personal finance

Opportunity cost

what you give up when you make a decision

Human capital

Knowledge, skills, and abilities that a person has making them valuable to a company

Employee benefits

Perks or compensation provided to employees in addition to their regular wages or salary

Grants

Tax exempt financial aid that may be given for many purposes

Work study

Federal program that provides part time employment opportunities to pay for school (jobs on campus)

Direct subsidized loans

Needs based loans provided by the federal government

Direct unsubsidized loans

Non needs based loan from the government where the borrower pays interest

grace period

Period of time after a borrower graduates, leaves, or drops below half-time enrollment where they don’t have to make certain loan payments

net pay

Money after deductions

W2

Form we receive from employers by Jan 31st to complete our 1040

W4

Tax form completed at employment to determine amount of income is taxed

Social security

Government run retirement and disability benefits program funded by payroll taxes

Ability to pay

Higher incomes pay more in taxes than those with low incomes

Benefits received

Those who use the service should pay taxes to support that service

Proportional taxation

Taxing always remains the same

Progressive taxation

System where the tax increases as the taxable base amount increases

Property tax

Levy on real estate and other tangible personal property like cars

Excise tax

Indirect tax imposed on the sale or use of specific goods, services, or activities

net worth

Describes the value of a persons or company’s assets minus its liabilities

Monetary assets

Checking savings tools and cash (LIQUID assets)

Tangible assets

Property (can’t be sold for the retail price only less)

Investment assets

(Less liquid) assets that build value over for time

FDIC

Insurance that protects our deposits at banks

APR

Annual percentage rate

APY

Annual percentage yield

Money market account

Account that usually has minimum balance requirements and tiered interest rates

CD account

Used for a fixed period of time and allowed restricted access to funds

Time value money

Money is building wealth when we deposit it into accounts that earn compound interest

Principal

Original amount of investment/deposit

Diversified portfolio

When you invest in a variety of tools to spread out risk

IRA

individual retirement amount lowers taxes le income tax benefit at contribution

Roth IRA

Tax benefit at distribution (no taxes benefit at contribution paid in retirement)

Dollar cost average

Strategy for investing where you invest early and regularly

Dividends

Regular payments made to the companies and shareholders get profits

Bonds

Lending money, paid interest on your loan

Mutual funds

built in diversification; expensive to maintain

Index funds

Funds of investments within the same index

Index

Group of similar stocks and bonds

DTI

Debt to income

Credit utilization rate

Amount of debt in relation to debt available to the borrower

APR annual percentage rate

Yearly cost of borrowing money

premium

Money paid to purchase the policy

Deductible

Out of pocket money paid by policy holder before an insurance company will cover the remaining costs attributed

Disability insurance

Payment ro replace earnings during times when workers can’t work because of illness or injury

Beneficiary

Person designated to receive assets of the dead account owner

Phishing

Pop up ads to grab your information

Open ended credit

A line of credit established in advance so the borrower doesn’t have to apply for credit each time they want it

closed end credit

A loan which the borrower must repay the amount in a specified number of equal payments

Payday loan

Shorter loan that gives immediate cash by securing the borrowers written check

Rent to own loan

Tangible items leased with the condition that the item will be owned by the renter if they complete the contract

inquires

Are on your credit account for 2 years

Late or missed payments

On your credit report for 7 years

On your credit account for 10 years

Closer accounts

Always on your credit report

open accounts in good standing

Never on your credit report

Medical info