Personal Finance Terms

Summary

Terms and concepts surrounding personal finance, including basic loans, taxes, and invenstments, etc.

Loans

Acronyms

Acronym or Term	Description
APR	Annual Percentage Rate
APY	Annual Percentage Yield
ARM	Adjustable rate mortgage
APYE	Annual Percentage Yield Earned
FHLMA (aka "Freddie Mac")	Federal Home Loan Mortgage Corporation
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Terms

Term	Description
Equity	Difference between fair market value and current indebtedness
Prime Rate	What banks charge their best corporate customers (quoted in the Wall Street Journal)
Disposable Income	Monthly income left after monthly debt and housing expenses
Debt Ratio	Ratio between monthly debt (including housing costs) divided by monthly income
Credit Card Ratio	Ratio of credit card balances to the credit card limits
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Investments

Question	Answer
401(k)	Retirement account funded by employee (and sometimes employer) contributions
IRA	Individual Retirement Account (tax-sheltered)
Junk Bond	A high-risk bond offering high yield (often for a takeover of a company)
Mutual fund	Divided into several stocks
Recession	Two consecutive quarters of declining real GDP
GDP	Gross Domestic Product
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Tax forms

Question	Answer
1099	For stock you own (summarizes dividends)
W2	Shows your annual wages and tax withheld (employer sends this to you IRS)
W4	You file it with employer so they know amount of tax to withhold
Date of	April 15
Extension	request to file taxes late
Audit	IRS looks into your taxes
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See also