Studied by 10 people
certified person finance counselor ( some things are noted based on my person established knowledge)
3 basic steps to budgeting
1. List income and expenses.
2. Evaluate where changes need to be made in the event the budget doesn't balance
3. Follow through to maintain the budget
Recommend using ______________________ as opposed to ___________________ to see the effect taxes have on take-home pay
Gross income & Net income
_____________________- examples: rent, car payments, childcare, cellphone bill, etc.
Monthly fixed expenses
____________________- majority of expenses; examples: food, utilities, transportation, etc.
Monthly variable expenses
______________________- occur regularly but not monthly; examples: car maintenance, textbooks, etc.
Periodic expenses
Monthly fixed and variable debt payments combined should be less than ____________ of a person's monthly gross income (not including rent/mortgage)
20%
____________ is the federal law that covers individual's credit reporting rights
Fair Credit Reporting Act (FCRA)
Secured credit has ___________ interest rates because have __________ risk of default or failure to repay
lower and lower
_____________________________ - a type of credit with no collateral backing the money that has been lent by the creditor based on the credibility of the borrower's ______________________ and _________________________________
unsecured credit, application, credit report
Unsecured credit Typically has _________________ because of the higher risk of default or failure of repayment
higher interest rates
____________________________ - loans in which a specific amount of money is borrowed for a defined _______________ and with defined _____________________
Installment loans, purpose, repayment terms
________________________________ - agreements by creditors to lend a specific amount of money which can be accessed by the borrow at anytime
revolving lines of credit
_______________________________- loan where the interest rate will remain constant for the entire term of the loan period
A fixed rate loan
____________________________ - loan where the interest rate will change during the term of the loan period according to a specific benchmark
adjustable rate loan
Process for determining type of credit
1. Determine if it should be __________________ or ______________________
2. Decide between an _________________________ or _______________________
3. Determine if it'd be better to have ____________________ rate loan or _____________________________ rate loan
1. secured or unsecured
2. installment plan or revolving link of credit
3. fixed interest
or adjustable
What does FICO stand for?
Fair Isaac Corporation
_____- get one free credit report annually from 3 places
Fair and Accurate Credit Transactions Act (FACT Act)
What are 3 places can you get your credit reports?
Equifax, Inc., Experian, Trans Union LLC
What are these 3 places ( Equifax, Inc., Experian, Trans Union LLC) called? (Hint: CRA)
Consumer Reporting Agencies
What information does a credit report contain?
Where an individual has worked, lived, and personal identifying information (aliases, spouses name, SSN, date of birth), who else has pulled a credit report in the last 2 years, consumer credit history
What is insurance? _________________________________________
Contractual agreement, also known as a policy, whereby the insured or policy holder receives financial protection or reimbursement against losses from an insurance company and in exchange the insured pays a fee known as a premium
Umbrella insurance - provide additional liability insurance coverage that goes beyond the limits of ________________________________ or ___________________________________
Homeowners insurance
or Vehicle insurance
Health savings account (HSA)
a tax-free savings account—funded by employees, employer, or both—to spend on routine medical costs. Usually combined with a high-deductible policy to pay for catastrophic care
Patient Protection and Affordable Care Act (PPACA)
2010 U.S. law requires virtually all citizens and legal residents to have minimum health coverage and requires employers with more than 50 full-time employees to provide health coverage that meets minimum benefit specifications or pay a penalty.
Supplemental Security Income (SSI)
A federal program established in 1972 and controlled by the Social Security Administration provides federally funded cash assistance to qualifying elderly and disabled poor.
Term Life Insurance
Insurance that provides financial protection from losses resulting from a death during a definite period, or term.
permanent life insurance
Insurance that gives a person protection for his or her entire lifetime and accumulates value
Formula to help determine the appropriate face value of the life insurance =
Policyholder's annual gross income / 5% (the average rate of return conservatively) = face value of life insurance policy
Who offers savings accounts?
___________________________, ________________________, and _____________________________
commercial banks, savings banks, credit unions
With a _______Depositor agrees to lock up their funds for a specific period of time
CD, Certificates of deposits
Bonds can _______________ or ___________________ in value based on the fiscal health of the company behind it
increase or decrease
________________ have higher interest rates than savings accounts and may have a minimum balance
money market accounts
Who offers annuities? ____________________ __________________
insurance companies
Many people use annuities in conjunction with _________________________________ __________________________________
retirement savings accounts
1st step to making a financial goal:
1. To begin, ask them to be ________________________ about what their goals are.
Specific
2nd step to making a financial goal:
1. Categorized as (types of goals) ________________________________ or _______________________________
short-term or long-term
What does behavioral economics study?
Behavioral economics and behavioral finance studies the effects social, cognitive, and emotional factors have on the financial decisions individuals make
3rd step to making a financial goal:
3. _______________________________ the list
prioritize
4th step to making a financial goal:
4. Make sure the goals are __________________________________________
written down
_______ are in direct contrast to the avoidance spender; they shop to cure what ails them.
Therapeutic spenders
_______ don't like to shop and usually buy items without comparison shopping or asking questions.
passive spenders
_______ shop to avoid/escape dealing with the stresses of daily life.
avoidance spenders
_______ shop only to fulfill needs, not wants.
utilitarian spenders
_______ are often so busy looking for bargains they may not realize that all the time and energy that went into finding the "bargain" made it not such a bargain after all.
fanatical spenders
_______ shop to buy things that will impress others.
Esteem spenders
_____ buy items without planning their purchases and often buy things they don't need.
impulse spenders
what tool do you encourage families to use for finding out the cost of college _________________________________
Net price calculators
- 529 savings - ______________________________________________________ designed to help families save for future college costs
state-sponsored college funding programs
________________________ is available to undergraduate students and is the largest grant program administered on a federal level. It may be used for any educational expense, such as tuition and fees, room and board, and living expenses. Award amounts are dependent on funding approved by the Federal government and are calculated by the college. Students who had a parent or guardian died as a result of military service performed in Iraq or Afghanistan after September 11, 2001, may be eligible for the maximum regardless of calculated need if they were under 24 years of age at the time of their parent/guardian's death.
The Pell Grant
__________________________ reward undergraduates, post baccalaureate, and graduate level students who are or will be taking coursework necessary to become an elementary or secondary teacher; recipients must sign an Agreement to Serve saying they will teach full-time in designated teacher shortage areas for 4 years (within 8 years of completing an academic program).
Teacher Education Assistance for College and Higher Education (TEACH) Grants
___________________________ gives priority to exceptionally needy students (in lowest EFC order) and Federal Pell Grant recipients. It is available to undergraduate students. The award amount is calculated on the basis of the student's need and availability of funds at the college. The college determines eligibility and students are notified via the financial aid award letter.
Federal Supplemental Opportunity Grant (FSEOG)
What does FAFSA stand for? ___________________________________
Free Application for Federal Student Aid
How many colleges can the student list to send their FAFSA to? ____________
10
To determine financial need, the U.S. Department of Education uses a formula established by Congress called the __________________________________________ to determine the amount that the student and family is expected to contribute
Federal Methodology
Financial Needs formula
COA ( cost of attendance) - EFC (expected family contribution) = Financial Needs
Type: Direct Subsidized Loan
Financial Need: _________
Interest: Interest is paid by the federal government while a student is in school at least half time and during authorized periods of deferment. Graduate students are not eligible for Direct Subsidized Loans
need based loan
Type: Direct _________ Loan
Financial Need: Not a need-based loan
Interest: The interest is not subsidized, so the student is always responsible for paying interest. Unpaid interest is capitalized (added to the principal balance) when the loans go into repayment.
unsubsidized
_____________is the series of beliefs and principles held by individuals about how to determine which human interactions they believe are right or wrong
Ethics
a _______ is a loan where the interest rate will remain constant for the entire term of the loan period.
fixed rate loan
an ______, also known as a variable rate loan, is a loan where the interest rate will change during the term of the loan period according to a specific benchmark
adjustable rate loan
an individual would want to use installment loan when_________
planning to finance short term projects or making general purchases
Typically a fixed-rate loan will have a ____- rate because the creditor is "locking" up that money and potentially losing the opportunity to lend it at a ____ rate
higher and higher
typically, an adjustable rate loan will have a _____ initial rate
lower
how many and what are the categories are in the FICO score?
amounts owed
payment history
credit usage
credit types
credit age
generally speaking, how many components are there to a budget?
6
what is included in the cash flow analysis?
subtract all taxes from the gross income to arrive at their monthly net income, add all other monthly expenses together, and subtract total expenses from their net income
Meta-ethics
branch of ethics that studies and analyzes the nature of and theoretical meaning to moral propositions. It looks at individuals' statements, attitudes and judgments. It is often associated with our words and language.
Meta-ethics addresses questions such as; "What is evil?"
the branch of ethics that studies and analyzes the nature of our actions. It looks at individuals' behaviors and the questions that arise when they consider how to behave such as what actions are "right" and "wrong".
______ ethics addresses questions such as "What should I do?", or "Would it be wrong to do this versus that?"
Normative ethics
the branch of ethics that studies and analyzes individuals’ beliefs about morality. ______ethics is a form of empirical research into the attitudes of individuals. Those working in this field are looking to discover individuals' beliefs about such things as values, how many of them hold these values, and which actions are right and wrong.
To summarize ______ ethics, think of the question; “What individuals think is “right”?
Descriptive ethics
The branch of ethics that studies and analyzes how moral values can be applied to specific cases. It examines how individuals attempt to handle difficult moral questions in their daily lives.
To summarize_____, think of the question; “How do we take our morals and apply them to everyday life?”
Applied ethics
The Dodd-Frank Wall Street Reform and Consumer Protection Act would overhaul______________________________________________________________
the U.S. financial sector through the creation of new government agencies and regulation with the goal of preventing a recurrence of the events of 2008
What does the CFPB (Consumer Financial Protection Bureau) do?
regulates consumer financial products and services offered by both banks and non-banks in compliance with federal laws.
practices are __________ when…
It causes or is likely to cause substantial injury to consumers;
The injury is not reasonably avoidable by consumers; and
The injury is not outweighed by countervailing benefits to consumers or to competition.
Unfair
Practices are _________ when…
The act or practice misleads or is likely to mislead the consumer;
The consumer’s interpretation is reasonable under the circumstances; and
The misleading act or practice is material.
deceptive
an act is _________ when…
Materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service; or
Takes unreasonable advantage of :
A consumer’s lack of understanding of the material risks, costs, or conditions of the product or service;
A consumer’s inability to protect his or her interests in selecting or using a consumer financial product or service; or
A consumer’s reasonable reliance on a covered person to act in his or her interests.
abusive
congress passed _________in 1977 to eliminate abusive collection practices by debt collectors and to ensure that those debt collectors who where not engaging in abusive practices were not at a competitive disadvantage
Fair Debt Collection Practices Act (FDCPA)
Congress passed the_________________ in 1974 to eliminate discrimination in the credit granting process. The ECOA has broad coverage prohibiting discrimination in various types of lending including; auto loans, credit cards, business loans, and mortgages.
Equal Credit Opportunity Act (ECOA)
Note 
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