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Lesson plan · Credit & Debt · Lesson 7

Borrowing Responsibly

Questions to ask before you borrow, and strategies for paying debt down.

  • 45 minutes
  • Grades 9–12
  • Beginner
  • Activity: pairs
Present slidesWorksheet + keyStudent lesson

Objectives

Students will be able to:

  • Ask four questions before borrowing
  • Calculate a debt-to-income ratio
  • Compare the avalanche and snowball methods for paying off debt

Materials

Standards

National Standards for Personal Financial Education (2021)
Managing Credit
Texas TEKS §113.76 Personal Financial Literacy and Economics
  • (7) The student understands the costs and benefits of borrowing.
  • (10) The student understands how to set personal financial goals.

Topic-level alignment by FLC. How we map standards

Key vocabulary

Debt-to-income ratio (DTI)
Your monthly debt payments divided by your gross monthly income. Lenders use it to judge whether you can take on more.

Background reading

The official sources this lesson is based on.

45-minute agenda

  1. 0–5 min

    Warm-up

    Post: “Before you borrow money for anything, what questions should you ask yourself? List as many as you can in two minutes.”

    Teacher note: Steer toward the lesson's four: Do I need it now? Can I afford the payments? What's the total cost? What if things change?

  2. 5–12 min

    Direct instruction

    Present the lesson slides. Make sure students leave with these points:

    • Ask: need it now? Can I afford it? Total cost? What if things change?
    • DTI = monthly debt payments ÷ gross monthly income.
    • Avalanche saves the most money; snowball builds momentum.
    • Call your lender before you miss a payment.

    Use the “See it” slide (Avalanche vs. snowball) to make the idea visual.

  3. 12–17 min

    Worked example

    Walk through “Two debts, one plan” on the slides. Pause before the result and ask students to predict it.

  4. 17–22 min

    Live demo

    Project plan a payoff from the slides or the Credit Card Payoff Calculator. Change one input at a time and have students call out what they think will happen.

  5. 22–34 min

    Avalanche vs. Snowball

    Format: pairs · 12 minutes

    1. Two debts: Card A has $600 at 15% APR (minimum $25). Card B has $2,400 at 24% APR (minimum $60). There's $250 a month for debt.
    2. Pairs decide which card gets the extra money under snowball (smallest balance first) and under avalanche (highest APR first).
    3. Share the results below and ask: which plan would you choose, and why?

    What to look for: Snowball (Card A first): debt-free in 1 year, 2 months, $453 interest, first card gone in month 4. Avalanche (Card B first): debt-free in 1 year, 2 months, $408 interest. Avalanche saves about $44; snowball gives a quicker first win.

  6. 34–39 min

    Check for understanding

    Use the question slides — or run them as a Four Corners game. Questions:

    1. Using the avalanche method, which card gets your extra payments first?
    2. What's your debt-to-income ratio?
    3. The snowball method always saves the most money.
    4. What's the best first step?

    Sign in as a teacher to see the answers.

  7. 39–42 min

    Discussion

    • Is student loan debt "good debt"? When might it not be?
    • Why do you think the snowball method works for so many people, even though it costs more?

  8. 42–45 min

    Exit ticket

    Prompt: What should you do if you know you're going to miss a payment?

    Answer: Sign in as a teacher to see the answers

Differentiation

Common misconception

“If I'm approved for it, I can afford it.” Approval means the lender will lend — not that the payment fits your budget.

Support

Walk through the first month of each plan together on the board before pairs discuss.

Extension

With the payoff calculator, compare paying $200 vs. $300 a month on Card B alone. (1 year, 2 months and $372 interest vs. 9 months and $242.)

Homework or make-up work

Students can complete the full interactive lesson — including its knowledge check — at learnwithflc.org/courses/credit-and-debt/responsible-borrowing. No account needed; progress saves on their device.