wise money & budgeting review

Adjustable Rate Mortgage

a mortgage with an interest rate that increases or decreases during life of the loan, also known as variable-payment mortgage

Fixed Rate Mortgage

a mortgage with a fixed interest rate and dixed schedule of payments, also called a “conventional mortgage”

assets

items of value that an individual owns including cash, property, personal possessions, and investments

bankruptcy

the legal process in which some or all of the assets a debtor are distributed among the creditors because the debtor is unable to pay his or her debts

budget

A plan for using money to meet wants and needs

Collateral 

a form of security to help guarantee that the creditor will be repaid

debit card

a cash card that allows you to withdraw money/pay for purchases from your checkings/savings acc

Discretionary

The money left after paying for the essentials, such as food, clothing, shelter, transportation and medication

Down Payment

a portion of the total cost of an item that must be paid at the time of purchase

Emergency Fund

a savings account you can access quickly to pay for unexpected expenses/emergencies (18k)

Income

cash inflow, or the money you receive

Liabilities

the debts you owe

Lease

the legal document that defines the conditions of the rental agreement between the tenant and the landlord

Regular income is money you receive on a consistent, predictable schedule typically from work, investments, or benefits.

Windfall income is unexpected or irregular money you receive often large, one-time amounts.

the more human capital you have the less likely you are to be

unemployed

salary is what you make yearly. each paycheck will be the 

same because they take the total amount and divide it by the number of paychecks

a wage is the hourly rate for working, and creates

a paycheck that varies week to week

A commission is money made on the sale of a good.

it helps increase productivity and is used in sale jobs

overtime

hours worked over the standard 40hrs expected. typically 1.5x your hourly rate

networth

how much youre worth is all ur assets are sold

networth formula

assets(things owned) - liabilities(debt/things owed)

gross pay

amount of money earned before payroll deductions for taxes, social security, & employee benefits

gross wage

hourly wage * hourly rate

net pay

actual amount you will receive. also called take-home pay

process and advantage of direct deposit and review of employer statement to employee

Direct deposit is an electronic payment method where an employee’s net pay is automatically transferred to their bank account, offering convenience, security, and speed. Employees should still review their pay statements to ensure all earnings, deductions, and contributions are accurate.

A payday loan is a short-term, high-interest loan that gives quick cash in advance of your next paycheck but

often leads to expensive repayment and debt problems.. also prohibiteed in 18 states

mandatory deductions include taxes such as

federal, state, city/local, FICA, social security, and medicare. While court mandated deductions are child support and garnishment.

optional deductions include

automatic savings, 401k, life insurance, and health insurance.

the USA tax system is progressive. the more you make

the more you take

federal income tax

taxes paid base on how much you make

state taxes

5.75% in VA

FICA

includes ss(6.2%) and medicare(1.45%)

tax schedule

tells you how much you will pay in taxes based on income

tax base

what can be taxed, ex: income, gifts, property

w-2

document given at tax time to tell how much you made. arrives on/before jan 30th each yr.

w-4

document filled out when you start a new job. tells yr employer how much to take out in taxes

what is the effect of net/gross pay when theres an increase/decrease of allowance from the w-4 form?

less deduction

tax

contributions to state revenue and funds gov programs

how does taxes impact net income

you get less money (ex: food & sales tax)

excise tax

taxes used to influence a change in behavior like a special tax on (tobacco/alcohol)