Budget
(Noun) A plan for managing income and expenses
(Verb) To plan or to manage income and expenses
Income
Earnings or payment received for resources provided such as labor
Expenses
Costs incurred or the spending of money
Fixed Expenses
Expenses or amounts you have already committed to spending that generally stay the same from month to month.
Variable Expenses
Expenses or amounts that you are not committed to spend that generally change from month to month.
Deficit
The amount by which expenses exceed income or costs exceed revenues.
Discretionary Income
The amount of the individual's income that is left for spending, investing or saving after taxes and personal necessities(such as food, shelter, and clothing)
Disposable Income
The amount of money that households have available for spending and saving after income taxes have been accounted.
Emergency Fund
An account that is used to set aside funds to be used in an emergency, such as the loss of a job, an illness or a major expense
Goals
A desired end towards which efforts are directed
Short Term Goals
Goals you can accomplish in the near future; usually within 1 to 3 months
Intermediary Goal
Goals you can accomplish within 3 months to a year
Long Term Goal
Goals that usually take 1+ years to accomplish
Wants
Something that people desire but is not necessary to survive
Needs
Something essential for survival such as food, clothing, and medical care
Opportunity Costs
The value of what you are willing to give up to achieve something else
Pay Yourself First
Set aside a certain amount of money (recommended 20%) into your savings account before spending on needs and wants; paying yourself before you begin paying your monthly living expenses and making discretionary purchases
Spending Plan
A strategy for saving and spending money
Surplus
The amount of an asset or resource that exceeds the portion that is utilized. A surplus often occurs in a budget, when expenses are less than the income taken in, or in inventory when fewer supplies are used than were retained.
Trade Off
The alternatives that we give up when we choose one course of action over another
Annual Percentage Rate (APR)
A finance charge, or the cost of credit, expressed as an annual rate
Buying Power
The ability to purchase or invest, usually depending on income
Compound Interest
Interest calculated on both the principal and interest previously earned
Simple Interest
Interest computed only on the principal amount (initial amount)
Interest
Earnings on principal; or the price paid for the use of borrowed money
Interest Rates
The amount earned (or charged), expressed as a percentage or principal
Principal
The amount deposited on which interest will be paid; the total amount borrowed
Rule Of 72
A method of finding the number of years required to double your money at a given interest rate. You can do the same process to find the interest rate require to double your money at a given number of years
Time Value of Money
The idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity; provided money can earn interest, any amount of money is worth more the sooner it is received
FDIC (Federal Deposit Insurance Corporation)
The government agency that insures customer deposits if a bank fails (currently insured up to $250,000)
Federal Reserve
The central bank of the United States; responsible for creating and tracking all the money in circulation in the United States)
Capacity
The ability or capability to repay a loan
Collateral
Capital or assets that can be used to repay a loan
Character
Fro your credit history, a lender may decide whether you possess the honesty and reliability to repay a debt
APR (Annual Percentage Rate)
The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents the actual yearly costs of funds over the term of a loan. This includes any fees or additional costs associated with the transact
Auto Finance Companies
Provides inventory financing services for retail or wholesale automotive dealers.
Balance Owed
The total amount of money owed to a third party such as a credit card company, utility company, mortgage banker or other type of lender or creditor.
Bankruptcy
A legal process in which you declare yourself legaly unable to pay your outstanding debts
Chapter 7 Bankruptcy
A process of wiping out most debts, include those owed to credit card companies and doctors or hospitals. Secured or "fixed" debts such as mortgages,[ student loans, taxes, and child support are not erased.
Chapter 11 Bankruptcy
A form of bankruptcy that involves a reorganization of a business's debts, affairs and assets.
Chapter 13 Bankruptcy
A reorganization bankruptcy for individuals that allow debtors to keep most of their property and use their income to pay a portion of their debts over three to five years.
Cash Advance
A service provided by many credit card issuers allowing cardholders to withdraw a certain amount of cash, either through an ATM or directly from a bank or other financial agency. Cash advances typically carry a high interest rate - even higher than the cr
Charge Card
A card that charges no interest but requires the user to pay his/her balance in full open receipt of the statement, usually[ on a monthly basis.
Consolidation Loan
The act of combining several loans or liabilities into one loan.
Consumer Credit Counseling Services (CCCS)
Personalized counseling services that provide guidance and support for those who have gotten in over their heads financially. Legitimate credit counseling firms are affiliated with the National Foundation for Credit Counseling or the Association of Indepe
Consumer debt
Debts that are owed as a result of purchasing goods that are consumable
Co-signed debt
A loan in which another individual promises to pay if the borrower fails to repay
Credit Card Companies
Companies MasterCard, Visa, and Discover that issue credit cards that give users options to borrow funds
Credit history
A record of your credit transactions over the past seven to ten years
Credit rating
A measure of creditworthiness based on an analysis of your credit and financial history
Credit report
A written statement of a consumer's credit history, issuedd by a credit bureau.
Credit reporting agency
Businesses that maintain historical information pertaining to credit experience on individuals or businesses.
Credit score
The total of assigned points used to determine the likelihood that you will repay debt as agreed
Debtors anonymous
twelve step program for those who want to stop incurring unsecured debt
Default
To fail to pay back a debt
Due date
The date on which a payment is due.
Finance charge
The total dollar amount of all interest and fees you pay for the use of credit
Fixed interest rate
An interest rate on a liability, such as a loan or mortgage that remains fixed on either for the entire term of the loan or for part of this term
Foreclosure
Seizure of property from borrowers who are unable to repay their loans
Garnishment
A legal process that allows part of your paycheck to be withheld to pay a debt
Grace period
A timeframe within which you may pay your current balance in full and incur no interest charges
Home equity loan
A consumer loan secured by a second mortgage, allowing home owners to borrow against the equity in the home
Installment loan
A loan repaid with interest in equal periodic payments.
Late fee
A charge against a client by a company or organization for not paying a bill or returning a rented or borrowed item by its due date
Lien
A financial claim against a property
Credit limit
The amount of credit that a financial institution extends to a client
Line of credit
An arrangement in which a bank or vendor extends to specified amounts of unsecured credit to a specified borrower for a specific time period.
Liquidation
A type of bankruptcy where assets are sold and debts are paid as much as possible; there is no repayment plan
Low credit rating
Suggests a high probability of default
Minimum Payment
The smallest amount of a credit card bill that a consumer can pay, to remain in good standing with the credit card comapny
Mortgage
A specific type of loan used to buy real estate
Pawn shop
A legal business that makes high-interest loans based on the value of the personal possessions pledged as collateral
Pawn ticket
A receipt for items obtained by a pawnshop
Payday loan
A type of short-term borrowing where an individual borrows a small amount at a very high interest rate
Penalty
A very high interest rate charged by the credit card issuer where a borrower violates the card's terms and conditions
Predatory lending
Dishonest actions carried out by the lender to entice, induce and/or assist a borrower in taking a[ loan that carries high fees, a high interest rate, strips the borrower of equity, or places the borrower in a low credit rated loan to the benefit of the l
Prepayment
The satisfaction of a debt or installment payment before its official due date
Repossession
Retaking possession of something when a borrower defaults a payment
Revolving credit
The ability to continuously borrow money up to a certain amount. When the money is charged, the limit goes down. When the payments are made, the limit then goes back up. Any left-over balance at the end of the month will be charged interest.
Secured credit card
A type of credit card that is backed by a savings account used as collateral on the credit available with the card
Unsecured loan
Also known as the uncollateralized loan that issued and supported only by the borrower's creditworthiness, rather than by a type of collateral.
Title for goods
Legally established ownership to property.
Truth in Lending Act of 1968
A federal law that requires financial institution to disclose specific information about the terms and cost of credit
Usury
The act of lending money at an interest rate that is considered unreasonably high or that is higher than the rate permitted by law
Variable interest rate
An interest rate on a loan or security that fluctuates over time, because it is based on an underlying benchmark interest rate or index that changes periodically
Annual Deductible
The dollar amount you must pay each year before your insurance carrier will help you pay for your health care costs.
Automobile Insurance
An insurance policy purchased by vehicle owners to ease costs associated with getting into an auto accident
Beneficiary
Person specified in a life insurance policy to receive payment upon the death of an insured person
Claim
Formal request made to an insurance company for payment for a loss
Collision Coverage
Pas for damage to your car caused by colliding with another car or object. Collision coverage carries a deductible and is likely to be one of the most expensive portions of an automobile policy
Comprehensive Coverage
Pay for damage to your car caused by something other than a collision. Examples: earthquakes, fire, wind, hail, and floods
Co-payment (Co-Pay)
Under managed health care insurance, the specified amount you pay for particular services, regardless of the cost for those services
Death Benefit
Payment made to the beneficiary of a life insurance policy upon the death of the insured person
Deductible
The amount you pay for a loss before the insurance company pays anything
Disability Insurance
Insurance to replace your lost income when you cannot work because of an accident or illness
Homeowner's Insurance
Insurance that will provide personal property and liability protection for your home
Insurance
Risk management tool that limits financial loss due to illness, injury or damage in exchange for a premium
Insurance Benefit
The payments for your insurance provider guarantees to make after covered services under an insurance policy
Long-term Care Insurance
Insurance designed to cover the cost of a chronic illness or disability that laves you unable to care for yourself for an extended period. Premiums for long-term care are relatively high
Managed Care Heath Insurance
Also called prepaid health plans because you and your employer pay for health care coverage