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dave ramsey
chapter 1-
67
Economics
02/15/2011

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Cards

Term
amoral
Definition
lacking morals neither good nor bad
Term
baby steps
Definition
the seven steps to a healthy financial plan
Term
step 1
Definition
$1000 in an emergency fund or $500 if you make less than 20000 a year
Term
step 2
Definition
pay off all debt except the house utilizing the debt snowball
Term
step 3
Definition
three to six months expenses in savings
Term
step 4
Definition
invest 15% of your household income into roth iras and pre tax retirement plans
Term
step 5
Definition
College funding
Term
step 6
Definition
pay off your home early
Term
step 7
Definition
build wealth and give
Term
compound interest
Definition
interest paid on interest previously earned, credited daily, monthly quarterly semi annually or annually on both principal and previously credited interest
Term
emergency fund
Definition
three to six months of expenses in readily available cash to be used on in the event of an emergency baby step 3
Term
interest rate
Definition
percentage paid to a lender for the use of borrowed money
Term
money market
Definition
mutual fund that seeks to maintain a stable share price and to earn current income by investing in interest bearing instruments with short term usually 90 days or less maturities
Term
murphys law
Definition
anything that can happen will happen
Term
pre-authorized checking (PAC)
Definition
system of automatic payment processing by which bills, deposits, and payments are handled electronically and at regular intervals or on a predetermined schedule
Term
priority
Definition
level of high importance or great urgency
Term
sinking fund
Definition
saving money for a specific purpose to allow interest to work for you rather than against you
Term
for most people a fully funded emergency fund will be about
Definition
$10,000-15,000
Term
Ben and Arthur illustrate which principle of saving?
Definition
compound interest
Term
Baby steps 1 and 3 have to do with
Definition
savings and emergency fund
Term
you should save for the following
Definition
emergency fund, purchases, wealth building
Term
how many baby steps are there
Definition
7
Term
saving is about contentment and
Definition
emotion
Term
the following is true pacs
Definition

stands for pre-authorized checking

helps build discipline when saving

Term
aggressive growth stock mutual fund
Definition
mutual fund that seeks to provide maximum long-term capital growth from stocks of primarily smaller companies or narrow market segments, dividend income is incidental the most volatile fund also referred to as a small cap fund
Term
annuity
Definition
contract sold by an insurance company, designed to provide payments to the holder at specified intervals usually after retirement the holder is taxed at the time of distribution or withdrawal making this tax deferred arrangement
Term
bond
Definition
debt instrument where an issuer such as corporation municipality or government agency owes you money a form of I.O.U the issuer makes regular interest payments on the bond and promises to pay back or redeem the face value of the bond at a specified point in the future (the maturity date)
Term
C.D.
Definition
certificate of deposit usually at a bank savings account with a slightly higher interest rate because of a longer savings commitment (i.e. six months, one year, etc)
Term
commodity
Definition
a food metal or fixed physical substance that investors buy or sell usually via future contracts
Term
diversification
Definition
to spread around ones investment dollars among several different classes of financial assts and among the securities of many issuers results in lowered risk
Term
dividend
Definition
distribution of a portion of a companys earnings decided by the board of directors to a class of its sharholders generally distributed in the form of cash or stock
Term
fixed annuity
Definition
type of annuity that guarantees a certain rate of return
Term
futures
Definition
a term used to designate all contracts covering the sale of financial instruments or physical commodities for future delievery on a commodity exchange
Term
investments
Definition
account or arrangement in which one would put their money for long term growth should not be withdrawn for a suggested minimum of five years
Term
growth stock mutual fund
Definition
fund that buys stock in medium sized companies that have experienced some growth and are still expanding also called a mid cap fund
Term
large cap fund
Definition
funds comprised of large well established companies
Term
liquidity
Definition
quality of an asset that permits it to be converted quickly into cash without loss of value availability of money when there is more liquidity there is typically less return
Term
mid cap fund
Definition
mutual fund containing a group of medium sized companies that are growing
Term
money market
Definition
mutual fund that seeks to maintain a stable share price and to earn current income by investing in interest bearing instruments with short tem (usually 90 days or less) maturities
Term
mutual fund
Definition
pool of money managed by an investment company and invested in multiple companies bonds etc. offers investor a variety of goals depending on the fund and its investment charter often used to generate income on a regular basis or to preserve an investors money sometimes used to invest in companies that are growing at rapid pace
Term
portfolio
Definition
a list of your investments
Term
rental real estate
Definition
buying real estate to rent out as an investment
Term
risk
Definition
degree of uncertainty of return on an asset in business the likelihood of loss or reduced profit
Term
international stock mutual fund
Definition
mutual fund taht contains international or overseas companies
Term
risk return ratio
Definition
relationship of substantial reward in comparison to the amount of risk taken
Term
savings account
Definition
accounts at financal institutions that allow regular deposits and withdrawls the minimum required deposit fess charged and interest rate paid varies among providers
Term
share
Definition
piece of ownership in a company or mutual fund
Term
single stocks
Definition
investing carries an extremely high degree of risk
Term
small cap fund
Definition
mutual fund that invest in companies whose market value is less than $1 billion, largely consist of smaller more volatile companies also called aggressive growhth stock mutual fund
Term
speculative
Definition
purchasing risky investments that present the possibility of large profits but also pose a higher than average possbility of loss
Term
track record
Definition
the past history of something with investments look at the five or ten year record
Term
variable annuity
Definition
annuity that has a varying rate of return based on the mutual funds to project better returns
Term
401k
Definition
defined contribution plan offered by a corporation to its employees which allows employees to set aside tax deffered income for retirement purposes in some cases employers will match their contributions
Term
403b
Definition

retirement plan similar to a 401k plan but one that is offered by non profit organizations such as hosiptals, schools, and some charitable organizations rather than corporations employees set aside tax deferred dollars

Term
457 plan
Definition
non qualified deferredd compensation plan established by state and local governments for tax exempt government agencies and tax-exempt employers eligible employers are allowed to make salary deferral contributions to the 457 plan earnings grow on a tax deferred basis and contributions are not taxed until the assets are distributed from the plan
Term
529 plan
Definition
college savings plan that allow individuals to save on a tax-deferred basis in order fund future college and graduate school expenses of a child or beneficiary; generally sponsored by a state these are professionally managed investments
Term
custodian
Definition
one who is responsible for an account listed in someone elses name
Term
direct transfer
Definition
movement of tax deferred retirement plan money from one qualified plan or custodian to another results in no immediate tax liabilities or penalties but requires irs reporting
Term
ESA educational saving account
Definition
after tax college fund that grows tax free for educational uses eligibility based on parents annual income
Term
IRA
individual retirement arrangement
Definition
tax-deferred arrangement for individuals with earned income and their non income producing spouses growth is not taxed unitl money is withdrawn contributions to an ira are often tax deductible
Term
pre paid tuition
Definition
paying for college ahead of time by accumulating units of tuition
Term
rollover
Definition
movement of funds from tax deferred retirement plan from one qualified plan or custodian to another incurs no immediate tax liabilities or penalties but require irs reporting
Term
roth ira
Definition
retirement account funded with after tax dollars that subsequntely grows tax free
Term
sepp
simplified employee pension plan
Definition
penision plan in which both the employee and the employer contribute to an individual retirement account also available to the self employed
Term
tax favored dollars
Definition
money that is working for you either tax deferred or tax free within a retirement plan
Term
ugma
uniform gifts to minors act
Definition
legislation that provides a tax effective manner of transferrign property to minors without the complications of trust or guardianship restrictions
Term
utma
uniform transfers to minors act
Definition
law similar to the uniform gifts to minors act that extends the definition of gifts to include real estate paintings royalties and patents