) 2. Find reliable consumer info 3. Budget 4. Save 5. Prepare for retirement 6. Create a spending plan 7. Use credit carefully 8. Use insurance to manage risks 9. Invest 10. Avoid consumer fraud What are the three types of counseling? - 1. Remedial counseling 2. Preventive counseling 3. Productive counseling What is remedial counseling? - For members who already have poor credit, debt, poor money management, etc What is preventive counseling? - Helps members with good financial habits deal with challenges due to life changes What is productive counseling? - Helps members identify the best way to use their resources to improve their financial status What are the 4 counseling concepts? - 1. People are resourceful-they just need to be taught what their resources are 2. Every life event is an opportunity for growth and learning 3. No one way is always best 4. Change is constant What are the four essential skills of counseling? - 1. Communication 2. Counseling-offer advice and guidance that can be applied to their situation 3. Teaching skills 4. Confidentiality What are six counseling pitfalls? - 1. Assuming that people share your beliefs and values 2. Assuming we understand what the speaker is about to say 3. Practicing wishful hearing 4. Using business slang/jargon 5. Talking too much 6. Failing to share the members perspective What is a "Cycle 1" spending cycle? - -Living paycheck to paycheck What can help people in a Cycle 1 (paycheck to paycheck) spending cycle? - Divide each paycheck into spending categories and put aside $ for savings and paying debts before spending What is a "Cycle 2" spending cycle? - Earn/Spend/Borrow/Spend -Confuse wants with needs -Think they deserve everything they want -Often rely on debt to maintain lifestyle What is a "cycle 3" spending cycle? - Earn/Spend/Save -say they want to save but make it a low priority -Rarely have enough $ What is a way to help people in a cycle 3 spending pattern prioritize saving? - They will often need a reason to save so it helps if they can visualize the result of saving What is a "cycle 4" spending cycle? - Earn/Save/Spend -"pay yourself first" -Saving is a priority What are the 5 ground rules of counseling? - 1. The counselor sees every member as unique 2. Avoid uniform responses to common issues 3. Gain an understanding of the member's perception of the problem before offering a solution 4. Build positive relationship combining genuine concern w/ awareness of the member's situation 5. Use consistent, congruent actions and words to communicate w/ the member What three counseling functions does asking questions effectively achieve? - 1. Counselor can analyze the debtor's income, basic living expenses, and debts 2. Explores the member's situation in depth 3. Helps brainstorm with members to generate alternatives What two principles should guide the process of offering ideas and suggesting solutions? - 1. Counselor generates alternatives with respect and in an orderly fashion 2. Counselor suggests solutions but lets the member take control What are three questions that can be used to help the plan evaluation process? - 1. Did the member solve the problem? 2. Has the member learned a process that can be used to solve problems in the future? 3. Which parts of the process were successful and which failed to help? What are three elements of the cash flow discussion that can help members gain awareness of their financial situations? - 1. Flow of money into and out of their budget 2. the interest rate they are paying on their debts 3. total amt they owe