credit
A credit-to-debt ratio is the amount of available credit you have relative to the amount of
debt you carry.
Debt to Credit Ratio
get good grades, no accidents, good credit, and drive a certain
type of car.
How you reduce the cost of auto insurance
next best alternative – it is what is given up when a choice is made.
Opportunity cost
how long (many years) will it take to double an investment? Divide 72 by the interest rate to be
earned: 72 divided by 3% interest = 24 years (if you are given the number of years and need to determine the
interest rate needed to double your money, then divide 72 by the given number of years: 72 divided by 24 years
= 3% interest).
Rule of 72:
refers to a financial market that
experiences an extended period of growth above the historical averages.
bull market
the longer you take to pay back a loan, the more you will
pay in interest and principal overall.
The length of debt repayment and impact on cost
Disability insurance will cover your bills while you are disabled or cannot work, with
an injury or illness for a certain amount of time. Doesn’t replace income.
Disability Insurance
collects taxes, prints money, issues treasury bonds
Role of the Treasury Department:
6 month grace period (after leaving school) before you start making payments.
Repayment of student loans
a bond is a
financial instrument that gives its holder/owner the right to collect interest payments from the company or
organization that has borrowed money. A municipal bond is a bond that is issued by a city or some type of
governmental agency. Government bodies usually issue tax-free municipal bonds to fund large capital
expenses and improvements, like parks, downtown restorations, schools or airports.
Bonds–purpose; how they work; interest feature; tax free feature of municipal bonds
Collateralized loans – the loan is collateralized/secured by the item (musical instruments, jewelry,
etc...) you bring in order to get a loan from the pawnshop. You pay interest on the loan and a type of fee
Pawnshops
A deductible is the amount that the insured has agreed to pay before the insurer is obliged
to pay anything on a covered claim. The higher the deductible the lower the monthly premium (payment) – the
lower the deductible the higher the monthly premium (payment).
Insurance deductible
Who is hurt the most and the least with inflation
most hurt are lenders (banks) and people living on a fixed
income. Least hurt are those who owe large amounts of money
A refund anticipation loan (RAL) is a short-term consumer loan secured by a
taxpayer’s expected tax refund
Tax anticipation loans:
are the earnings given to the people who are shareholders of the company stock
Dividends
contact banks and cancel all credit card/debit
cards, review bank accounts to see if there are recent charges/purchases on accounts, contact all 3 credit bureaus
to report identity stolen, apply for new social security card
What to do if a person thinks he/she is a victim of identity theft:
is insurance you buy to protect you furniture, belongings, etc. in case of a burglary, fire,
or some natural disaster. Also covers liability/injury to others.
Renters Insurance
wages, rentals, interest, capital, profits, investments, entrepreneurship
Sources of income
banks, credit unions, pawnshops, finance companies, payday lenders, tax
preparers
Institutions that give loans
are short-term loans sold to operate the U.S. government. Amounts invested
range from $1,000 to $5 million per investor.
Treasury Bills
Equifax, TransUnion, Experian
Three leading credit reporting agencies
is insurance against the risk of incurring medical expenses
among individuals. By estimating the overall risk of health care and health system expenses, among a
targeted group, an insurer can develop monthly premium to ensure that money is available to pay for the
health care benefits specified in the insurance agreement. A co-pay is the amount of money you pay out-of-
pocket for a covered medical service. Co-pays are typically a flat dollar amount for a doctor's office visit,
prescriptions or lab tests.
Health insurance and co-pay
not allocated for food or shelter
Discretionary income or budget surplus
interest added to principal – interest earned on interest
Compound Interest:
is when an investor has different type of investments (stocks, bonds, mutual funds, Treasury
Bills, etc..) it reduces risk of investing – not putting “all your eggs in one basket”
Diversification