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Personal Financial Literacy Mrs. VanWart

Personal Financial Literacy Mrs. VanWart. CD = certificate of deposit lock in a guaranteed interest rate for specific period of time usually slightly higher than savings account incur penalty for early withdrawal. credit cards : charge a purchase bill comes once a month

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Personal Financial Literacy Mrs. VanWart

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  1. Personal Financial LiteracyMrs. VanWart

  2. CD = certificate of deposit • lock in a guaranteed interest rate for specific period of time • usually slightly higher than savings account • incur penalty for early withdrawal

  3. credit cards: • charge a purchase • bill comes once a month • can pay minimum balance or more • interest charged on unpaid balance • merchant typically pays 3% of transaction

  4. 3. IRA = individual retirement account • must have earned income • can contribute up to $5500 per year(+$1K “catch-up” if over age 50) • may be income limitations • can use either:-pre-tax money (traditional IRA) or-after-tax money (Roth IRA)

  5. 4. stock: • publicly-owned company sells shares for capital • shareholder owns part of the company • prices can be volatile

  6. 5. mutual fund: • group of stocks (by sector, type, etc) • actively or passively managed • allows investor to buy more types of stock for less money

  7. 6. bond: • similar to an IOU • bondholder gets interest from issuer • types of bonds:-corporate-treasury-savings (EE or I)-municipal

  8. 7. mortgage: • loan on a home or other real estate • secured by that property • “under water” mortgage:-more is owed on the mortgage than the property is worth

  9. 8. formula to calculate simple interest: I = prt (interest = principal x rate x time)

  10. 9. FICO score: • credit score that lenders use to determine interest rate of loan approval • ranges from 350-850 • Fair Isaac Corporation • request one free credit report each year:www.annualcreditreport.com

  11. 10. FAFSA = Free Application for FederalStudent Aid: • parents usually complete the form • colleges use it to determine financial aid and expected family contribution (“EFC”)

  12. 11. 529 plan: • tuition savings plan • earnings are tax-exempt if used for qualified expenses • different states have different rules

  13. 12. 401(k) plan: • company sponsored retirement savings plan • often company will match contributions • current limit = $17,500 per year(+ $5500 if over age 50) • withdrawal at age 59 ½ or later-or incur a penalty

  14. 13. Income tax filing deadline: • April 15 (usually)

  15. 14. New Jersey unemployment rate: • 9.8% (July 2012) • 7.8% (Dec 2013) • U.S.: 6.7% • Rate dropped “for wrong reasons”

  16. 15. New Jersey sales tax: • 7% • 3.5% in urban enterprise zones

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