Personal Finance Terms
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Summary
Terms and concepts surrounding personal finance, including basic loans, taxes, and invenstments, etc.Loans
Acronyms
| Acronym or Term (memorize) | Description (memorize) |
|---|---|
| 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 |
Terms
| Term (memorize) | Description (memorize) |
|---|---|
| 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 |
Investments
| Question (memorize) | Answer (memorize) |
|---|---|
| 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 |
Tax forms
| Question (memorize) | Answer (memorize) |
|---|---|
| 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 |
