POINTERS TO REVIEW: LOANS

PERSONAL FINANCE Involve borrowing money with an

DEBT PAYMENTS-TO-INCOME
RATIO agreement to repay it, as well as interest,
WAGE within a certain amount of time.
Calculated by dividing your monthly debt
payments (not including house payment, CLOSED-END CREDIT
which is a long term liability) by your net One time loans that the borrower pays
monthly income. back in a specified period of time and in
CERTIFIED CHECK
payments of equal amounts.
Personal check with guaranteed payment. MUTUAL SAVINGS BANK
OPEN-END CREDIT
SURPLUS A financial institution that is owned by
depositors and specializes in savings A line of credit in which loans are made
The amount by which actual spending is accounts and mortgage loans. on a continuous basis and the borrower is
less than planned spending. billed periodically for at least partial
payment.
CURRENT LIABILITIES FINANCE COMPANIES
MEDIATION
Debts that must be paid within a short Provide loans to consumers and small
time, usually less than a year. businesses.
The attempt by an impartial third party to
CASH FLOW resolve a difference between two parties
BROKERAGE FIRMS
The actual inflow and outflow of cash through discussion and negotiation. It’s
Employ investment advisers and financial non-binding.
during a given time period.
planners, and serve as an agent between
MONEY MANAGEMENT the buyer and seller for stocks, bonds, and
other investment securities. EXEMPTION
Day to day financial activities necessary
to manage current personal economic SAVINGS AND LOAN
resources while working toward long-term ASSOCIATION (S&L)
financial security. A financial institution that traditionally
ECONOMICS specialized in savings accounts and EXCISE TAX
mortgage loans.
The study of how wealth is created and Imposed by the federal and state
distributed TRUST SERVICE government on specific good and services,
such as gasoline, cigarettes, alcohol
TAX SHELTERS A legal agreement that provides for the beverages, tires, air travel, hotels and
management and control of assets by one phone service.
Investment that provide immediate tax party for the benefit of another.
benefits and reasonable expectation of a TAX AUDIT
future return. ELECTRONIC BANKING
A detailed examination of your tax return
TAX CREDIT by the Internal Revenue Service

The tax owed may be deducted by a tax ADULT LIFE CYCLE

credit, an amount subtracted directly from CHECKING AACCOUNT
the amount of taxes owed. The stages in the family situation and
financial needs of an adult.
Regular checking account - Usually
AVERAGE TAX RATE have a monthly service charge that you BALANCE SHEET
may avoid by keeping a minimum balance
Total tax due divided by taxable income. in the account. A financial statement that reports what an
ARBITRATION individual or a family owns and owes,
Activity Account - Charge a fee for each
The settlement of a difference by a third check written and sometimes a fee for also called a net worth statement or
party whose decision is legally binding. each deposit in addition to a monthly statement of financial position.
service charge.
BUDGET VARIANCE
DEBT-TO-EQUITY RATIO Interest-Earning Check - Usually
require a minimum balance. The difference between the amount
Calculated by dividing your total
liabilities by your net worth budgeted and the actual amount received
or spent.
INSOLVENCY An agreement between a business and a
consumer to cover the repair costs of a
The inability to pay debts when they are
due because liabilities far exceed the value product. Also called extended warranties.
of assets.
CAPITAL GAINS
OPPORTUNITY COSTS ENUMERATION
Profits from the sale of a capital asset such
What you give up by making a choice. as stocks, bonds or real estate. 2 TYPES OF CREDIT

SMART CARDS TIME VALUE OF MONEY  CLOSED-END CREDIT

 OPEN-END CREDIT
A plastic card-equipped with a computer Increase in an amount of money as a result
chip that can store 500 times as much data of interest earned. TYPES OF TAXES
as a normal credit card.
LIQUID ASSETS  Taxes on Purchases
SMART CARDS  Taxes on Property
Cash and items of value that can easily be  Taxes on Wealth
These "digital wallets" are similar to other converted to cash.  Taxes on Earnings
ATM cards with an imbedded microchip.
SAFETY DEPOSIT BOX 3 COMPONENTS OF MONEY
COLLATERAL MANAGEMENT
A private storage area at a financial
A valuable asset that is pledged to ensure institution with maximum security for 1. Storing and maintaining personal
loan payment. valuables and difficult to replace financial records and documents.
documents.
CERTIFICATE OF DEPOSITS 2. Preparation of financial statements.
TAKE HOME PAY
A savings plan requiring that a certain 3. Creating and implementing a plan for
amount be left on deposit for a stated time Earnings after deductions for taxes and spending and saving (budgeting).
period to earn a specified interest rate. other items, also called disposable income
or net pay.
ASSET MANAGEMENT ACCOUNT
DISCRETIONARY INCOME
An all-in-one account that includes
savings, checking, borrowing, investing, Money left over after paying for housing,
and other financial services for a single food and other necessities.
fee; also called a cash management
OVERDRAFT PROTECTION
account.
An automatic loan made to checking
AUTOMATED TELLER MACHINE
account customers to cover the amount of
(ATM)
checks written in excess of the available
A computer terminal used to conduct balance in the checking account.
banking transactions; also called a cash
SIMPLE INTEREST
machine.
Interest computed on principal only and
CREDIT CARDS
without compounding.
A thin rectangular slab of plastic issued by
a financial company, that lets cardholders
borrow funds with which to pay for goods
and services.
CHARACTER

The borrower's attitude toward his or her

credit obligations.

CAPACITY

One's ability to pay additional debts.

SERVICE CONTRACT