Pay attention. There will be a test.

In 2004, the Durham, NC-based Center For Responsible Lending's "Financial Education: No Substitute for Predatory Lending Reform" revealed 96 percent of consumers couldn't compute interest costs of a loan because they lacked "quantitative literacy," the ability to apply arithmetic to numbers in written material.

In 2005, the federal Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) mandated that debtors filing for bankruptcy after Oct. 17, 2005 undergo credit counseling before they file. They must also complete a more rigorous course in financial management before their debts could be discharged.

Just last month, the Federal Reserve Board's "Do Homeowners Know Their House Values And Mortgage Terms?" revealed 41 percent of adjustable rate mortgage (ARM) holders didn't know the potential maximum interest rate for their loan, 35 percent didn't know how much the rate could increase in one adjustment period and 20 percent didn't even know their starting interest rate.

Home owners who fall into any of those categories are at risk of losing their homes because they can't determine costs crucial to keeping them afloat financially.

That's because if they can't determine costs they can't set financial plans or goals to help them navigate rough seas.

With home ownership comes a need for a broad based knowledge of credit, debt, budgeting, financing, even economics, market conditions and related calculations and shopping-around comparisons that are often apples and oranges.

At the very least you should know where to go for information related to knowledge necessary for financially sound home ownership.

Lucky for you, April is Financial Literacy Month and only one day is reserved for fools. The month should shape up to offer a bounty of just the kind of information you need for sound financials

"In a time of negative personal savings rates and unprecedented levels of consumer debt in this country, it is critical for consumers to take a moment to assess their personal financial condition and overall financial knowledge so they are able to live financially healthy lives," says the National Foundation for Credit Counseling .

The foundation offers this true-or-false quiz to help you test your financial knowledge and strength in the credit world.

1. You have too much debt if you can afford only the minimum monthly payment on your credit cards.

   True. You are tapped out. Make major credit card purchases only when you can afford to pay them off in three to six months. Otherwise the interest will squeeze you dry. At least always pay more than the minimum required payment -- which amounts largely to an interest-only payment that leaves the principal intact to accrue more interest.

2. When my paycheck arrives, I should pay my rent and other bills first and then see what is left over that I can then put into savings.

   False. Pay yourself first every payday. Put the money in a savings account. Treat your savings as another monthly bill you are committed to paying and build an emergency fund and retirement nest egg.

3. Spending more than 20 percent of your take-home pay on credit card bills is a red flag of financial trouble.

   True. Use your credit card to pay for what is normally a cash purchase and deplete most of your disposable income to pay off those purchases and there's a good chance you are over-extended. Lower the sails on spending, deploy a plan to pay off your balances.

4. Any time you have a choice between paying two roughly equal debts, you should pay the one with the lower interest rate first.

   False. The longer you take to pay off credit card debt and the higher the interest rate, the more that loan actually ends up costing. Pay off the debts with higher interest rates first.

5. It is important to have an emergency saving plan to cover living expenses for three to six months to protect myself from an unanticipated event, such as losing a job or a medical emergency.

   True. A supply of emergency cash is a lot like insurance. It can equip you with a life preserver should you hit choppy waters. It also prevents you from being anchored to borrowing your way out of trouble.

Published: April 4, 2006

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.