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EPF M2 Review
Economics & Personal Finance Module 2 Review
| Term | Definition |
|---|---|
| Wants | Things we would like to have but not necessary for survival. |
| Needs | Things required for survival including food, water, and shelter. |
| Mandatory Spending | Money that must be spent to meet needs in a budget. |
| Discretionary Spending | Money spent on wants in a budget. |
| Fixed Expenses | Costs that stay the same every month like mortgage or rent. |
| Variable Expenses | Costs that change from one month to the next like a water bill. |
| Budget | A plan for spending money based on income. |
| Debt | Spending more money than comes in as income. |
| Lease | Contract that allows you to use a car for a specified period of time for a monthly payment. |
| Landlord | The owner of a property who rents it out to another person for a monthly sum of money. |
| Tenant | Person who pays monthly sum of money to a property owner for the use of their home or apartment. |
| Lease Agreement | Legally binding agreement signed by landlord and tenant to specify amount of rent and responsibilities of each party. |
| Renter's Insurance | Insurance that protects the value of a tenant’s belongings in case of fire or other damage to rental property. |
| Fixed Rate Mortgage | Loan from a lender with an interest rate that will not change over time. |
| Adjustable Rate Mortgage | Loan from a lender with a fixed rate for a specific amount of time: after that time period, rate adjusts based on market interest rate. |
| Annual Percentage Rate | The rate of interest that a lender will charge a borrower for a loan. |
| Amortization Schedule | A schedule that shows how much interest and principal are paid each month over the life of a loan. |
| Principal | Actual amount of money borrowed from a lender. |
| Interest | Cost of borrowing money from a lender. |
| Down Payment | Amount of money paid by a borrower towards the purchase of a house or car. |
| Closing Costs | Attorneys’ fees, cost of inspections, and cost of a mortgage all paid at the closing or signing of the contract. |
| Refinance | Changing the terms of a loan usually to obtain a lower interest rate or change the lending period. |
| Home Equity Loan | Loan offered based on the value obtained through payments on a mortgage or an increase in property value. |
| Money Market Account | A type of savings account that requires a minimum balance and typically pays higher interest than a general savings account. |
| Certificate of Deposit | A form of savings that requires an amount of money for a specific time period. |
| Direct Deposit | A paycheck from an employer is directly deposited into an employee’s checking account. |
| Overdraft Protection | Service offered by banks when there is not enough money in an account to cover all of the transactions; also a way that banks make money through charging fees. |
| Debit Card | Card that can be used for transactions where the money comes directly out of the checking or savings account. |
| Credit Card | Card that uses borrowed funds from a lender to pay for transactions; money must be paid back plus interest. |
| Secured Credit Card | A type of credit card that may be offered to someone with poor credit; requires a refundable cash deposit. |
| Insufficient Funds Fee | Fee incurred by obtaining a negative balance in a checking account; may also be known as a bounced check. |
| Cryptocurrency | A form of digital currency where users can make direct exchanges without the need for a third party. |
| Collateral | Item of value offered as a guarantee that a borrower will pay back a loan; houses and cars are commonly used for this. |
| Secured Credit | Loan with collateral offered as security for payment. |
| Installment Credit | Credit where the total amount of the loan is divided over a fixed time period into equal monthly payments |
| Revolving Credit | Credit that is based on a fixed limit and charges are made on a continuing basis; credit cards are an example. |
| Foreclosure | When a mortgage is not paid, the lender can take possession of the home and re-sell it to recover their investment. |
| Unsecured Credit | Loan that has no collateral. |
| Home Equity Line of Credit | Loan on the equity of the home that can be used like a credit card on a revolving basis. |
| Equity | Stored value of an asset; for example, if a home valued at $150,000 had $40,000 paid on it, the equity is the $40,000. |
| Bankruptcy | Legal process to eliminate an individual or business’s debt. |
| Executor | The person responsible for carrying out the actions of a will. |
| Beneficiary | Person who will benefit financially from an insurance policy payout. |
| Premium | Monthly sum of money paid for an insurance policy whether the policy is used or not. |
| Deductible | The amount of money an individual must pay when using an insurance policy before the company will pay its portion. |
| Insurance | Financial protection from life events that could be devastating financially for a person without coverage. |
| Will | Legal document that determines what happens with a person’s assets when they die. |
| Estate | All of the financial assets and debts that a person has at the end of their life. |
| Claim | Filed after an event that requires an insurance policy to go into effect. |
Created by:
dmcsorley13
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