MONEY MANAGEMENT

WORD OF THE DAY 8-)

1.) EARNED INCOME: THE MONEY A PERSON RECEIVES FOR WORKING.

“WHEN FILING HIS TAX RETURN, JOHAN HAD TO ADD UP ALL HIS EARNED INCOME IN ORDER TO DETERMINE HIS TAX.”

2.) DEBIT CARD: A CARD ISSUED BY A BANK THAT ALLOWS PEOPLE TO WITHDRAW MONEY OR TO PAY FOR PURCHASES FROM THEIR CHECKING OR SAVINGS ACCOUNT.

“WHILE SHOPPING FOR HER HUSBAND’S BIRTHDAY, SASHA USED HER DEBIT CARD TO PURCHASE ALL HER GIFTS.”

3.) INFLATION: THE GENERAL RAISE IN THE LEVEL OF PRICES FOR GOODS AND SERVICES OVER TIME.

“WHEN INFLATION RISES, THE PRICES OF GOODS GO UP, OFTEN CAUSING PUBLIC ANGER OVER ECONOMIC POLICIES.”

4.) LIABILITY: THE LEGAL RESPONSIBILITY FOR THE FINANCIAL COST OF ANOTHER PERSON’S LOSSES OR INJURIES.

“WHEN TAKING OUT INSURANCE, IT IS LAW THAT LIABILITY INSURANCE BE INCLUDED IN YOUR POLICY.”

5.) COPAYMENT: A FLAT FEE THAT A PERSON PAYS EVERY TIME THEY RECEIVE A MEDICAL SERVICE COVERED UNDER THEIR HEALTH INSURANCE.

“THE COUPLE WERE HAPPY TO MAKE THEIR COPAYMENT AFTER THEIR CHILD WAS ADMITTED TO THE HOSPITAL.”

6.) EXCLUSION: AN AMOUNT OF INCOME THAT IS NOT INCLUDED IN A PERSON’S GROSS INCOME & IS NOT SUBJECT TO TAXES.

“THE BUSINESS DECIDED TO GIVE AN EXCLUSION IN THEIR PAY TO THEIR EMPLOYEES TO HELP WITH THEIR RETIREMENT.”

7.) OPERATING COSTS: THE ONGOING EXPENSES THAT A PERSON EXPECTS TO HAVE OPERATING A BUSINESS.

“DESPITE ALL THE OTHER PAYMENTS, SHE WAS SURPRISED AT HOW MUCH CAPITAL SHE USED FOR HER ORIGINAL OPERATING COSTS.”

8.)SECURITY DEPOSIT: AN AMOUNT OF MONEY PAID TO THE OWNER OF A RENTAL PROPERTY BY A TENANT TO GUARD AGAINST ANY FINANCIAL LOSS THE TENANT MAY CAUSE.

“AFTER NUMEROUS SEARCHES, THEY DECIDED ON THE TWO BEDROOM APARTMENT BECAUSE THE SECURITY DEPOSIT WAS LESS.”

9.)DEFICIT: THE SITUATION THAT OCCURS IF A PERSON SPENDS MORE THAN THEY EARN OR RECEIVE.

“AFTER SEVERAL ENTRIES INTO HIS LEDGER, THE ACCOUNTANT COULD EASILY SEE THE COMPANY HAD A HIGH DEFICIT.”

10.)HEIRS: THE PEOPLE THAT HAVE THE LEGAL RIGHT TO A PERSON’S ASSETS WHEN THEY DIE.

“AS LEGAL HEIRS TO THE ESTATE, THE TWO SISTERS WHERE OBLIGATED TO DEAL WITH THE DEBTS OWED BY THE DECEASED.”

11.)INTERNSHIP: A POSITION IN WHICH A PERSON RECEIVES TRAINING BY WORKING WITH PEOPLE WHO ARE EXPERIENCED IN THAT PARTICULAR FIELD.

“SHE WAS REQUIRED TO COMPLETE HER INTERNSHIP AT THE RADIO STATION BEFORE SHE WAS ALLOWED TO GRADUATE.”

12.) PROFIT: THE AMOUNT OF MONEY EARNED OVER AND ABOVE THE AMOUNT SPENT TO KEEP A BUSINESS OPERATING.

“DESPITE LOOMING DEFECITS, THE COMPANY WAS REPORTING FAIR PROFITS FOR THE THIRD QUARTER OF BUSINESS.”

13.) DOUBLE INDEMNITY: AN ADDITION TO A LIFE INSURANCE POLICY THAT PAYS TWICE THE VALUE OF THE POLICY IF THE PERSON COVERED BY THE POLICY IS KILLED IN AN ACCIDENT.

“ THOUGH THE INSURANCE COMPANY WOULD BE BURDENED, THEY KNEW THEIR CLIENT WAS COVERED BY DOUBLE INDEMNITY.”

14.) ENDOWMENT: LIFE INSURANCE THAT PROVIDES COVERAGE FOR A SPECIFIC PERIOD OF TIME TO THE POLICYHOLDER IF THEY ARE STILL LIVING AT THE END OF THE ENDOWMENT PERIOD.

“AFTER THEIR MARRIAGE, THE INSURANCE PROVIDER STATED THEIR ENDOWMENT TO LAST FOR 25 YEARS.”

15.) COMMON STOCK: TYPE OF STOCK THAT PROVIDES THE MOST BASIC FORM OF OWNERSHIP AND ENTITLES THE OWNER TO VOTING PRIVILEGES.

“THE INVESTOR TRIED TO ENCOURAGE ALL OF HIS CLIENTS TO INVEST MOSTLY IN COMMON STOCKS.”

16.) NETWORKING: A WAY OF MAKING AND USING CONTACTS TO GAIN JOB INFORMATION AND ADVICE.

“AFTER SHE GRADUATED COLLEGE, SHE FELT THAT SHE NEEDED TO GAIN A LARGER NETWORK OF MENTORS TO HELP WITH HER CAREER CHOICE.”

17.) DIRECT DEPOSIT: THE PROCESS OF AUTOMATICALLY DEPOSITING NET PAY IN AN EMPLOYEE’S DESIGNATED BANK ACCOUNT.

“DURING THE CLOSING OF HER NEW LOAN, SHE WAS ASKED TO USE DIRECT DEPOSIT FOR HER MONTHLY PAYCHECK TO ENSURE PROMPT PAYMENT ON THAT LOAN.”

18.) CO-SIGNING: AGREEING TO BE RESPONSIBLE FOR LOAN PAYMENTS IF THE BORROWER FAILS TO MAKE THEM.

“THE TEEN WAS ANXIOUS TO BUY A CAR, BUT SHE NEEDED A CO-SIGNER TO COMPLETE THE LOAN.”

19.) MEDIATION: THE ATTEMPT BY A NEUTRAL 3^RD PARTY TO RESOLVE CONFLICT BETWEEN 2 PARTIES THROUGH DISCUSSION & NEGOTIATION.

“THE ATHLETE DECIDED TO PURSUE MEDIATION TO DETERMINE HIS NEWEST CONTRACT’S MONETARY WORTH.”

20.) SALARY: A FIXED AMOUNT OF MONEY PAID TO AN EMPLOYEE FOR EACH PAY PERIOD.

“PART OF HIS CONTRACT AS A MANAGEMENT TRAINEE WAS TO ACCEPT A SET SALARY AMOUNT FOR THE LENGTH OF HIS CONTRACT.”

21.) TAX CREDIT: AN AMOUNT SUBTRACTED DIRECTLY FROM THE AMOUNT OF TAXES A PERSON OWES.

“IN ORDER TO MANAGE HER FINANCES BETTER, SHE SET UP A MONTHLY TAX CREDIT TO PAY FOR HER INCOME TAXES.”

22.) DOWN PAYMENT: A PORTION OF THE TOTAL COST OF AN ITEM THAT MUST BE PAID AT THE TIME OF ITS PURCHASE.

“IN ORDER FOR THE COUPLE TO PURCHASE THE NEW HOUSE, A 20% DOWN PAYMENT WAS REQUIRED.”

23.) ITEMIZED DEDUCTION: A SPECIFIC EXPENSE THAT A PERSON DEDUCTS FROM THEIR ADJUSTED GROSS INCOME.

“AFTER PLANNING THE BUDGET, SHE USED HER MORTGAGE INTEREST AS AN ITEMIZED DEDUCTION TO COMPLETE HER PLANNING.”

24.) NEGLIGENCE: THE FAILURE TO TAKE ORDINARY OR REASONABLE CARE TO PREVENT ACCIDENTS FROM HAPPENING.

“AFTER THE COURT APPEARANCE, THE JUDGE DECIDED THAT THE LANDLORD WAS GUILTY OF NEGLIGENCE.”

25.) PAYROLL: A LIST OF EMPLOYEES AND THE PAYMENTS DUE TO EACH EMPLOYEE FOR A SPECIFIC TIME PERIOD.

“HER NEW JOB DUTIES INCLUDED TAKING CARE OF THE PAYROLL FOR THE ACCOUNTING DIVISION.”

26.) DIVIDENDS: DISTRIBUTIONS OF MONEY, STOCK, OR OTHER PROPERTY THAT A CORPORATION SOMETIMES PAYS TO STOCKHOLDERS.

“ONE OF THE INFLUENCING DECISIONS CAME BECAUSE THAT COMPANY OFFERED STOCK DIVIDENDS.”

27.) ESTATE TAX: A TAX COLLECTED BY FEDERAL AND STATE GOVERNMENTS ON SPECIFIC GOODS AND SERVICES.

“AFTER LONG DEBATE, CONGRESS DECIDED THAT THEY COULD NOT LOSE THE FUNDING FROM THE ESTATE TAX.”

28.) MENTOR: AN EXPERIENCED EMPLOYEE WHO SERVES AS A TEACHER AND COUNSELOR FOR A LESS EXPERIENCED PERSON.

“UPON BEING HIRED FOR HER NEW POSITION, SHE WAS IMMEDIATELY ASSIGNED A MENTOR TO HELP HER ADJUST.”

29.) PENSION PLAN: A RETIREMENT PLAN THAT IS FUNDED AT LEAST IN PART BY AN EMPLOYER.

“PART OF HIS DECISION FOR ACCEPTING HIS JOB WAS THAT THE COMPANY OFFERED AN EXCELLENT PENSION PLAN.”

30.) TITLE INSURANCE: TYPE OF INSURANCE THAT PROTECTS A HOME BUYER IN THE EVENT OF PROBLEMS WITH THE TITLE FOUND IN THE FUTURE.

“THE SIGNING OF THE HOME LOAN WAS CONTINGENT ON THE TITLE INSURANCE BEING CLEAR AND FREE.”

31.) SMALL CLAIMS COURT: A COURT THAT DEALS WITH LEGAL DISPUTES THAT INVOLVE AMOUNTS BELOW A CERTAIN LIMIT.

“THE CASE IN SMALL CLAIMS COURT DEALT WITH A MINOR CAR ACCIDENT IN WHICH THE DEFENDANT WANTED $300 IN DAMAGES.”

32.) MONEY MARKET ACCOUNT: A SAVINGS ACCOUNT IN WHICH THE INTEREST RATE VARIES AS THE MARKET CHANGES.

“THE INVESTOR DECIDED TO MOVE MUCH OF HIS ASSETS INTO A MONEY MARKET ACCOUNT AS THE MARKET WAS DOING VERY WELL.

33.) FREE ENTERPRISE SYSTEM: A SYSTEM IN WHICH PEOPLE ARE FREE TO CHOOSE WHAT THEY WILL BUY, WHAT THEY PRODUCE AND SELL, AND WHERE THEY WORK.

“AFTER MORE THAN 70 YEARS OF COMMUNIST CONTROL, THE SOVIET UNION MOVED TO A FREE ENTERPRISE SYSTEM IN THE EARLY 1990’S.”

34.) INSURANCE COMPANY: A RISK-SHARING BUSINESS THAT AGREES TO PAY FOR LOSSES THAT MAY HAPPEN TO SOMEONE THAT IT INSURES.

“ONE OF THE BIGGEST COSTS TO INSURANCE COMPANIES IS THE HIGH AMOUNT OF ACCIDENTS FROM THE FIRST TIME/TEEN DRIVERS.

35.) CREDIT RATING: A MEASURE OF PERSON’S ABILITY AND WILLINGNESS TO MAKE CREDIT PAYMENTS ON TIME.

“IN ORDER TO QUALIFY FOR THE NEW-CAR LOAN, SHE HAD TO HAVE HER CREDIT RATING VERIFIED.”

36.) CREDIT UNION: A NONPROFIT FINANCIAL INSTITUTION THAT IS OWNED BY ITS MEMBERS AND ORGANIZED FOR THEIR BENEFIT.

“AFTER BECOMING A WORKER AT BOEING, THE WORKERS WERE ELIGIBLE FOR A MEMBERSHIP IN THEIR CREDIT UNION.”

37.) EQUITY: THE VALUE OF A HOME MINUS THE AMOUNT STILL OWED ON THE MONEY BORROWED TO PURCHASE IT.

“AFTER THE GARAGE REMODEL AND WINDOW UPGRADES, THE COUPLE HAD INCREASED THEIR OVERALL EQUITY.”

38.) PAY PERIOD: THE SPECIFIC PERIOD OF TIME OVER WHICH A BUSINESS PAYS ITS EMPLOYEES.

“ONE BENEFIT OF HIS NEW JOB WAS THAT HIS NEW PAY PERIOD WAS EVERY TWO WEEKS, AS OPPOSED TO ONLY ONCE A MONTH.”

39.) LIABILITIES: THE DEBTS THAT A PERSON OWES, INCLUDING SHORT TERM & LONG TERM DEBTS.

“WHEN PREPARING HER UPDATED BUDGET, SHE HAD TO INCLUDE ALL OF HER CURRENT LIABILITIES.”

40.) MEMORIAL DAY: THE LAST MONDAY IN MAY SET ASIDE SERVING TO PRESERVE REMEMBRANCE, COMMEMORATIVE.

“MEMORIAL DAY WHERE MAY 29 IS FORMERLY OBSERVED AS A LEGAL HOLIDAY IN MOST STATES OF THE U.S. IN REMEMBRANCE OF WAR DEAD.”

41.) BEAR MARKET – A MARKET CHARACTERIZED BY FALLING PRICES AND INVESTOR PESSIMISM.

“INVESTORS BECAME NEGATIVE ABOUT THE OVERALL ECONOMY AND BEGAN TO SELL THEIR STOCKS IN THE BEAR MARKET.”

42.) BULL MARKET – A PROLONGED PERIOD OF RISING STOCK PRICES AND A GENERAL FEELING OF INVESTOR OPTIMISM.

“BECAUSE OF THE CONFIDENCE IN HOW THE COUNTRY WAS DOING, THE BULL MARKET DROVE UP STOCK PRICES.”

43.) BAIT AND SWITCH – AN ILLEGAL SALES TECHNIQUE IN WHICH A SELLER ADVERTISES A PRODUCT WITH THE INTENTION OF PERSUADING CONSUMERS TO BUY A MORE EXPENSIVE PRODUCT.

“LES SCHWAB OFTEN TIMES WILL ADVERTISE A SET OF 4 TIRES FOR UNDER $100 IN ORDER TO BRING CUSTOMERS IN THE DOOR WHERE THEY CAN SELL THEM A BETTER SET AT A HIGHER PRICE.”

44.) CREDIT: MONEY BORROWED TO BUY SOMETHING NOW, WITH THE AGREEMENT TO PAY FOR IT LATER.

“CREDIT IS SERIOUS BECAUSE IT IS MONEY YOU HAVE TO PAY BACK IN THE FUTURE. IT TIES UP FUTURE INCOME AND COSTS MORE THAN JUST PAYING FOR SOMETHING OUTRIGHT.”

45.) FINANCE CHARGE: THE INTEREST YOU PAY FOR THE USE OF CREDIT.

“THE FINANCE CHARGES ARE ALSO CALLED HANDLING CHARGES, SERVICE CHARGES, OR CARRYING CHARGES.”

46.) GRACE PERIOD: ALSO KNOWN AS A FREE PERIOD, ALLOWS YOU TO AVOID THE FINANCE CHARGE BY PAYING YOUR CURRENT BALANCE IN FULL BEFORE THE DUE DATE SHOWN ON YOUR BILLING STATEMENT.

“KNOWING WHETHER A CREDIT CARD PLAN GIVES YOU A GRACE PERIOD IS ESPECIALLY IMPORTANT IF YOU PLAN ON AVOIDING INTEREST PAYMENTS.”

47.) CREDITOR: A PERSON OR COMPANY THAT GIVES YOU CREDIT.

“DO YOU PAY YOUR BILLS ON TIME, DO YOU PAY YOUR DEBTS ACCORDING TO THE LOAN AGREEMENT, HOW MUCH DO YOU OWE, ARE ALL QUESTIONS A CREDITOR MAY ASK YOU ABOUT YOUR PAST CREDIT PERFORMANCE.”

48.) THE CONSUMER CREDIT PROTECTION ACT OF 1968: ALSO KNOWN AS THE TRUTH-IN-LENDING LAW, REQUIRES CONSUMERS TO BE FULLY INFORMED ABOUT THE COST OF A CREDIT PURCHASE BEFORE AN AGREEMENT IS SIGNED.

“THE CONSUMER CREDIT PROTECTION ACT WAS CREATED TO PROTECT CONSUMERS FROM BEING LOCKED INTO A MAJOR TRANSACTION THAT THEY DO NOT HAVE THE RIGHT INFORMATION TO MAKE A WISE DECISION.”

49.) UMBRELLA POLICY : INSURANCE THAT SUPPLEMENTS BASIC AUTO AND PROPERTY LIABILITY COVERAGE BY EXPANDING REIMBURSEMENT LIMITS AND INCLUDING SOME RISKS THAT WERE EXCLUDED IN THE BASIC COVEREAGE.

“IT IS A GOOD THING THAT LEE ROY ADDED THE UMBRELLA POLICY TO COVER ALL THE EXTRA EXPENSES HE INCURRED AFTER THE ACCIDENT.”

50.) ANNUITY: A CONTRACT SOLD BY AN INSURANCE COMPANY THAT PROVIDES THE INVESTOR WITH A SERIES OF REGULAR PAYMENTS, USUALLY AFTER RETIREMENT.

“YOU USUALLY BUY AN ANNUITY DIRECTLY FROM A LIFE INSURANCE COMPANY WHO PROVIDES YOU WITH REGULARY INCOME PAYMENTS THAT CONTINUE FOR AS LONG AS YOU LIVE.”