(P--FBLA)Personal Finance Vocab

20/10 Rule

a plan to limit the use of credit to no more than 20% of yearly take-home pay, with payments of no more than 10% of monthly take-home pay

401k plan

a defined contribution plan for employees of companies that operate for a profit

403b plan

a defined contribution plan for employees of schools, non profit organizations, and government units

A-rating

an excellent credit rating

absenteeism

the record and pattern of absence rates of workers

adjustable-rate mortgage (ARM)

A mortgage for which the interest rate changes in response to the movement of interest rates in the economy as a whole

adjusted gross income

gross income less adjustments

adult foster care facility

a shelter for adults who need care beyond what can be provided at home

advanced degrees

specialized, intensive programs that prepare students for higher-level work responsibilities with more challenges and higher level work responsibilities with more challenges and higher pay

agency bond

a bond issued by a federal agency

allowances

reduction in the amount of tax withheld from your paycheck

alternative dispute resolution (ADR)

formal methods of settling disputes without suing the court system

annual percentage rate (APR)

the cost of credit expressed as a yearly percentage

annual percentage yield (APY)

the actual interest rate an account earns stated on a yearly basis

annual report

a summary of a corporation's financial results for the year and its prospective for the future

annuity

income from an investment paid in a series of regular payments made for a set number of years

appeal

a request to a higher court to review the decision of a lower court

application letter

also called a cover letter, is used to introduce you to a potential employer

appraised value

home value determined by examining the structure, size,, features, and quality as compared to similar forms

aptitude

a natural, physical or mental ability that allows you to do certain tasks well

arbitration

a dispute resolution method in which an independent third person helps resolve the dispute

arbitrator

an independent third person who resolves a dispute

assessed value

value set by the city of county that is used to compute property taxes

assets

items of value that a person owes

assigned-risk pool

a group of people who are unable to obtain automobile insurance due to high risk

attractive nuisance

a dangerous place, condition, or object that is particularly attractive to children

audit

an examination of your tax return and records by the IRS

automatic deductions

represent money you have authorized your bank or other organization to move from one account to another at regular intervals

B-rating

a good credit rating

bait and switch

any illegal sales technique in which a seller advertises a product with the intention of persuading consumers to buy a more expensive product

balanced fund

a mutual fund that seeks both growth and income but attempts to minimize risk by investing in a mixture of stocks and bonds rather than stocks alone

bank reconciliation

the process of matching your checkbook register with the bank statement

bankruptcy

a legal process that relieves debtors of the responsibility of paying their debts or protects them while they try to repay

basic health coverage

coverage which includes medical, hospital, and surgical costs

basic needs

items necessary for maintaining physical life

Better Business Bureau (BBB)

a clearinghouse of information about local businesses

bear market

a prolonged period of falling stock prices and a general feeling of investor pessimism

benefits

forms of employee compensation in addition to pay

proceeds

the amount received by the beneficiary from a life insurance policy

binding arbitration

when the arbitrator makes a decision that is binding on the parties

blank endorsement

the signature of the payee written exactly as his or her name appears on the front of the check

blue chip stocks

stocks of large, well-established corporations with a solid record of profitability

bond default

when a bond issuer cannot meet the interest or principal payment on a bond

bond fund

a group of bonds that have been bundled together for investment purposes

bond rating

tells the investor the risk category that has been assigned to a bond

bond redemption

occurs when a bond is paid off at maturity

bonds

debt obligation of corporation or state or local governments

budget

a spending and saving plan based on your expected income and expenses

bull market

a prolonged period of rising stock prices and a general feeling of investor optimism

bundling

combining services into one package

callable bond

a bond that the issuer has the right to pay off before its maturity date

canceled check

a check that has cleared your account

capacity

the financial ability to repay a loan with present income

capital

the value of property you possess after deducting your debts

capitalism

an economic system in which producers and consumers are free to operate and compete in business transactions with minimal if any, government interference or regulation

car buying service

a service that allows you to choose the vehicle features you want, and a professional car buyer takes over the price negotiation for you

cash value

the savings accumulated in a permanent life insurance policy that you would receive if you canceled your policy

cashier's check

a check written by a bank on its own funds

certificate of deposit (CD)

a time deposit where a fixed rate of interest is earned for a specified length of time

certified check

a personal check that the bank guarantees or certifies to be good

chapter 7 bankruptcy

a liquidation form of bankruptcy for individuals which wipes out most debts in exchange for giving up most assets

chapter 13 bankruptcy

a reorganized form of bankruptcy for individuals that allows debtors to keep most of their property and use their income to pay a portion of their debts over three to five years

character

a responsible attitude toward honoring obligations, often judged on evidence in the person's credit history

civil case

a case which involves one person who has a dispute with another person of entity

vicil ceremony

a wedding performed by a public official, such as a judge or justice of the peace

class action lawsuit

a lawsuit in which a large number of people with similar complaints against the same defendant join together to sue

closed-end credit

a loan for a specific amount that must be repaid in full, including all finance charges, by a stated due date

closing costs

the expenses incurred in transferring ownership from buyer to seller in a real estate transaction

co insurance clause

a provision requiting policyholders to insute their building for a stated percentage of its replacement value in order to receive full reimbursement for a loss

co-op

a room similar to one in a dormitory at lower oct but with added responsibilities

COBRA

a law that allows people who leave employment to continue their health insurance under the company plan for a limited period of time

codicil

a legal document that modifies parts of a will and reaffirms the rest

collateral

property pledged to assure repayment of a loan

collective bargaining

the process of negotiating a work contract for union members

collective values

things that are important to society as a whole

common law

a system of laws based on decisions made in court cases

common stock

represents a type of stock that pays a variable dividend and gives the holder voting rights

communist economic system

a system in which the government owns and controls most, if not all, of the productive resources

complaint

a document outlying the issues of the case and the relief (damages) that the plaintiff requests

comprehensive coverage

automobile insurance that protects you from damage to your car from causes other than collision or vehicle overturning

consideration

something of value exchanged for something else of value

consumer credit protection act

also known as Truth in Lending, this law requires lenders to fully inform consumers about the costs of credit

conventional loan

mortgage agreement that does not have government backing and that is offered through a commercial bank or mortgage broker

convertible bond

a corporate bond that can be exchanged for common stock

coordination of benefits

a group health insurance provision that specifies how the insurers will share the cost when more than one policy covers a claim

consigner

someone who promises to pay if the borrower fails to pay

CPSC

an agency that protects consumers from unreasonable risk of injury or death from potentially hazardous consumer products

credit bureau

a business that gathers, stores, and sells credit information to other businesses

credit guard

a service that monitors your credit record

credit management

following an individual plan for using credit wisely

credit rating

a measure of creditworthiness based on an analysis of your credit and financial history

creditor

a person or business that loans money to others

critical listening

the ability to differentiate facts from opinion

custom

a long established that takes on the force of an unwritten

database

a computer program that sorts data for easy search and retrieval

dealer add-ons

high-priced, high-profit dealer services that add little or no value to an automobile

debenture

a corporate bond that is based on the general creditworthiness of the company

debt management plan (DMP

a plan which involves giving money each month to a credit counseling organization

debt negotiation program

hiring a company to call your creditors to negotiate reductions in the amount owed

debtor

a person who borrows money from others