Study skills vocab

Amortize

Paying a loan off in installments, rather than one lump sum

APR

The abbreviation for annual percentage rate

Claim

A request submitted to your insurance provider to help pay for covered expenses

Collision Coverage

A type of auto insurance that protects against damage costs accrued

by the policyholder

Comprehensive Coverage

Car insurance that protects against damage that isn't caused

by a collision

Credit Report

A detailed list of the factors contributing to your credit score, including open accounts and payment histories

Credit Score

A number assigned to an individual that quantifies their ability to use and pay back credit

Debt-to-income Ratio

A calculation that divides the debt you have by the amount of money you make to produce a percentage that helps lenders decide your ability to pay back a loan

Deductible

The amount you'll need to pay before insurance kicks in and covers the rest of your costs. For renter's and auto insurance, the deductible is per claim

Double Entry Accounting

A budgeting method where you record your earnings twice: once

in your account and once in your budget

Down payment

An amount paid before a large purchase to reduce the loan amount and prove your interest and ability to make such a purchase

Exemption

A deduction that legally allows you to lower the amount of taxable income you made in a year

Expense

Anything that you spend money on, whether it's a necessity or a luxury

401(k)

An employer-sponsored savings and investment plan that allows you to contribute some of your earnings to keep for retirement. Contributions are tax-deferred and your employer might choose to match contributions as a benefit of employment

Gross income

Your income from any and all sources, before taxes are withheld.

Hard inquiry

An inquiry into your credit history, typically in advance of applying for a loan. Hard inquiries can negatively affect your credit for 12 months and remain on your credit history for two years

Identity Theft

Illegally using someone else's identity for personal or financial gain

Insurance

A service that provides protection against the unpredictable; like car accidents or broken arms

Lease

A contract that lets you use someone else's property for a specified rate and length of time

Liability Coverage

Liability coverage protects you from being sued if you're at fault for personal or property damage

Minimum payment

Typically assessed monthly, the minimum amount you need to pay on a loan to keep it current and avoid negative effects on your credit report

Net income

Your total income after all taxes and withholdings are paid

Net worth

The amount that you own in assets minus the amount you owe in liabilities

Personal Injury Protection

An add-on insurance option that protects against medical costs

and lost wages in the case of a car accident

Policy

A document detailing the type and amount of coverage your insurance offers

Principal

The total amount of unpaid money on a loan excluding any interest charges

Private Mortgage Insurance

A policy offered by a private third party that protects your lender against mortgage default. It is usually required unless the purchaser pays a down payment of at least 20%

Rate of Return

How much an investment gains or loses over a specific amount of time

Taxes

Contributions to state and federal governments to pay for things like public services and infrastructure

Team life insurance

Life insurance with a finite coverage period; usually 5, 10, 20, or even 30

years

Uninsured Motorist Coverage

A type of insurance that covers you in the case of a collision

with an uninsured driver who is at fault.

Withholdings

The amount deducted from your paycheck by your employer to go toward paying things like federal and state taxes, social security taxes, and health insurance.