MoneyU Glossary of Terms


MoneyU Glossary of Terms


Browse the glossary using this index

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D

Debt Ratio/Debt Burden

An amount of money you owe to banks or credit issuers. It is the percentage of your income that goes to paying your debts every month. Debt ratio usually gives a clear picture of your overall financial well-being. To calculate your debt ratio, first add up all your monthly income including take-home pay (after taxes), Social Security or disability benefits and alimony. Then add up all your monthly payments for interest bearing loans and accounts, such as mortgages, student loans, credit cards and car loans. If you rent your home, include that amount, but do not include utilities and telephone charges because they can vary on a monthly basis. Finally, divide your monthly payments by your income. Multiply the result by 100 and that number is your debt ratio percentage.

A low ratio is under 20%, which means that you are in good financial health and are doing a good job of managing your money.

A moderate ratio is between 21% and 40%. This means that you should look carefully at your monthly payments and start decreasing your overall level of debt, including credit cards.

A high debt burden is over 40%. You should immediately stop accumulating debt and start looking for ways to decrease your debt or increase your income.

Debt Repayment Plan

A plan you create to most efficiently repay all of your debts.

Debt-to-Income Ratio

Your debt-to-income ratio compares the amount of your debt (excluding your mortgage or rent payment) to your income.

Decedent

A deceased person.

Decision making

The process of considering alternatives and analyzing information to make a choice.

Decision making process

There are several models of the decision making process. Generally it is a process used to determine and/or set goals and can be defined as a series of actions that includes: 1) Stating or identifying the problem; 2) Identifying a variety of solutions; 3) Comparing the advantages and disadvantages of possible solutions; 4) Making a decision; 5) Implementing the decision; and 6) Evaluating the decision based on the desired outcome.

Deductible

The dollar amount or percentage of a loss that is not insured, as specified in an insurance policy.

Default

Failure to pay a debt as outlined in the cardholder agreement, bankruptcy, or an inability or unwillingness to pay your debt. If you default on your credit card account, the issuer cancels your account and demands full payment of the outstanding balance

Deferred Payment

Payments put off to a future date or extended over a period of time. Interest will usually still accumulate during deferment.

Defined-benefit plan

The employer guarantees that the employee will receive a definite amount of benefit upon retirement, regardless of the performance of the underlying investment pool.


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