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Average Annual Return

The rate of return on investments averaged over a specific period of time (i.e. the last 20 years). It is determined by adding together the rates of return for each year and dividing by the number of years in the calculation.

Amortization

The process by which loan payments are applied to the principal, or amount borrowed, as well as the interest on a loan according to a set schedule.

Annual Percentage Rate (APR)

The finance charge for total amount it costs per year to use credit, calculated as a percentage of the amount borrowed ( percentage rate), including interest, transaction fees, and service charges.

Annual Percentage Yield (APY)

The actual interest rate and account pays per year with compounding included: calculated the same way by all banks/credit unions.

Appreciation

A rise in value or price.

Asset

An asset is anything that is owned by an individual. With respect to saving and investing, assets are generally categorized as liquid (cash) assets and capital (investment) assets.

Accidental Death

Term refers to a type of limited life insurance where the insurance covers the insured should the policy holder die as a result of an accident.

Adjustment Cap

Term refers to the limit of how much the rate can go up or down within a single adjustment period.

Adjustable-Rate Mortgage

Term refers to a debt instrument that does not have a fixed rate of interest.

Alternative Financing

Term refers to non-bank financial products such as payday loans, rent-to-own agreements, sub-prime mortgage loans, car title loans, refund anticipation loans, and non-bank check cashing.

Ancillary Costs

Term refers to costs associated with property taxes and insurance.

Annual Renewable Term

Term refers to a type of term insurance policy where it is only for one year.

Bank and Load

A sales charge paid when investments are sold.

Bait and Switch

An illegal sales technique in which sellers advertise a product with the intention of persuading customers to buy a more expensive product.

Banks

Corporations chartered by state or federal government to offer numerous financial services such as checking and savings accounts, loans, and safe deposit boxes. The Federal Deposit Insurance Corporation (FDIC) insures accounts and federally chartered banks.

Budget

A financial plan that summarizes future income and expenditures over a period of time.

Bankruptcy

Legal process for selling most of the debtor’s property to help satisfy debts that can’t be repaid, in exchange for (a) relieving debtors of the responsibility of paying their financial obligations or (b) protecting them while a plan is created in they try to repay debts.

Bankruptcy Rules

Term refers to the process, or procedural aspects, of bankruptcy and how they are governed and monitored by the Federal Rules of Bankruptcy Procedure.

Bank Statement

Term that refers to a document that displays banking activities.

Beneficiary

Term refers to a person who receives benefits after the death of an insured policyholder.

Bilateral Debt

Term refers to a type of international debt.

BOE

Acronym stands for business overhead expense.

Business Overhead Expense Disability Insurance

Term refers to type of disability insurance that reimburses a business when the owner suffers a disability.

Capacity

Ability to repay a loan from present income; one of 3 factors and credit scoring.

Capital

The value of personal items that one owns, including savings, investments, and property, one of 3 factors used in credit scoring.

Capital Gain

A positive difference between an asset’s price when blocked in its price when or if sold; the opposite of capital loss.

Capital Loss

A negative difference between an asset’s price when Bought and its price when or if sold: the opposite of capital gain.

Car Insurance

Term refers to a type of insurance purchased for cars, trucks, motorcycles, and related road vehicles Co-insurance: term refers to is a fixed amount the insurer would have to pay over and above the co-payment.

Career

Pattern of activities and positions involved in individual’s lifetime or work to which the person has made a long-term commitment.

Cash Flow

A measure of the money a person receives and spends.

Cash Outflow

Term that refers to money going out of a business.

Cash Flow Statement

Term refers to a financial statement that provides insight into how changes in the company’s balance sheet and income statement affect cash and cash equivalents.

Cash Inflow

Term that refers to money coming into a business.

Character

Refers to trustworthiness: one of 3 factors in credit scoring (e.g., paying bills on time shows financial responsibility). Credit worthiness indicating a responsible attitude toward living up to agreements.

Check

Written order directing a bank or credit union to pay a person or business a specific sum of money.

Commission

A fee to a 3rd party for assisting a business transaction, such as buying or selling an asset.

Compensation

The total wage or salary and benefits that an employee receives.

Compound Interest

Interest credited daily, monthly, quarterly, semi annually, or annually on both principle and previously credited interest.

Consumer

A person who buys and/ or uses a product.

Consumer Advocates

Individuals or groups that actively promote consumer interest in areas such as health and safety education, redress, truthful advertising, fairness in the marketplace, and environmental protection.

Consumer Economics

The study of the role of the consumer in an economic system.

Consumer Movement

Efforts to protect and inform the consumer by requiring such practices as honest advertising, product warranties, and improved safety standards.

Contextual Factors

Personal, historical, and socio-cultural aspects of a financial situation that influence an individual or family’s attitudes and behavior, including goal setting, decision making, and judgment about what to believe or how to act.

Historical Aspects of Context

Each individual and family brings a unique personal history to the financial situation, and each interacts with the workplace, school, and neighborhood environments with personal norms, expectations, and social structures that have evolved over time.

Personal Aspects of Context

The perceptions, values, and goals of all parties involved in the financial situation.

Socio-Cultural Aspects of Context

The larger social institutions (such as the media, business and industry, economy) and cultural vales, folkways, mores, and language that influence financial decision making.

Contract

Legally enforceable written or oral agreement between two or more parties to do or not do something

Cost/Benefit Analysis, Risk/Reward Relationship

Tool used to choose among alternatives involves weighing the cost of a product or service against the benefit it will provide.

Credit

A record of a borrowers ability to pay back debt or other financial obligations in a timely fashion.

Fair Credit Reporting Act (1971)

Federal law that covers the reporting of debt repayment information. It establishes when a credit reporting agency may provide a report to someone; states that obsolete information must be taken off (7-10 years); gives consumers the right to know what is in their credit report; requires that both a credit bureau and information provider (e.g., department store) have an obligation to correct incorrect information; gives consumers the right to dispute inaccurate information and add a 100-word statement to their report to explain accurate negative information; and gives consumers the right to know what credit bureau provided a report when they are turned down for credit.

Fair Credit Billing Act (1975)

Federal law that covers credit card billing problems. It applies to all open-end credit accounts (eg., credit cards, overdraft checking). States that consumers should send a written billing error notice to the creditor within 60 days (after receipt of first bill containing an error); creditor must acknowledge in 30 days; creditor must investigate; and creditor may not damage a consumer’s credit rating while a dispute is pending.

Fair Debt Collection Practicies Act (1978)

Federal law that prohibits debt collectors from engaging in unfair, deceptive, or abusive practices when collecting debts. Collectors must send a written notice telling the amount owed and name of the creditor; collector may not contact consumer if he or she disputes in writing within 30 days (unless collector furnishes proof of the debt); collectors must identify themselves on the phone and can call only between 8am and 9pm unless a consumer agrees to another time; and collectors cannot cal consumer at work if they are old not to.

Equal Credit Opportunity Act (1975)

Federal law that ensures that consumers are given an equal chance to receive credit. Prohibits discrimination on the basis of gender, race, marital status, religion, national origin, age, or receipt of public assistance. Lenders cannot ask about your plans for having children or refuse to consider consistently received alimony or child support payments as income. If you are denied credit, you have a legal right to know why.

Truth in Lending Act (1969)

Federal law that mandates disclosure of information about the cost of credit. Both the finance charge (i.e., all charges to borrow money, including interest) and the annual percentage rate or APR (i.e., the percentage cost of credit on a yearly basis) must be displayed prominently on forms and statements used by creditors. The law provides criminal penalties for willful violators, as well as civil remedies. It also protects you against unauthorized use of your credit card. If it is lost or stolen, the maximum amount you have to pay is $50.

Fair Credit and Charge Card Disclosure Act (1989)

A part of the Truth in Lending Act that mandates a box on credit card applications that describes key features and costs (i.e., APR, grace period for purchases, minimum finance charge, balance calculation method, annual fees, transaction fees for cash advances, and penalty fees such as over the limit fees and late payment fees)

Credit

Amount of money a creditor is willing to loan another to purchase goods and services, based on trust and expectation that the money will be repaid as promised with interest.

Credit Card

Card that enables holder to charge expenses for purchases or to get money, often with interest; synonymous with “buy now, pay later.”

Credit Score

Consumer’s financial history often computed as a numerical score, using the FICO or other scoring systems to analyze the consumers credit. A creditors evaluation of a persons willingness and ability to pay debts as judged by character, capacity, and capital; a mathematical model used by lenders to predict the likelihood that bills will be paid as promised.

Credit Unions

Not-for-profit cooperatives of members with some type of common bond (i.e. employer) that provide a wide array of financial services, often at a lower cost than banks.

Creditworthiness

A measure of ones ability and willingness to repay a loan.

Credit Rating/Score

A measure of creditworthiness based on an analysis of one’s ability to maintain debt.

Chapter 7

Term that refers to a type of bankruptcy for no asset cases.

Chapter 11

Term that refers to a type of bankruptcy that is specific to commercial enterprises that want to undergo reorganization while continuing to operate the business and repaying creditors through a court-approved plan.

Chapter 13

Term that refers to a type of bankruptcy that is designed for individuals with a regular source of income.

Checking Account Register

Term that refers to a bank document used to list current activities; used with a reconciliation sheet.

Commercial Auto Insurance

Term refers to a type of business for company vehicles used in the normal course of business.

Consumer Debt

Term refers to multiple categories such as secured, unsecured, revolving, and installment.

Co-Payment

Term refers to the amount the policyholder pays out of pocket before the health insurance company pays for a particular doctor’s visit; a co-payment is typically paid each time and before the insured receives a particular service.

Credit Counseling Company

Term refers to a company that offers to help you fix your credit and create a budget.

Credit Repair Company

Term refers to a company that offers to fix your credit for a fee.

Debit Card

Card used to pay for goods and services directly from a checking account by transferring funds electronically from once checking account to the stores accounts to pay for a purchase; also called check cards.

Debt

The entire amount of money owed to lenders.

Decision-Making

The process of considering alternatives and analyzing information to make a choice.

Deflation

A broad, overview drop in the price of goods and services: the opposite of the more, inflation.

Demand

The quantities of a particular good or service that consumers are willing and able to buy a different possible prices at a particular time.

Depreciation

Decline in their product’s value that starts the mole moment a product is purchased and (car).

Disposable Income

Income remaining after income and payroll taxes are deducted from gross pay: income available to spend or save.

Diversification

The process of spreading assets among the different investments to reduce the risk of a decline in value of an investor’s total per folio from a decline in any one investment.

Dividend

A payment to shareholders that a company’s Board of Directors approves from earnings.

Dollar Cost Averaging

Investing regular sums of money (i.e. $50.00) at regular time intervals (i.e. quarterly) regardless of whether security prices are moving up or down.

Deductible

Term refers to the amount the policyholder pays out-of-pocket; the individual must pay this expense before the health insurance will pay its share.

Deed in Lieu of Foreclosure

Term refers to a type of document signed by the owner of a property, selling right to the property to the bank.

DI

Acronym stands for disability insurance.

Disability Income Insurance

Term synonymous with disability insurance. See disability insurance.

Disability Insurance

Term refers to type of insurance that insures the beneficiary’s earned income against a particular type of risk.

Disputing

Term refers to the process of submitting a request for a credit reporting agency to investigate an error and/or an inaccuracy on the report.

Distressed Property

Term refers to three types of properties that fall under short sale, bank purchase, and foreclosure auction.

Earned Income

Payments received for work, such as wages, salaries, commissions, and tips.

Economy - Global or World

Worldwide system that results from choices of consumers, workers, visitors owners, manufacturers, and government officials in multiple societies and with increasing trade and culture exchange.

Employee Benefits

Something of value that an employee receives in addition to a wage or salary. Examples include health insurance, life insurance, discounted childcare, and subsidized meals at the company cafeteria.

Employer Sponsored Retirement Savings Program

Tax deferred savings plans offered by employers that provide a federal tax deduction, tax deferral of contributions and earnings, and, in some cases, implore her matching. They include 401(k) plans for corporate employees, for 3B plans for employees of schools and nonprofit organizations and section 457 plans for state and local government employees.

Employer Sponsored Savings Plan

A government approved program through which an employer can assist workers in building their personal retirement funds.

Entrepreneur

A person who starts a business. A person who organizes, manages, and takes the risk involved in creating a new product/ service or developing a better way to operate a business.

Entrepreneurship

A process that involves (a) seeing an opportunity to provide a product/ service, (b) taking initiative to find out about competitors and what customers want from the product/ service, and (c) developing plans to market the business, analyze potential profit or losses, and produce the product/ service. Imagination, innovative thinking, and management skills needed to start and operate a business.

Ethical/Ethical Reasoning

Applying criteria, standards, principles for judging what to believe for how to act. For example, some widely held criteria include: it is good to pay bills, keep promises, and be healthy; it is wrong to cheat, lie, deceive, or otherwise harm others. These principles work both ways in the trust relationship between consumer and business/producer. They reflect personal or business values involving actions and attitudes that affect more than one person or affect one’s character. Choice involves the the consideration of regulations of justice, and reciprocity. In financial terms, ethical questions focus on fulfilling obligations, furthering the well-being of others, or resolving dilemmas and conflicts in a particular financial situation.

Expense

The cost of a good or service.

Employer

Supplied disability insurance: term synonymous with worker’s compensation.

Emcumbrance

Term refers to the right of the lender on real property.

Endownment Life Insurance Policies

Term refers to the cumulative cash value and how it equals the death benefit of the insured at a certain age, which is called the endowment age.

Equifax

Term refers to a credit reporting agency.

ERISA

Acronym stands for Employee Retirement Income Security Act of 1974.

Exclusions

Term refers to services that are not covered under an insurance policy.

Experian

Term refers to a credit reporting agency.

FICA

Federal insurance contributions act, the legislation that funds Social Security.

Financial Goals

Short, intermediate, and long-term goals that require money and guide a person’s future plans and savings decisions.

Financial Plan

A plan of action that allows a person to meet not only the immediate needs but also the long-term goals.

Finanical Resources

Financial assets that can be accessed when necessary.

Fraud

A sellers intentional deception of the buyer, which is illegal.

Front-End-Load

A sales charge paid when investors are purchased and sometimes when dividends are reinvested.

Federal Housing Administration

Term refers to a federal agency whose goals are to improve housing standards, provide home financing through insurance of mortgage loans, and stabilize the mortgage market.

FHA

Acronym stands for Federal Housing Administration.

First-Time Home Buyer

Term refers to an individual who is purchasing a principal residence for the first time.

Fixed Rate Mortgage

Term refers to a fully amortizing loan where the interest rate on the loan remains the same.

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