Finance Basics
Money owed to another person or company
What is debt?
The amount by which the value of a person’s assets exceeds or falls behind the value of their liabilities
What is net worth?
Anything that is owned by an individual, including money in the bank or investments.
What is an asset?
A plan of action that allows a person to meet not only their immediate needs but also their long-term goals
What is a financial plan?
Your home is appraised for $325,000 and you have a mortgage balance of $200,000. This is the equity you have in your home.
What is $125,000.
A person or organization that uses a product or service
What is a Consumer?
This is an expression used to describe a person or household whose monthly income is devoted to expenses and has little to no savings.
What is "paycheck-to-paycheck"?
This is any financial debt or obligation.
What is liability?
The knowledge and skill base necessary for people to be informed consumers and manage their finances effectively
What is financial literacy?
As a high school senior, you owe $11,000 on your car, have $100 in savings, $1,000 in credit card debt, and college tuition is due in 8 months. According to Ramsey, this is the first financial goal you should accomplish.
What is save $500 in an emergency fund?
All of the financial decisions an individual or family must make in order to earn, budget, save, spend, and give money over time
What is Personal Finance?
This is when then dollar value of a person’s assets is greater than the dollar value of their liabilities.
What is positive net worth?
The cost of goods or services; money paid out.
What is an expense?
In high school, the first foundation of a solid financial plan is to create an emergency fund with this much money in it.
What is $500?
You have $10,000 in credit card debt, owe $20,000 on a car valued at $15,000, have $2,000 in savings, $1,000 in your checking account, and no other significant assets. This is your net worth.
What is -$12,000?
The granting of a loan and the creation of debt; any form of deferred payment
What is credit?
This is when the dollar value of a person’s liabilities is larger than the value of their assets.
What is negative net worth?
This is the percentage of principal charged by the lender for use of its money.
What is interest rate?
This is second foundation of financial literacy.
What is get out of debt and stay out of debt?
Joe said, "I'm going to save money for a car by next January by putting aside money every month." In order to set a solid, actionable goal, Joe needs to do this to his goal.
What is make it specific?
The additional cost a lender charges for borrowing their money
What is interest?
This is what a person earns after payroll taxes and other deductions are taken out; often referred to as take-home pay.
What is net income?
This is a person or entity that charges borrowers interest rates above an established legal rate.
What is a loan shark?
As hard as it may seem, Ramsey teaches that the third and fourth foundations are to pay cash for these.
What are your car and college?
To know your net worth, you must calculate your assets and these.
What are liabilities?