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*Disposable Income

Income after taxes

*Budget

A plan on how to save and spend your money

*Mortgage

Loan on a house or real estate property

*Variable expense

kinds of spending that can be controlled and typically change from month to month.

*Discretionary Income

Income that is left over after taxes AND aconsumer's necessary expenses

*Fixed expense

expenses which stay basically the same from month to month, such as housing and transportation.

*Debt Snowball

When you pay off your smallest debt first and then use that money to pay off your 2nd biggest debt and then...

*Emergency Fund

a savings account you can access quickly to pay for unexpected expenses or emergencies

Pawn Shop

A place where customers lend personal property in exchange for money

Title Loan

A high-cost, short-term loan that uses the borrower's automobile as collateral.

Traditional Bank

the most common financial institution used by consumers

Wealth

the total value of everything someone owns, minus the debts

Zero-based budget

A budget that accounts for every dollar earned. The amount coming in matches the amount going out or saved.

income

A persons wealth in money

Rate, amount, and time

The factors that affect the growth of an investment

functions of money

Medium of exchange, store of value, measure of value are all...______________

Interest

The price of money on a loan or the money earned on an investment

Debit Card

a card used to withdraw money from a checking account

Liquidity

ability to converted an asset into cash quickly and at a low cost

Overdraft

When someone has insufficient funds to cover the full amount of the check they wrote

Simple Interest

interest paid on the principal alone

Rule of 72

A mathematical equation that can be used to show how long it will take to double your money in an investment given the interest rate

Individual Retirement Arrangement (account)

What IRA stands for

401(k)

A contribution plan that automatically takes out money from an employee's paycheck before income taxes and invests it in mutual funds for purposes of retirement savings (this is the most common kind)

Matching contribution

Money your employer adds to your retirement savings account, such as a 401(k)...usually as a % of your gross income.

Start early, Buy and Hold, Diversify

the three rule of investing

assets

anything of value that is owned

liability

anything that you do not fully own (debt)

Compound Interest

Interest paid on the principal and on interest earned previously

Risk

Most interest rates on loans are primarily based off this "R" word

debt avalanche

pay off debts progressively, starting with the highest INTEREST RATE first

Ramsey's 7 steps to financial peace

1. $1000 in an emergency fund 2. Pay of debt (snowball) 3. 3-6 months of savings 4. 15% of income toward retirement in a ROTH 5. College funding 6. Pay off home early 7. Build Wealth and give back

Principal

the original amount of a debt on which interest is calculated OR the amount of money that is put into an investment

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