personal financial literacy mrs. vanwart
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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 - PowerPoint PPT PresentationTRANSCRIPT
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Personal Financial Personal Financial LiteracyLiteracy
Mrs. VanWartMrs. VanWart
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1. 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
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2. 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
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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)
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4. stock:
• publicly-owned company sells shares for capital
• shareholder owns part of the company• prices can be volatile
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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
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6. bond:
• similar to an IOU• bondholder gets interest from issuer
• types of bonds:-corporate-treasury-savings (EE or I)-municipal
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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
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8. formula to calculate simple interest:
I = prt
(interest = principal x rate x time)
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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
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10. FAFSA = Free Application for Federal Student Aid:
• parents usually complete the form
• colleges use it to determine financial aid and expected family contribution (“EFC”)
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11. 529 plan:
• tuition savings plan
• earnings are tax-exempt if used for qualified expenses
• different states have different rules
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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
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13. Income tax filing deadline:
• April 15 (usually)
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14. New Jersey unemployment rate:
• 9.8% (July 2012)• 7.8% (Dec 2013)
• U.S.: 6.7%
• Rate dropped “for wrong reasons”
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15. New Jersey sales tax:
• 7%
• 3.5% in urban enterprise zones