Auto Loan
This popular budgeting rule suggests putting 50% of your income toward needs, 30% toward wants, and 20% toward savings.
What is the 50/30/20 rule?
This is the initial upfront payment made in cash when buying a car to reduce the total amount of the loan.
What is a down payment?
This specific type of loan is used by individuals to purchase a home or other piece of real estate.
What is a mortgage?
This three-digit number, ranging from 300 to 850, is used by lenders to evaluate how risky it is to loan you money.
What is a credit score? / FICO score
Albert Einstein famously called this mathematical concept the "eighth wonder of the world" because it allows you to earn interest on your principal plus any interest previously earned.
What is compound interest?
This term describes expenses that change from month to month, such as groceries, dining out, or gasoline.
What are variable expenses?
This option allows you to essentially "rent" a car from a dealership for a set number of years and miles instead of buying it outright.
What is a lease?
To avoid paying Private Mortgage Insurance (PMI), a homebuyer typically needs to provide a down payment of at least this percentage of the home's purchase price.
What is 20%?
Doing this basic task on time every month is the single most important way to build a high credit score.
What is paying your bills?
This 3-letter acronym represents the total yearly cost of borrowing money on a loan or credit card, including both the base interest rate and any required fees.
What is APR? / Annual Percentage Rate
Financial experts recommend building a fund containing 3 to 6 months' worth of living expenses to cover unexpected events like job loss or medical bills.
What is an emergency fund?
This 3-letter acronym represents the actual yearly cost of funds over the life of a loan, including interest and fees.
What is APR? / Annual Percentage Rate
This type of mortgage keeps the exact same interest rate for the entire lifespan of the loan, usually lasting 15 or 30 years.
What is a fixed-rate mortgage?
Unlike a credit card, which borrows money from a bank, this type of plastic card takes money immediately out of your own checking account.
What is a debit card?
When you borrow money, is the extra fee you pay to the bank. When you save money, is the extra money paid to this person.
What is interest?
This type of expense remains the same amount every month, such as rent or a standard insurance premium.
What is a fixed expense?
Because a new car loses value the moment it is driven off the lot, it is subject to this economic concept.
What is depreciation?
This term refers to the actual amount of money you originally borrow from a bank, before any interest or fees are added to it.
What is the principal?
This is the maximum amount of money a credit card company will let you borrow or spend on your card at any given time.
What is a credit limit?
This acronym represents the actual rate of return an investor earns on a savings account or investment over one year, taking the effects of compounding into account.
What is APY? / Annual Percentage Yield
his strict budgeting method requires you to assign every single dollar of your monthly income a specific purpose before the month begins, leaving a net balance of zero
What is zero-based budgeting?
This classic cash-management system involves placing physical cash into labeled paper holders for different spending categories to prevent overspending on debit cards.
What is the envelope system?
This type of mortgage features an interest rate that can change periodically based on the market, often starting lower than standard fixed rates before shifting.
What is an ARM? / Adjustable-Rate Mortgage
This legal process allows a consumer or business to erase or restructure their debts when they are completely unable to repay them, heavily damaging their credit score for up to 10 years.
What is bankruptcy?
While a fixed rate stays the same forever, this type of interest rate goes up or down depending on market conditions.
What is a variable interest rate?