Chapter 2: Money Management Strategies and Skills
Quiz yourself by thinking what should be in
each of the black spaces below before clicking
on it to display the answer.
Everything you own, including liquid assets, real and personal property, and investments.
Debt payment ratio
A financial ratio that measures the percentage of disposable income required to make debt payments.
Total debt divided by total assets.
Everything you owe to others, including unpaid bills, credit card balances, car loans, student loans, and mortgages. Also known as liabilities
Expenses that are a constant dollar amount
Income before taxes and expenses.
The inability to pay debts as they come due.
Cash and near-cash assets that can be easily
converted to cash without loss of value.
A financial ratio that measures the ability to
pay household expenses out of liquid assets
in the absence of regular income.
The price that something can be sold for today.
Mortgage debt service
The total dollar amount of monthly mortgage
principal, interest, property taxes, and homeowner’s
Mortgage debt service ratio
The ratio of mortgage debt service to gross
The amount of wealth you would have left
after paying all your outstanding debts.
Personal balance sheet
A statement that details the value of what
you own and what you owe to others to
arrive at an estimate of your net worth.
Personal cash flow statement
A summary of income and expenditures over
a period of time.
Personal financial statement
A statement that summarizes your financial
A financial ratio that measures the percentage
of after-tax income going to savings.
Expenses that vary in amount from period to