MoneyU Glossary of Terms


MoneyU Glossary of Terms


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SAVINGS

Savings Bond

A promise by the U.S. government to repay principal and a return in the future. The return may be based on government note rates or on the rate of inflation plus a small fixed rate. Savings bonds are available for as little as $25.

Social Security Taxes

Social Security taxes are paid to Old Age Survivors and Disability Insurance (OASDI) and Medicare. For 2006, employee and employer each pay 7.65% of the first $94,200 of the employee's salary as Social Security taxes. For any additional income, employee and employer each pay 1.45% to Medicare. Self-employed persons pay 15.3% of their first $94,200 in salary to Social Security taxes in 2006. For higher incomes, they pay 2.9% to Medicare.

Stocks

Securities representing equity ownership in a corporation.

Tax-Deferred Earnings (Investment)

Earnings on which taxes are not paid until a future date, usually when funds are withdrawn. The TSP and traditional IRAs are examples of vehicles that offer tax-deferred earnings.

Tax-Exempt Earnings

Earnings on which taxes are never paid. Roth IRAs and municipal bonds are examples of vehicles that offer tax-exempt earnings.

Taxable Income

Any money you earn or receive - such as salary, bonuses or interest from investments - that can be taxed by the Federal, state, or local government.

SCORE

Bad Credit

Poor credit rating. Things that damage your credit rating include late or missed payments, exceeding the credit line on cards, defaulting on loans, or declaring bankruptcy.

Bankruptcy

Legal process for selling most of the debtorÔÇÖs property to help satisfy debts that canÔÇÖt be repaid, in exchange for (a) relieving debtors of the responsibility of paying their financial obligations or (b) protecting them while a plan is created and they try to repay debts. Two types of bankruptcy apply to consumers -┬á Chapter 7 and Chapter 13. Once a bankruptcy has been filed, foreclosures, garnishments, repossessions, utility cut-offs and debt collection activities are automatically stayed.

Borrower

The person who signs and agrees to the terms of a promissory note and is responsible for repaying the loan.

Charged Off

A term on your credit report that means that the creditor attempting to collect a particular debt gave up and is no longer trying to get payment from you.

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