Finance chp 1-5

step 1: determine adjusted gross income

this process starts with steps to determine taxable income, which is the net amount of income after allowable deductions on which income taxes is computed

Earned income

usually in the form of wages, salary, commission, fees, tips, or bonuses

when interest rates are falling

- Use short-term loans to take advantage of lower rates when you refinance the loans. - Select long-term savings instruments to "lock in" earnings at current high rates.

atm access

- obtain cash, check account balances, and transfer funds - check out the fees

other payment methods

-Certified Check -Cashier's Check -Money Order -Traveler's Check

penalties and interest

-Underpayment of quarterly estimated taxes may require paying interest on the amount owed. -Underpayment due to negligence or fraud can result in penalties of 50 to 75 percent. ( can go to prison after a while if it constantly still happens)

exemption

-a deduction from adjusted gross income for the taxpayer, the spouse, and qualified dependents -after deducting exemptions you have your taxable income

time limit on unfavorable data

-adverse data can be reported everyy 7 years -bankruptcy can be reported for 10 years -application for credit $>75,000 -application for life insurance $>150,000

tax deduction

-amount subtracted from adjusted gross income to arrive at taxable income -2 types available for us citizens: standard deduction and itemized deduction -maintain records of documents like home filing system, canceled checks, receipts, medical records/expenses, contributions, business expenses

2 steps of the cost of credit

1 finance charge 2annual % rate

On,INE filing process steps

1 go to irs website and click "free file" under "filing and payment" section 2 determine eligibility and read "how to use free file" 3connect to the chosen website to begin 4 use companies online software to prepare return

calculating savings amounts

1. Convert savings goals into specific amounts 2. Use savings and investments plans to grow your $ 3. Use time value of money to calculate progress toward financial goals

3 most common types of closed end credit

1. installment sales credit 2. installment cash credit 3. single lump sum credit

3 basic tax forms

1040EZ & 1040A (used by 20% of taxpayers) 1040 (used by 60%)

protecting your credit info on internet

1use a secure a browser in a nonpublic space 2keep records of online transactions 3review monthly bank and credit card statements 4read the privacy and secruity policies of websites you visit 5 keep personal info private 6 never give password out 7dont download files sent by strangers

interest calculations

3 AMOUNTS ARE USED IN CALCULATING INTEREST EARNED: principal=amount of savings, annual interest rate, and length of time money on deposit (in years)

FICO credit score

350-850 rates how risky a borrower is, higher the score ->less risk you pose to creditors

What is the most common error when filing tax returns

Forgetting to sign your name

other financial services

Insurance, investments, tax assistance, financial planning, trusts

mutual savings bank

Owned by the depositors and specialize in savings and home loans, profits go back to the depositers through higher rates on savings

interest

a periodic charge for the use of credit

restrictive endorsement

consists of the words 'for deposit only', followed by your signature: dpeositing checks

Roth IRA

contributions not tax deductible Amount withdrawn are NOT included in gross income

interest rate

cost of money (when you go to the bank & borrow $ that's the cost that you pay the bank to borrow funds from the bank) -affected by supply & demand -the FED -risk premium (length of time funds in use, expected inflation, & uncertainty) -has major impact on financial planning & economic activity in our economy

convenience credit card users

credit card holders who pay off their balances in full each month

installment cash credit

direct loan of $ for personal purposes, no down payment and make payments in specified amounts over time ex: home improvment or vacation expenses

types of income

earned, investment, passive

regular checking accounts

have monthly service charge that can be avoided, you lose interest on the minimum balance amount in a non-interest earning amount, must have/keep a minimum balance

simple interest on the declining balance

interest is paid only on the amount or original principal not yet repaid: more often you make payments, the lower the interest youll pay

loans

involve borrowing with an agreement to reapy it in certain amount of time

exclusion

is an amount not included in gross income ex: foreign income exclusion allows us citizen working and living in another country to excluded from a certain portion of tax

term vs interest costs

longer term for a loan the greater amount of interest charges

resrictions

minimum balance, federal deposit insurance, hours and location of office, holding period for deposited checks

investment income (portfolio income)

money received in the form of dividends, interest, or rent from investments

series HH bonds

no longer sold current income bonds with interest deposited electronically to bank account every 6 months, interest direct deposit was taxed at current income on a person federal tax return-exempt from state and local tax

Effects of Bankruptcy

obtaining credt may be more difficult, creditors may consider the inabiliity to file again for 8 years credit could be easier for chp 13 who have repad some debt vs chp 7 who have not paiid any

investment companies (mutual funds)

offer a money market fund, company uses the $ from many investors to purchase a variety of short term financial instruments, accounts are not covered by federal deposit insurance

comercial banks

organized as corperations, offer full range of financial services: checking, savings,lending,etc ex: national banks, regional banks, community banks, online banks

written budget

paper ( ex: notebook or multicolumn accounting paper)

fixed expenses

payments that do not vary from month to month ex: gas, going out to eat clothes, items you want, utility bill

$ iirder

purchase at institution ex: post office, store

KEOGH plan

self employed retirement plan

net worth

the difference between total assets and total liabilities

smart cards

"digital wallets" similar to ATM cards, card may store, past purchases, insurance info and med history, pay with reward points

credit card debit card prepaid card

"pay later" "pay now" "pay before"

how to calculate credit score

# and. type of account -> whether you pay bills on time -> how much of your avaible credit you are using -> whether you have an collection actions against you -> amount of your outstanding debt -> and age of your account

credit score

# that reflects the info in credit report and helps prevent how likely it is that you repay a loan and make timely payments -lenders use it in deciding whether to grant you credit, what terms you are offered, or interest rate you pay on a loan

discretionary income

$ left over after paying for housing, food, and other necessities : $ you have to spend

annual % rate (APR)

% cost of credit on a yearly basis: key to comparing costs when shopping for rates ex: borrowing $100 a year and pay finance charge of $10 and keep $100 the whole year then pay it back at once, then is 10%

annual % yield

% rate expressing the total amount of interest that would be recieved on a $100 deposit based on the annual rate and frequency of compounding for a year period: reflects the amount of interest a saver should expect to earn "total %" equation: rate per period x # of period per year divided by 2 100(interest/principal)

Tax services warnings

- ultimately YOU are responsible for proving complete and accurate info: if your tax preparer makes amístame you are still responsible for paying the correct amount, plus any interest and penalties -hiring a tax preparer does not guarantee that you will pay the correct amount - beware of tax preparers that offer refunds in advance : " refund anticipation loans" can charge interest rates in excess of 300%

How do I file my state tax return

-All but 7 states have a state income tax -in most states the tax rate ranges from 1-10% -states usually require income tax returns to be filed when the federal income tax return is due

General rules of credit capacity

-Debt Payments-to-Income Ratio : monthly debt payments/net monthly income -Debt to Equity Ratio= total liabilties/ net worth -consumer crediit payments should not excedd 20% of net income -should be <1

When selecting a tax software consider

-Personal situation (are you employed) -special tax situations -features in the software ( "audit checks", future tax planning, states tax filing online) Tech aspects ( hardware and operating system requirements & online support) -

Tax prep services

-Profesionales services can be utilized if you don't not wish to complete them yourself -Services can range from 1 person, local offices, or large firms like H&R Block -attorneys - cpa tax accountants -enrolled agents = gov. Approved experts

medium priced loans

-can obtain with moderate interest from banks, savings, and loan assocations and credit unions -provide personalized service credit union and must be a member to get one

Who can obtain a credit report?

-courtorder or written request - Only authorized persons have access to your report for approved legitimate business purposes

records on your personal computer

-current past budgets -summary of checks written and other backing transactions -past income and tax returns -account summarizes, performance results of investments -digital versions of wills, estate plans, and other documents

present value

-current value of an amount desired in the future -current values for a future amount based on a certain interest rate and a certain time period; also referred to as discounting

When audited

-decide whether to bring your tax preparer,accountant, or lawyer -be in time and bring only relavent documents -present evidence in a logical, calm, and confident manner; maintain a positive attitude -make sure your info is consistent with tax law -keep your answers aimed at the auditors questions

keeping computer records safe

-download copies of all statements & forms to local storage & use logical filenames and folders -back up files externally or online -secure data with complex passwords and encryption -scan copies of documents: hard copies of some documents may be required -completely erase files

expensive loans

-easiest ones to obtain but are the most expensive -compaines that lend to consumers will charge high interest rates from 12-25% -most card cahrges higher interest for cash advance and charge interest -taking out cash advance is more expensive than purchasing card -finance and check cashing companies, retailers car and appliance dealers, bank credit

inexpensive loans

-parents/ fam members are the source of the least expense loans -loans with low interest -interest usually isnt charged if from fam member but there is interest if its is from bank -borrowers with good credit can borrow interest rates lower than those charged by banks and unions

regular savings accounts

-passbook savings -statement accounts -low minimum balance -easy withdrawal -offered at banks -savings -loan associations -pay loan interest rate etc credit union=share accounts

Consumer purchases

-place of residence : one of the best tax shelters is owning a home, deduct mortgage loan interest & property taxes, reduces your taxable income -consumer debt: use home equity line of credit (second mortgage) to buy a car or consolidate debt, interest deductibles Job related expenses: may be allowed as itemized deductions : union dues, business tools, and job search costs Health care expenses: like FSA allow you to reduce your taxi le income when paying for health related expenses

budget varable expenses

-planning for variable expenses is not fun or easy -expenses will fluctuate by household, time of the year, health, economic, conditions, etc

cons/concerns with online banking

-potential privacy -security violations -atm fees can become costly -difficulty depositing cash, checks -overspending due to easy access -online scams, "phising", and email scams

3 actions to take for identity crisis

1 contact credit bureaus: ask the fraud dep. to institue a fraud alert, request that creditors call you for permission before opening any new accounts in your name 2contact creditors: check for any accounts that have been tampered with or opened fraudently 3file a police report: keep and copy in case creditors need proof

2 options for sources of quick cash

1 liquidate savings: savings account, certificate of deposit, mutual fund, or other investment 2 borrow: credit card advance, personal loan both reduce net worth

3 common endorsement forms

blank restrictive special

money market funds & money market account

both offer earnings based on current interest rates minimum balance restrictions and allow check writing

record spending amounts

budget variance dificit surplus

debit card transactions

can be used with signature or with your PIN #, have move security, merchant may freeze an amount in bank account above what you actually spend-> hold can result in overdrawn account

borrower

cardholders who do not pay off their balances every month

liquid assets

cash & items of value that can easily be converted to cash

assets

cash and other property with a monetary value

for successful financial planning be aware of

changing interest rates, vising consumer prices, and other economic factors as they influence financial services info sources: wall street journal, financial times, forbes, fortune, bloomberg business week

check cashing outlets

charge 1-20% of the face value of a check (averg. 2-3%) aka currency exchanges -offer services are electronic tax filing, money orders, private postal box, utility bill payments, and sale of transit token

activity accounts

charge a fee for each check written and sometimes a fee for each deposit in addition to a monthly service charge, DONT have to keep a minimum balance: for people who write only a few checks each month and unable to maintain required balance

cashiers check

check issued by a financial institution you pay the face amount

payment services

checking accounts=demand deposits, automatic payment as it has the ability to transfer $ quickly and to receive it quickly

2 basic types of consumer credit

closed end open end

questions to ask when selecting service provider

1. where can i get the best return on my savings 2how can i minimize the cost of checking and payment services 3will i be able to borrow $ if i needed to also consider safety and rates

fair credit billing act (FCBA)

1975, sets procedures for promptely correcting billing mistakes, refusing to make credit card or revovling credit payments on defective goods and crediting your payments: provides the consumer recourse against the retailer

consumer credit reporting reform act

1977, places the burden of proof for accurate credit info on bureau ratther than you, creditor must prove that disputed info is accurate, can sue if bureau verifies incorrect data

improving credit score

1: reciew credit report to make sure it is accurate, get a copy 2: pay bills ontime 3: undersgtand how credit score is determined (do you pay your bills on time? what is your outstanding debt? how long is your credit history?have you applied for new credit rencetly? how many and what type of credit accounts you have?) 4:learn the legal steps to take to improve your credit report 5:beware of credit repair scams

6 step procedure for financial planning - (can be adapted to any life situation )

1determine current financial situation 2develop your financial goals 3identify alternative course of action (continue same course of action, expand current situation, change current situation, take a new course of action) 4evaluate alternatives (consequences of choices, evaluate risks, financial planning info sources 5 create & implement your financial action plan 6 review & revise the financial plan

life situation & personal values

ADULT LIFE STYLE: the stage in the family situation & financial needs of an adult LIFE SITUATION FACTORS: marital status, household size, employment MAJOR EVENTS, AFFECTING LIFE SITUATION: graduation, marriage, divorce, birth or adoption of a child, career or health changes VALUES: ideas & principles you consider correct, desirable, & important (look at pg 5)

rent to own companies

AVOID stores that lease products to consumers who can own the item if they complete a certain # of weekly or monthly payments: purchases can result n annual interest rates of over 300% ex: $600 computer can result in $1,900 in payments

Recent tax changes

Advanced tax credits available, employers allow employees flexible health care to carry over up to $500 of unused funds, streamlined options for home office small businesses

Self employment

Advantage: owning your own business can have tax advantages Disadvantage : business owners have to pay additional taxes

Flat tax

All taxpayers pay the same rate, would increase taxes for many

H&R Block at home and turbo tax

Allow you to complete returns on,INE and print and mail or file online

credit bureau

An agency that collects info on how promptly people and businesses pay their bills: get info from banks, finance companies, stores, credit card companies, lenders, court records

credit

An arrangement to receive cash, goods, or services now and pay for them in the future: is based on twist in peoples ability and willinglness to pay bills when due

Tax-deferred investment

An investment that is not taxed until you withdraw the money and begin to use it, gives you advantage to pay taxes in the future rather than now: health savings account, tax deferred amuitites, retirement plans = IRA, KEOGH, AND 401k

Form 4868

Application for Automatic 6 month Extension of Time To File U.S. Individual Income Tax Return: must submit by april 15

mental budget

Appropriate if financial resources and responsibilities are limited

Who gets audited

Aproximadamente 1% of all returns are audited If you claim large or unusual deductions you are more likely to be audited

payroll withholding

Based on the number of exemptions and the expected deductions claimed: on w-2 form it reports your annual earnings, and the amounts deducted for taxes differences is either additional amount to pay or refund ex: married person with kids would have less withheld than a single person with the same salary since the married person will owe less tax

financial needs goals

CONSUMABLE-PRODUCT GOALS: usually occur on a periodic basis & involve items that are used up relatively quickly (ex: food, clothes, entertainment DURABLE-PRODUCT GOALS: involve infrequently purchased, expensive items - tangible items (ex: appliances, car, sporting equipment) INTANGIBLE - PURCHASE GOALS: may relate to personal relationships, health, education, community service, & leisure

interest earning checking accounts

Checking accounts paying low interest, recently some institutions have offered high-rate checking accounts to people who meet certain requirements ex: using debit card an certain # of times each month and agree to terms and online statements

3 types of audits

Correspondence audit (for minor questions) Office audit ( takes place in IRS office) Field audits ( most complex, with an IRS agent visiting you at home, business, or accountants office

Coverdell education savings account

Educational uses for kindergarten through college age

physical budget

Envelopes, folders, or containers

3 major credit bureaus

Equifax, Experian, TransUnion

solving for future value of a series of deposits using the formula method

FV= annuity (1+i)n-1 / i ex: if you deposit $50 per year at 7% for 6 years you'll have FV=$50 (1.07)6-1 / .07= $357.66

Major sections of 1040 correspond to

Filing status & exemptions, income, adjustable to income, tax computation, tax credits, and other taxes such as self employment, payments, refund, or amount you owe (refunds are directly deposited from back account, payments are debited from back account)

equal credit opportunity act (ECOA)

Gives all applicants the same rights. Credit providers may not discriminate based on: Age, Social Security, Housing loans.

Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (CARD act)

companies must provides 45 days notice of rate increases, must apply payment first to debts that carry higher interest rates-cash advances, must provide a detailed statement that includes time and total amount to pay off balance, can extend credit to persons under 21 has changed, young people must be able to show proof of income or have a signature by a person willing to accept responsibility for account

peer-to-peer payments

conducted by email, registering card or bank info may be required, fees range from less than a $1 to a % of the amountt transferred

payments

credit/debit card cash online, mobile stored value (pre paid) cards smart cards (digital wallet) peer-to-peer (P2P

protecting your credit rating

creditor may not threaten your credit rating or do anything to damage reputation while negotiatting billing dispute, creditor may not take any action to collect the amount in question until your compliant has been answered

fair credit billing act

creditor that fails to follow rules that apply to any charges to question will automatically give up amount owed on item up to $50 may sue for actual damages plus twice the amount of any charge

tax forms and filing info

current ax and instruction booklets & online resources, reference boos on current tax laws, and tax saving techniques, ss # of household members, copies of federal tax returns from previous years (5-7 years)

Chapter 13 Bankruptcy

debtor witth regular income proposes a plan for using future earning / assets to eliminate their debts over time must provide same iinfo required for chp 7 plan must last up to 5 years debtor makes payments to a court appointed trustee

long term liabilities

debts that are not required to be paid in full for more than a year

current liabilities

debts that must be paid within a short time, usually less than a year

opening checking account

decided who the owner is of the account, there can be individual and joint accounts but both require a signature card

deflation

decline in prices

debit card

deduct $ directly and immediately out of your account, lost card liability $50-500

misusing credit can cause:

default, bankruptcy, loss of credit worthiness

budget for fixed expenses

definite obligations involved projected or planned income & expenses assinging amounts to spend in certain categories

credit card uses

delay payment build a credit history buy online major purchases earn rewards

which tax form to use

depends on your type of income you have, amount of income, # of deductions, complexity of tax situation

Alternative Minimum Tax (AMT)

designed to ensure that those who receive tax breaks also pay their fair share of taxes & paid by taxpayers with high amounts of certain deductions and various types of income

budget variance

difference between then amount budgeted and the actual amount received or spent

special services

direct deposit, availibility of ATMS, overdraft protection, discount or free checking for certain groups (students and old people)

questions to ask before deciding how and when to make a major purchase

do i have the cash i need for the down payment? do i want to use my savings on this purchase? does this purchase fit my budget? could i use the credit ii need for this purchase in some way better? could i postpone the purchase? what are the opportunity costs of postponing the purchase? what are the $ costs and the psych costs of using credit? -if you deicide to use credit make sure the benefits of purchasing now outweigh the costs of using credit

cost of credit and expected inflation

each % point increase in iinflation means a decrease of around 1% in quantity of goods and services you can buy with same amount of $, lenders incorporate expected rate of inflation when deciding how much iinterest to charge

compounding

earning interest on your interest -longer you compound $ the more powerful the force of compound interest is

take home pay (net pay)

earnings after deduction for taxes and other items: aka disposable income

estimate income

estimate $ for a given period: common one is a month include only $ that you are sure you'll receive

who files taxes

every citizen of USA, resident of USA, every USA citizen who resides in Puerto Rico is required to file a federal income tax if their income is above a certain amount

stored value cards

ex: prepaid cards for phone service, transit fares, highway tolls, etc some are disposable some can be reloaded

itemized deductions

expenses you can subtract from adjusted gross income to determine your taxable income ex: medical expenses, taxes, interest, contributions, casualty, and theft losses, moving expenses, job related, and other expenses (72% of AGI)

daily economic transactions

facilitate financial planning activities -investing in a bond, investing in stock, buying & selling mutual funds, cds, commodity futures

credit cards offer "teaser rates":

finance charge thats low for 6-12mo then after jump to regular charges

balance sheet

financial statement that reports what an individual or a family owns or owes as of a specific date: aka net worth & statement of financial position items you value (what you own=assets) - amount owned (what you own) = net worth (your wealth)

complaining about consumer credit:

first: try to solve the problem directly with creditor if that fails:use formal complaint procedures a variety of consumers credit protection laws and federal agencies administer and assist with complaint procedures

financial plan

formalized report summarize current financial situation analyzes financial needs recommends future financial activities

adjusted gross income

gross income by certain adjustments/ reductions have been made ex: medical expenses

legal right?

you have legal rights to sue the credit bureau or the creditor that has caused you harm

pre paid debit card

have become the fastest growing payment method, being used instead of traditional banking services, issued by financial service providers including traditional financial institutions, retailers (walmart), and non bank companies: common use include in store, online purchases, and person-person payments MAJOR CONCERN is the extensive # of fees (beware of fees that inlcude activation, monthly, transaction, cash withdrawl (atm), balance-inqury, fee to add funds, or a domancy fee: use of them have resulted in lower consumer debt since the debit card can help control spending and buying on credit

review financial progress

have to review areas where spending has been more or less than expected: can prepare an annual summary to compare actual spending with budgeted amount for each month -excel is very helpful in this step -vital to both successful short & long term management & financial security -revise goals and budget allowances: questions and cut less necessary items or purchases on them & see if your'e making any progress towards goal if not change it and rearrange goals and budget sheet if needed to

credit used effectively can:

help you have more and enjoy more

personal financial records & document

help you plan the use of your resources: provide written evidence of business transactions, ownership of property, & legal matters

rule of 72

how long it takes for prices to double ex: an annual inflation rate of 4% means prices will foldable in 18 years (72/4=18) regarding savings, if you earn 6%, your money will double in 12 years (72/6=12)

defective goods and services

if a sincere effort to resolve a problem with an item purchased has been made, but store is not compliant, you can ask for credit company to stop payment

electronic fund transfer act

if an institution does not follow provisions you may sue for damages plue punitive damages of $100-1,000, entitled to court costs and attorney fees iin successful lawsuit, class action suits are permitted

truth in lending and consumer leasing act

if creditor fails to disclose info or inaccurate info you can sue or can sue a creditor that does not follow rules regarding credit cards: permit class action of all people who suffer same injustice

Equal Credit Opportunity Act (ECOA)

if you think you can prove a creditor has dicriminated you, you can sue for actual damages plus punitive damages (payment used to punish the creditor who has violated law up to $10,000)

tax-deferred income

income that will be taxed at a later date

inflation

increase in the general level of prices for consumers -interest earned on saving -reduces buying power of the dollar -most harmful to those on fixed incomes -rates vary -"hidden inflation"(ex: in store getting fewer items for a higher price while a couple months prior you might've gotten more of that item for less, happens a lot in USA)

ways to increase net worth

increase savings, reduce spending, increase value of investments & other possessions, reduce amounts owed

advantages of financial planning

increased effectiveness in obtaining, using, & protecting financial resources increased control of your financial affairs improved personal relationships sense of freedom from financial worries

I bonds

interest based on 2 components: fixed rate for the life of the bond & inflation rate that changes twice a year -earns a fixed rate plus an inflation rate, twice a year theres an inflation adjustments, sold over $25 and purchased at face value, holding period 1 year, interest earned is added to value of bond and received when redeemed, same tax and education benefits at EE bonds ex: person can buy up to $10,000 worth of electronic savings of each series a year

Tax exempt investments

Interest income from municipal bonds are exempt from federal and some state taxes

add on interest

Interest is calculated on the full amount of the original principal. iinterest added to original principal , does not decrease as loan is repaid payment=total divided by # of payments to be made

Tex planing should be an on going process

Know current tax laws as they affect you , maintain complete and appropriate Tax records, make purchases and investments decisions that reduce your tax liability, time elapsed from Jan 1st to mid April represents the portion of the year people work to pay their taxes GOAL: paying your fair share but still making advantage of tax benefits types of taxes

simple interest

interest computed on principal only and without compounding based on 3 elements: 1. amount borrowed (principal)2. rate of interest 3. amount of time for which the principal is borrowed formula :amount in savings x annual interest rate x time period = interest ex: $500 on deposit at 6% annual interest for 6 months principal = $500 interest rate =6% time period = 1/2 (6 is half of 12 so 6 months is half a year) $500 x .06 x 1/2 =$15

Managing CDs

investigate potential earnings and cost, do not allow institution to automatically roll over $ into another CD for same term, if interest rate drop you might consider shorter maturity, obtain CD with longer term or create CD portfolio with CDs at different times ex: $2000 in 3 month CD, $2000 in 6 month CD, $2000 in 1 year CD, $2000 in 2 year CD

brokerage firms

investment advisors and fianancial planners serve as an agent between the buyer and seller (for stocks, bonds, product, other invest sercurities), checking accounts, and online banking is available

SWOT analysis

is a planning tool used by companies, can be used for $ management and budgeting activities: stay on top on personal finance topics, tax laws, minimize credit card debt S: stengths W:weaknesses O: opportunity T: threats

time value of money

is the increase in an amount of money as a result of interest earned -saving today=more money tomorrow -spending today=lost interest

blanks endorsement

just signature: only used when you are depositing or cashing check

trusts

legal agreement that provides for the management and control of assets by one party for the benefit of another: created through bank or lawyer ex: parents who set aside certain funds for their childrens education

insolvency

liability to pay debts when they are due because liabilities far exceed that value of assets : very bad

debit card uses

limit spending to available funds avoid future bills avoid interest annual fee obtain better protection

installments sales credit

loan that allows you to recieve merchandise: high priced stuff, sign contract and make down payments to repay balance and interest and service charges in equal installments over a specified period ex: furniture and appliances

pawnshops

loans are based on value of tangible items , people use them for quick cash loans, they charge higher fees than other places around 3% per month

U.S. Savings Bond

low risk savings program guarenteed by gov. that have been used to achieve various financial goals

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005

makes it more difficult for consumers to file a chap 7 forces a chp 13 repayment plan, debtors must wait 8 years from last bankruptcy to file agaiin, clamps down on "bankruptcy mills" that seek to game the system includes provisions for customers education on debt managements and financial planning

Free file alliance

Online tax preparation and filing free to many taxpayers deponer on income & partnership with IRS and tax preparation softwares

online payments

PayPal, MyCheckFree,paytrust, and google wallet some give choice of using a credit card or bank account while some require it of "person to person" payments, near field communication, replace debit and credit cards

fair credit reporting act

Regulates the use of credit reports, law requires out of date info to be deleted, gives consumers access and ability to correct misinfo, place limits of who can obtain your credit report may sue any bureau or creditor that violates rules regarding credit record access or fails to correct erros in file, entitled to any actual damage plus punitive damages

types of financial goals

SHORT TERM: will be achieved in the next year or so (ex: saving for a vacation or paying off small debt) INTERMEDIATE: have a time frame of 2-5 years (ex: buy a car) LONG TERM: 5+ years (ex: retirement, $ for kids college, purchase of a vacation home)

effective goals should be

SMART S=specific (know exactly what your goals are & can create a plan) M=measurable (specific amount) A=action-oriented (providing basis for the personal financial activities you'll do) R=realistic ( involving goals based on income & life situation) T=time-based (indicate time frame for achieving the goals-allows to measure progress toward financial goals)

pay day loan companies

STAY AWAY aka cash advances, check advance loans, post dated check loans and delayed deposit loans, high interest rates -people pay annual interest rates of 780% to obtains needed cash, most frequent users are workers who are trapped by debts or poor financial decisions ex: person writes check for $115 to borrow $100 for 14 days, lender molds it until next pay day, $15 charge for 14 days translate into an annual % of 391%, some "rollover" to pay another $15 for $100 loan as it goes on the finance charges can exceed amount borrowed

credit card companies

Specialize in funding short term lending ex: VISA, mastercard, discover

VAT values added tax

Taxes a product at each stage in the manufacturing process, tends to start small and rise over time

State inheritance tax

Taxes levied on the value of property bequeathed by a deceased person

tax table rates =

marginal rates

personal financial statements

measure & guide your financial position & progress

CPI

measure of inflation

selecting a budget system

mental budget, physical budget, written budget, computerized budget

restrictions and fees

minimum balance limitations, fee for additional transactions pg 120-121

fees and charges

monthly fee, fees for each check or deposit, printing of checks, fee to obtain canceled check copy, overdraft, stop-payment order, certified check fee, fees for online banking

daily spending and saving decisions are central to financial planning

must be coordinated with needs, goals, & personal situations

what is in a credit bureau file?

name, address, ss #, bday: also may include employment position, income, previous address, previous employer, spouses info whether you rent your home or not, checks returned for insufficent funds

what do you pay federal income taxes through

payroll withholding or estimated tax payments

car title loan companies

people with poor credit can use car titles as a cash advance, loans are due in 30 days, high interest of over 200%: repossession of car can happen if you dont pay

records in your home file

personal and employment, records, money management records, tax records, financial services record, credit records, consumer purchase & auto records, housing records, insurance records, investment records, estate planning and retirement records

certified check

personal check with guaranteed payment, amount deducted from balance when institution certifies check

you budget

planning&spending& saving to achieve financial goals

financial goals

plans for your spending, saving, & investing : goals should S.M.A.R.T

revolving credit card

prearangged loan from banks for a specfied amount aka bank line of credit

safe deposit box

private storage area of a financial institution with maximum security for valuables: birth, marriage, wills, death certifications, list of checking savings, financial institution account #s, citizenship & military papers, adoption and custody papers, serial #s, photos of valuables, cds, credit and banking account#s, certifications, coins and other collectibles: put things in that are difficult to almost impossible to replace

compounding

process that calculates interest based on previously earned interest: each time interest is added tto savings the next interest amount is computed on new balance in account, the more frequent the higher your rate of return will be ex: $100 in savings earns 6% will increase to $6 after a year but the same $100 in a 6% will earn $6.19 each day for a year

money market funds

product of investment and insurance companies, invest in short term (less than a year) gov. and corporate securities, safe: not covered by federal deposit insurance

Safety via FDIC and NCUA

provide deposit iinsurance for certain retirement accounts up to $250,000

life insurance companies

provide financial security for dependents with various insurance policies, insurance plus savings and investments, and include investment and retirement planning services

mortgage companies

provide home mortgage loans for home purchasers: pay off as soon as possible bc they carry high interest rates

finance companies

provide loans to consumers and small businesses, loans have short and medium terms with higher rates than most other lenders charge

e-banks and e-branches

provide payment, savings, and credit services

US bankruptcy act of 1978

provides 2 choices iin declaring personal bankruptcy: chapter 7 straight bankruptcy and chapter 13: wage earner plan

system for personal financial records

provides a basis for: handling daily business affairs (ex such as paying a bill), planning, measuring financial progress, completing required tax reports making effective investment decisions, determining available resources for current& future buying

Series EE bonds

purchased for $25+ purchased online st 1/2 face value($50-500), flexible, fixed rate interest compounded semiannualy, penalty if redeemed within 5 years, continues to earn interest for 30 years, potential tax advantages is used to pay tuition "patriot bonds"

interest

rate, minimum deposit o earn interest, method of compounding portion of balance for computing interest, fee charged for falling below necessary balance to earn interest

expense records

receipts from medical, dependent care, charitable donations, job related expenses, mortage interest (form 1098) other deductiable interest, business, investment, and rental property expense documents

credit report/ credit file

record of complete credit history -are huge factors when considering loans

adjustment to income

reduce AGI, contributions to a traditional IRA or keogn retirement plan, penalties for early withdrawl of savings and alimony payments

money management

refers to the day to day financial activities nescessary to manage current personal economic resources, while working toward long term financial security

checking accounts

regular activity interest-earning

purpose of personal financial statements

report current financial position, measure your progress toward financial goals, maintain info about your financial activities, provide data for preparing tax forms or applying for credit

interest-earning account

requires a minimum balance, if goes below this amount you may not earn interest and will incure a service charge: share draft accounts at credit unions

fair credit and charge card disclosure act

requires that solicitations for credit cards in maiil, over phone, in print, or online must provide necessary terms of the account : includes finance charges, cash advance, or annual fees, any charges to account

evaluating checking and payment accounts

restrictions, fees and charges, interest rate and computation method (over draft protection), beware of "package" deal that include unneeded services

changes in net worth

result from cash inflows and outflows outflows>inflows : draw from savings or borrow (buy on credit), problem / result: lower or higher liabilities inflow>outflows: put $ aside into savings or pay off debts, results in higher net worth

Practice tax avoidance

The use of legitimate methods to reduce ones taxes obligations to your fair share but no more: financial decisions related to purchasing, investing, and retirement planning are the most heavily affected by tax laws

truth in savings act

This law requires banks to disclose the fees on deposit accountts, interest rate, the annual % yield, and other terms and conditions of savings plan -> defines annual % yield

global influences

US is affected by foreign investors & competition from foreign countries level of imports and exports affects available supply of dollars level of foreign investment affects domestic money supple money supply affects consumer interests rates

Child's investment

Under 18 kids or full time student under 24 with investment income of $2000 is taxed at parents top rate, under $2000 qualifies for a $1000 deduction with remainder taxed at child's rate

income records

W-2 forms reporting salary, wages, and taxes withheld , w-2p forms reporting pension income, 1099 forms reporting interest dividends, capital gains, losses from saving and investments, 1099 from pension or retirement plans

annuity

seres of equal deposits at equal intervals a constant rate ex: retirement savings or other savings goals in which you deposit an equal amount at equal intervals

budget an emergency fund & savings

set aside $ for unexpected expenses & future financial security "pay yourself first" when putting $ aside for the month do it at the beginning not end bc the $ "you pay yourself" can go straight towards savings

borrowing

short term accounts (credit card and cash loans) to long term (house mortages): used by most people

avoid minimum monthly payment trap

smallest amount you can pay and remain a borrower iin goof standing, lenders encourage it bc it takes longer to pay it off

savings and loan association

specialize in savings accounts and home mortgage loans: but offer more checking accounts, specialized in saving plans, loans, financial planning and investments

budget

spending plan, is necessary for successful financial planning : purpose is to help you live within your income, spend $ wisely reach financial goals, & prepare for emergencies, & develop wise financial management habits

computerized budget

spreadsheet or specialized software ex: excel

basic federal income tax

step 1: determine adjusted gross income step2: computing taxable income step 3: calculating taxes owed step 4:making tax payments step 5: making deadlines and penalties

creating a personal balance sheet

step 1: list of items of value: liquid assets, real estate, personal posessions, investment assests step 2: determine amounts owed: currentliabilites, long term liability step 3: compute your net worth

creating a cash flow statement

step 1: record income step 2: record cash outflows step 3: determine net cash flow

develop a monthly budget

step 1: set financial goals step 2: estimate income step 3: budget an emergency fund & savings step 4: budget for fixed expenses step 5: budget variable expenses step 6: record spending amounts step 7: review spending & saving patterns

economics

study of how wealth is created & distributed -includes business, labor, & government working together to satisfy needs & wants

taxes

taxable interest reduces amount of earnings

many companies offer reward programs:

that proivde cash, rebates, or airline tickets: usually higher charges

cash flow

the actual inflow and outflow of cash during a given time period

line of credit

the dollar amount, which may or may not be borrowed, that a lender makes available to a borrower

liquidity

the ease with which savings or investments can be turned into cash to be spent

income

the inflow of cash for an individual or household

rate of return

the percentage of increase in the value of your savings from earned interest, increase with frequency of compounded: "yield" ex: $100 savigns account that earned $5 after a year would have a yield of 5% -*determined by interest earned/amount in the savings account* -usually greater than the stated interest rate

personal financial planning

the process of managing your money to achieve personal economic satisfaction

marginal tax rates

the tax rate paid on an individual's next dollar of taxable income ex: a person with 35% tax bracket pays 35 cents in taxes for every dollar of taxable income in that bracket

finance charge

the total dollar amount you pay to use credit: includes interest costs and other like service charges, credit-related insurance premiums, or appraisal fees ex: borrowing $100 a year will cost you $10 in interest and whatever services charges there are will be added

comsumer credit

the use of credit for personal needs(except for home mortage) by individuals and families in contrast to credit card for business purposes: major force in the USA economy

Tax evasion

the use of illegal actions to reduce one's taxes: such as not reporting all income

lender risk vs interest rate

to reduce the risk of interest rate: accept a variable interest rate, provide collateral to secure a loan, provide up front cash, take a shorter term loan

consumer financial protection bureau

to resolve credit card issues: complain to creditor, file a complaint with gov. sue creditor

average ttax rates

total tax due divided by taxable income : average tax rate<marginal tax rate ex: taxable income $50,000 total tax bill $8,240 average tax rate = 16.5% (8240/50,000)

what does the cost of a card depend on

type of card company

other counseling services

universities, creditt unions, mlitary base, state and federal housing, authorities provide nonprofit services -check with institution or consumer protection office for a list of reputable, low cost financial services

when interest rates are rising

use long-term loans to take advantage of current low rates, select short-term savings instruments to take advantage of higher rates when they mature

determine cash flow

use this statement as a basis for creating a spending, saving, & investment plan ex: save 10% of your income

deposit check

used for adding funds to checking account: list amount of cash, checks being deposited each item requires endorsement

characteristics of a successful budget

well planned realistic flexible clearly communicated

opportunity cost

what you give up making a choice -trade off of a decision -not always measurable in dollars -maybe time should be viewed in terms of both personal & financial resources (ex: give up time to get an education)

your cash flow statement

what you received & spent over the past period

Tax audit

a detailed examination of your tax return by the Internal Revenue Service

Bankruptcy

a legal process in which some or all of the assets of a debtor are distributed among the creditors because the debtor is unable to pay his or her debts: may iinlcude a plan for the debtor to repay creditors on an installment basis, last resort bc it severely damages your credit report/rating -medical bills are the leading cause

single lump-sum credit

a loan that must be repaid in total on a specified day, usually within 30 to 90 days sometimes used to purchase a single item

consumer credit counseling services

a nonprofit organization affiliated witth the national foundation of consumer credit (NFCC), provide debtt counseling services, free, provides help with spending plan, education about credit, can develop a debt consolidation plan, and negotiate reduced interest rates

certificate of deposit

a savings plan requiring that a certain amount be left on deposit for a stated time period to earn a specified interest rate 30 days ->5+ years -most have penalty for early withdrawal -requires minimum depots -required time on deposit -take care when rolling over

money market fund

a savings-investment plan offered by investment companies, with earnings based on investments in various short-term financial instruments

standard deduction

a set amount on which no taxes are paid blind people and 65+ receive higher deductions

excise tax

a tax imposed on specific goods or service ex: gas, alcohol, tires

credit unions

a user-owned, not-for-profit, cooperative financial institution/organization, there are lower fees and lower loan rates with higher satisfaction levels

types of cds

-rising rate or bump up: have higher rates at various intervals -liquid cds: offer opportunity to withdrawal $ without penalty, may require minimum balance in account, restrictions like a "waiting period", or limited # of withdrawals -zero-coupon: purchased at deep discount with no interest payments -indexed: have earnings based on the stock market, can result in higher returns as inflation increases -callable: start with high rates and have long maturities 10-15 years, if interest rates drop bank closes account but when call is exercised saver receives original deposit amount and any earned interest -promotional: BEWAREl attempt to attract savers with gifts or special rates

disadvantages of credit

-temptation to overspend -can create long-term financial problems and slow progress toward financial goals -question of its security -ties up future income -credit costs $-more costly than paying cash bc of monthly charges and interest

pros/ benefits of online banking

-time and money savings -convenience for transactions, comparing rates -no paper trail for identity theives -transfer access for loans -investments -email notices of due dates

cosigning

agreeing to take responsibility for loan payments if the other person fails to make them

cash flow statement

aka a personal income and expenditure statement: summarizes receipts, payments for a given period, provides data on your income & spending patterns *total cash received during the time period - cash outflows during the time period = cash surplus or deficit *

asset management account

aka cash management account, an all in one account that includes savings, checking, borrowing, investing, and other financial services for a single fee ex: credit card, online backing, atm car, cash loan, access to a variety of investments

savings

aka time deposits, provides safe storage of funds for future use ex: $ in savings account and certificates of deposit

traverlers check

allow you to make payments when you are away from home, requires you to sign each check twice: theres electronic ones too, helps let travelers get local currency from atm

vantage score

allows for more score for consumers, developed by 3 credit agencies, score range 501-990, new

special endorsement

allows you to transfer a check to someone else with the words "pay to the order of" and name of person and signature

personal opportunity costs

-time that when used for one activity cannot be used for other activities (ex: time used for studying, working, shopping will not be available for other uses, have 24 hours in a day and nobody can extend those hours to do more stuff bc you spent so much time on other things) -related to health (ex: poor eating habits, lack of sleep, or avoiding exercise can result in illness, time away from school or work, increased health care costs, & reduced financial security)

dificit

amount by which actual spending exceeds planning spending

select a savings technique

-write a check even payday, electronic, transfer, to deposit in savings account -use pay roll deduction to deposit a certain amount in savings (direct deposit) -save coins or spend less on certain items ex: bring lunch instead of buying & put $ saved in savings or investment account

surplus

amount by which actual spending is less than planned spending

tax credits

amount subtracted directly from the amount of taxes owed ex: earned income credits, foreign tax credits, child and dependent care credits, savers credit (retirement tax credits), adoption tax credits, education credits o offset college education expenses

liabilities

amounts owed to others

Chapter 7 Bankruptcy

an individual is requires to draw up a petition listing their assets and liabilities , striaght bankruptcy in which many but not all debts are forgiven, assets are sold to pay creditors, certain assets are protected (ss payments, home, vehicle, goods and appliances, tools inwork, books) the realse debt does not affect alimont child debt failed to disclose properly to bankruptcy court, debts from fraud driving drunk or other acts of crime may be excluded

what if application is denied?

-you have the rights to know the reasons -if based on credit report youre entitled to know specific info in report leading to denial -customers not recieviing best rate must be advised of the their credit score -if based on info from bureaus you are entitled to free report within 60 days -charges higher rates to riskier customers -jan 1 2011 lenders must disclose details to costomers if risk-based pricing

incorrect info in your life

-you may request a copy of your credit info within 60 days of being denied credit -may request free copy of credit report annually -the bureau mist remove item if there is speculation and it must be gone until lender can verify info is accurate

tax shelter

an investment that provides immediate tax benefits and a reasonable expectation of a future financial return

applying for credit

ask yourself questions before taking loans: can you meet all essential expenses and still afford monthly loan payments? what do you plan to give up in order to make payments? 2 calculation: 1 add all basic monthly expenses and then subtract this total from your take home pay(if difference wiill not cover payment and still leave funds for expenses, you cant afford it)2 ask yourself what you plan to give up to make monthly payment

net worth, asses, & insolvency

assets - liabilities = net worth measurement of current financial position *net worth ≠ cash available* the amount you would have left if all assets were sold for the listed values and all debts were paid in full liabilities + net worth= assets

the federal reserve system (the FED)

attempts to maintain an adequate money supply to encourage consumer spending, business growth, & job creation (look at pg 6 for chart)

overdraft protection

automatic loan made to checking account customers to cover the amount of checks written in excess of the available balance in the checking account

Traditional IRAS

available to people who are not participating in an employer sponsored program Amounts withdrawn are included in gross income

safety

availibility of deposit insurance, risk

reconciling checking account

1 compare written checks with hose reported paid, use cancelled checks, or compare check registar with check #s reported on bank statement -subtract from the bank statement balance the total of the checks but not yet cleared 2 determine if any deposits made are not on statment -add the amount of the outstanding deposits to bank statement balance 3 substract fees or charges on bank statement and ATM wihdrawals from check book balance 4add any interest earned to checkbook balance revised balances for both checkbook and bank statement should be the same

open end credit

A line of credit in which loans are made on a continuous basis and the borrower is billed periodically for at least partial payment -cards issued by department stores, banks card (visa mastercard), travel and entertainment (american express, t&e, diners club),over draft protection -use as needed until line of credit max reached: credit cards, dep. store cards, come equity loans -have option to pay bills within 30 days without interest or can make set monthly installments based on the account balance and interest -pay interest and finance charges if you do not pay bill in full when due -revolving credit card -bankline of credit

money market account

A savings account offered by banks, savings and loan associations, and credit unions that requires a minimum balance and has earnings based on market interest rates: allow limited # of checks to be written and generally impose a fee when account balance goes below required minimum (usually $1000), are covered by federal deposit insurance

Federal estate tax

A tax imposed on the value of a persons property at death.

problematic financial companies

AVOID AT ALL COSTS pawnshops check cashing outlets payday loan companies rent to own companies

warning signs of debt problems

Paying only the minimum balance each month Increasing the total balance due each month Missing or alternating payments or paying late Intentionally using overdraft protection or taking frequent cash advances Using savings to pay routine bills such as food Getting second or third payment notices Not talking to your partner about money or talking only about money Depending on overtime to meet routine expenses Using up your savings Borrowing money to pay old debts Not knowing how much you owe Going over your credit limit on credit cards Having little or no savings for the unexpected Being denied credit due to a credit report Getting a credit card revoked by the issuer Putting off medical or dental visits because you can't afford them now

Capital gain

Profits from the sale of stock, bonds, real estate : long term ones are taxes at a lower rate

Fair Debt Collection Practices Act (FDCPA)

Prohibits certain practices by debt collectors, does not eliminate the legitimate debts that consumers owe but control the ways in which debt collection agencies may do business

Types of taxes

Purchases (sales tax and excise tax) property ( real estate property tax and personal property tax) wealth ( federal estate tax and state inheritance tax) earnings ( income tax and social security)

529 plan

Qualified educational expenses

You may, if audited

Request time to prepare, clarification of items being questioned, rights to appeal audit results

401(k) plan

Tax deferred retirement plan

Factors to consider when evaluating tax services

-Training and experience of the tax profes. -Fee for preparing taxes and how determined -Questionable deductions suggested -if return is audited will the preparer represent the client -is tax prep the main business activity or is it a front for other financial problems/products

future value

-amount to which current savings will grow based on a certain interest rate and a certain time period -total amount available in the future ex: $100 deposited in a 6% account for 1 year will grow to $106 FV=$100+ ($100 x .06 x 1 (year) )= $106 FV 2 years= 100(1.06)2=112.36 future value=original amount in savings + interest earned

home equity loans

-based on the difference betqeen current market value of home and amount you still owe of it -interest is tax aductable -should only be used for big purchases ex: home, education, medical bills -if you miss payments lender can take your home ex: own home $100,000 mortage $50,000 how much can you borrow using a home equity loan if linder allows 75% loan to value? 75% of $100,000 -> $75,000 (75,000-50,000=25,000)

advantages of credit

-enables people to enjoy goods and services now ex: car, home, education -can provide for emergencies -permits purchases even when funds are low -advance notice of sales -easier to return merchandise -convenience of shopping and effeciency of paying for several things with 1 monthly payment -provides a record of expenses -it is safer than cash-can just call bank to cancel card if lost -needed for hotel reservation, car rentals, and shopping online -can provide up to a 50 day "float " time/ grace period -rebates, airline miles, accidental death, dismemberment insurance up to $250,000, rental collision damage waiver for damage or collision up to $50,000, roadside assitance refferal, no foreign transaction fees for some cards (capital one) -credit indicate financial stability

calculation method

-formula -time value of money tables -financial calculators -spreed sheet software (excel) -websites & apps

Education deduction or tax credit

-if paid higher education costs this year decide between: tuition and fees deduction, 1 of 2 education credits -Tuition and fees deduction reduces AGI as much as $4000 -American opportunity credit: allows credit up to $2500, limited for 4 years, and must be enrolled part time -lifetime learning credit: limited to $2000, can be used for Part-Time education and graduate school funds

financial planning info sources

-internet & apps -financial institutions (ex: banks, credit union, investment companies) -media sources (ex: newspaper, magazines, tv, radio, podcasts, videos) -financial specialists (ex: financial planners, insurance agents, investment advisors, credit conselor, lawyers, tax preparers

How Do I File My Taxes Online?

-more common than paper- it's faster and better - IRS reports that over 123 mil people file online -which is 90% of filers -e-filing refunds take usually 3 weeks -cost for e-filing is between $15-$40 depending on tax situations and in some cases there are no fees -free file alliance

selecting a financial institution

1 list your most important features for a financial institution related to: services (checking, savings account, deposit insurance, loans, investments, mobile app) convenience (branch locations, hours, atm locations, customer services, rewards programs) cost, fees,earning (checking minimum blanace, atm fees, credit rates, savings rates) online mobile banking (ease of operation, services, privacy, secruity, other fees) 2rank the top 3-4 specific factors based on importance to you 3 prepare a list of local, national, and online financial institutions 4 conduct 3 types of research : talk to people who have used various institutions, conduct online research on their services, policies, and fees, and visit institution to observe the environment and talk to staff (addtional research actions: determine minimum balance to avoid monthly service charges, obtain a fee disclosure statement, saving rates sheet, and sample loan application, assess whether the deposit insurance, and online banking services meet your needs 5 balance needs with collected info, select business: may use 1 institution to take advantage of best deal-gives flexibility to move $

steps if you think bill is wrong or want more info

1 notify your creditor in writing within 60 days 2 pay portion of bill not in dispute 3 creditor must respond within 30 days 4 credit card company has 2 billing periiods but no longer than 90 days to correct your account or tell you why they think its correct 5disputed item wont affect credit rating while in disput 6can within hold payment on damaged or shoddy goods or poor services if purchased with credit card 7 must make sincere attempt to resolve problem with creditor

most commonly made mistakes when managing current cash needs include

1 overspending: as a result of impulse buying and overusing credit 2 having insufficient liquid assets: to pay current bills 3 using savings or borrowing to pay for current expenses 4 failing to put unneeded funds in an interest-earning savings account or investment plan

What tax services are available - IRS services

1 publications and forms (1-800-tax-form and irs website) 2 recorded messages (1-800-829-4477) 3 phone hotline (1-800-829-1040) 4 walk in service at IRS office 5 interactive tax assistant 6 DVD sold by IRS 7 IRS2GO app ( helps check refund status, requesting tax records, locating free tax prep help, etc) Internet (be sure to access reliable websites and print info for your records) Tax publications are published and offered for sale ( j.k lasers your income tax & the Ernest and young tax guide & your federal income tax for individuals is offered)

protecting your credit from theft of loss

1 shred any papers that contain personal info 2check machines carefully to avoid skimming (skimming involves recording of data on the magnetic strip of credit/debit card-an atm machiines theives add device on machine that captures pin # 3 close your accounts immediately if you suspect an identity theft has accessed your account 4stop payments of checks iif you suspect fraud 5be sure your credit card is returned after a purchase 6keep a record of credit card #s 7notify your crediit card company immediately if your card is loft or stolen

5 filing status categories

1 single or legally seperated w/ no dependents 2 married filing joint returns (combine spouses income) 3 married filing seperate returns (each is responsible for their own tax) 4 head of household 5qualifying widow or widower (limited to 2 years after death of spouse)

savings bond registered in 3 ways

1 single owner 2 two owners-co owners or 1 primary 3 a beneficiary-who takes ownership of bond when original owner dies treasury direct-> buy an manage and redeem savings bond

Components of Money Management

1 store and maintain personal financial records and document 2 creating personal financial statements: balance sheets & cash flow statements of income and outflow 3 creating and implementing a plan for spending & saving: budgeting

3 methods for online financial services

1 text banking (providing account info and conducting transactions through text messages 2 mobile web banking (with access to the financial institutions website) 3 banking apps (to conduct transactions using the mobile app of a bank or credit union) concerns with privacy, secruity of data, ease of overspending, costly fees, and online scams may be considered

career choices & financial planning

1 the life one works is key to financial well being &personal satisfaction 2 career choices have risks & opportunity costs 3career choices require periodic re-evaluation of trade offs related to personal, social, & economic factors 4 changing personal &social factors requires continuous assessment of work situation

closed end credit

1 time loan for a specific purpose with a specific amount paid back in specified period of time in equal amounts (if someone reaches out after you payed back loans its usually to good to be true and a scam) -mortage, automobile, and installment loans for furniture, appliances and electronics -seller holds title to the merchandise until payments are completed and take back pocession if bill isnt paid -mortage, automobile, installments loans

five c's of credit

1. Character : will you repay loan ?they want to know that youre trustworthy and stable, get personal iinfo and responsible 2. Capacity: can you repay to loan? iincome and debts are effected, lenders wont extend more credit if you already have a large amount 3. Capital: what are your assets and net worth? want to make sure you have enough capital to pay back loan 4. Collateral: what iif you dont repay loan? if fail to repay it creditor may take whatever you pleged as collateral: a valuable assets that is pledged to unsure loan payments 5. Conditions: what if your job is insecure? good credit rating is a vaulabe asset you should protect