Personal Finance 101
This is a plan that tells every dollar where to go before it gets a mind of its own and decides to buy three pairs of novelty socks.
What is a Budget?
On October 19, 1987, the Dow dropped a massive 22.6% in one day, a stunning and terrifying event now simply known by this color and day of the week.
What is Black Monday?
This is your financial GPA, a three-digit number that decides if you get a low-interest loan or if lenders think you're going to buy a yacht and disappear.
What is a FICO Score?
This financial event happens when a company decides its stock price is too high and cuts each share into two or more pieces to make it more accessible to small investors.
What is a Stock Split?
This financial safety net is often called the "Adulting Buffer" and should ideally hold enough cash to keep you afloat if you suddenly lose your job for 3 to 6 months.
What is an Emergency Fund?
This financial calamity from the late 90s and early 2000s saw investors throwing money at any company with a ___ in its name, until the Internet Party ended abruptly.
What is the Dot-Com Bubble?
This is the single biggest factor in your credit score, proving that when it comes to debt, consistency is king and you always hit the deadline.
What is Payment History?
A term for when an investor buys a stock betting the price will go up, as opposed to shorting, where you bet it will fall. It's named after a common market animal.
What is Going Long (or Buying/Being Bullish)?
The secret money hack where you pay yourself first by diverting a set amount to ___ account the second your paycheck hits. Don't even let the money see your checking account!
What is Saving?
The financial disaster in 2008 was mainly caused by the explosion of this asset class, which had been wildly overvalued and led to millions of foreclosures.
What is the Housing Bubble?
The big, scary word for a loan that lets you buy a house now and pay for it for the next 30 years.
What is a Mortgage?
This famously eccentric CEO co-founded Apple, was briefly ousted, and then returned to lead the company to its massive success with products like the iPod and iPhone.
Who is Steve Jobs?
Albert Einstein allegedly called this force the "eighth wonder of the world," which makes your money grow on its previous growth like a super-saving snowball.
What is Compound Interest?
Following the crash of 1929, the Dow Jones industrial average bottomed out in 1932, marking the beginning of this agonizing decade of poverty and mass unemployment.
What is the Great Depression?
The financial sleight of hand where you only pay the interest on a loan, meaning the original debt amount never actually shrinks.
What are Interest-Only Payments?
The official corporate term for when a company has more cash coming in than going out, the ultimate goal for any business to achieve sustainability.
What is Positive Cash Flow?
If you added up everything you own (assets) and subtracted everything you owe (liabilities), this bottom line would tell you if you're financially fabulous or frightening.
What is Net Worth?
After Black Monday, regulators created these automatic market controls that halt trading when prices drop too far, effectively hitting the "Pause" button on panic.
What are Circuit Breakers?
This three-letter acronym is the real villain on your credit card statement, representing the annual interest rate you pay if you don't pay your bill in full.
What is APR?
The controversial practice of a company purchasing its own shares from the open market, often to boost the earnings per share metric.
What is a Stock Buyback (or Share Repurchase)?