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GFL Test Review
| Term | Definition |
|---|---|
| conformation bias | look for the answer that fits your narrative |
| loss aversion | the loss hurts more than the gain |
| FOMO | fear of missing out- doing something just because your friends are |
| heard mentality | following the crowd |
| anchoring effect | having an idea be put in your head than sticking to it when making decisions |
| endowment effect | putting more value on something that is yours |
| overconfidence bias | thinking you can do anything when in reality you cant |
| cognitive bias | having shortcuts in your brain to make life easier |
| hedonic adaptation | the idea that if you accomplish something, it will make you happy |
| banking desert | having no accessible banks or not being a part of the banking system= no loan, credit, and cant cash checks + debt and fees |
| 4 main types of taxes | federal, state, social security, and medicare |
| what is a progressive taxation | it adapts to income/ higher income=higher tax bracket payment lower income=lower tax bracket payment |
| what is regressive taxation | straight tax/ meaning it stays the same |
| is Utah a progressive or regressive taxed state | it depends because we offer credit but it is generally or technically |
| what is a deduction | money we do not have to pay taxes on (lowers tax liability) |
| AGI | adjusted gross income |
| Gross and Net income | gross= total income before tax Net= total income after tax |
| bank savings | has low interest and easy access/liquidity |
| money market account | better interest rates |
| certificate of deposit/ CD | locked up for a term- 3m, 6m, 12m |
| bonds | buying debt- government and cooperate and cooperate is higher risk |
| index funds | holds multiple stocks |
| mutual funds | similar to an index fund that is actively managed with higher fees |
| stocks | buying an ownership of a company |
| roth | post tax account |
| 401k | pre tax retirement account usually through your work |
| 529 | post tax savings account for college |
| insurance | transfer of risk |
| health insurance | helps for when your sick or injured |
| FSA | you have to spend all the money within the year and it has a low deductible |
| HSA | you get to keep the money and invest it and it has a high deductible |
| long term disability | payed over a long period of time |
| short term disability | cash now, immediate money |
| home insurance | covers damage to the property and people who get hurt on the property |
| renters insurance | cover damage to your personal belongings not the apartment |
| life insurance | given to your family and friends when you die |
| auto insurance | liability- covers only the other person full coverage- covers you and the other person (best to have) collision and uninsured motorist |
| deductible | the amount you pay before insurance kicks in |
| premium | the monthly payment |
| copay | the set amount you pay every time you go to the doctor |
| coin insurance | cost you pay after you met your deductible |
| coverage limit | max amount your insurance company will pay for a covered claim |
| zero based budgeting | every penny you get has a set category it gets spent in |
| cash envelope | you label envelopes in different categories and budget your cash out into each one |
| 50/30/20 | 50-needs 30- wants 20- savings |
| 60/30/10 | 60-needs 30-wants 10-savings |
| 70/20/10 | 70- needs and wants 20- savings 10-debt repayment |
| 5 c's of credit | character, capital, collateral, capacity, conditions |
| 3 things in a loan | principle, term, rate |
| APR | interest+fees |
| credit score limit | 300-850 |
| what is credit history and credit utilization | history-35% affect credit the most credit utilization-30% most important to pay attention to |
| what is an amatorization schedule | a schedule telling you when you have to pay back your loans and your monthly payments |
| avalanche method | you pay the highest interest payment first |
| snowball method | you pay the lowest debt first |
| debt management | you talk to a creditor about changing terms, payment dates, lowering or dropping fees etc |
| refi/debt consolidation | when you take all your loans and put them into one smaller loan downsides: longer term, and it restarts so your only paying interest instead of principle |
| chapter 13 | bankruptcy for individuals with a decent amount of debt who want to keep some of their assets but still get rid of their loans |
| chapter 7 | bankruptcy that liquidates all your assets and wipes your slate clean |
| chapter 11 | for businesses who are in debt but allows for them to keep their business and assets |
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