General Terms
personal finance
process of planning, spending, financing, and investing so as to optimize your financial situation
Assests
What you own
To determine future value of an amount of money deposited today, must know...
-Amount of deposit today
-Interest rate to be earned on the deposit
-Number of years it'll be invested
Credit Limit
A rating used by credit reporting companies to help lenders decide whether and/or how much credit can be extended to a borrower.
Coverage limit
applies to the amount of protection you have through an insurance company in an event of a loss
Credit
an arrangement to receive cash, goods, or services now and pay for them in the future
Liabilities
What you owe
Stocks
Certificates representing partial ownership in a firm
APR
Annual Percentage Rate-cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a loan
Deductible
amount you have to pay out-of-pocket for expenses before the insurance company will begin to cover all or a portion of remaining costs
Credit Management
Decisions regarding how much credit to obtain to support your spending and which source of credit to use
Net worth
(Value of what you own) - (Value of what you owe)
Diversification
to spread around one's investments dollars among several different classes of financial assets and among the securities of many issuers; results in lowered risk
Compound interest
interest paid on interest previously earned; credited daily, monthly, etc
Claim
a formal request to an insurance company for coverage or compensation for a covered loss or policy event
Bankruptcy
legal procedure for dealing with debt problems of individuals and businesses; specifically a legal court case filed under one of the chapters of title II of the u.s code
Liquid assets
Access to funds to cover any short term cash deficiencies
Bonds
Certificates issued by borrower, usually firms and government agencies, to raise funds
Grace period
time period during which a borrower can pay the full balance of a credit due with no finance charges
Premium
amount paid on an insurance policy per a given time period
Emergency fund
6 months worth of expenses
Debt-to-Asset Ratio
-Measures debt level
(total liabilities) / (total assets)
-Higher ratio=Higher debt relative to assets
Dividend
distribution of a portion of a company's earnings, decided by board of directors, to a class of its shareholders; generally distributed in form of cash/stock
Default
Failure to fulfill a duty or promise as specified in the Promissory Note and/or Deed of Trust.
Appraisal
Process that determines the value of property, or the extent of damage, usually performed by an impartial expert