MoneyU Glossary of Terms


MoneyU Glossary of Terms


Browse the glossary using this index

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D

Daily Periodic Rate

The daily periodic rate is your annual interest rate expressed on a daily basis. It equals 1/365th of your annual percentage rate.

Death Certificate

A legal document produced by the states showing that a person has died. It is used to obtain proceeds from life insurance policies and to show the probate court that the probate process should begin.

Debit Card

This card allows you to deduct the amount of your purchase directly from your checking account for payment to the merchant.

Debt

A liability or obligation in the form of bonds, loan notes, or mortgages, owed to another person or persons and required to be paid by a specific date.

Debt Consolidation

The replacement of multiple loans with a single loan, often with a lower monthly payment and a longer repayment period. (Also called Consolidation Loan.)

Debt Manager

Someone that restructures your current debt with your existing creditors. You don't loan money from them (or anyone else) and you still owe all of the same creditors. However, the Debt Manager can help change the terms and conditions that apply to your current debt. The Debt Manager then consolidates your debts into one monthly payment. You pay the Debt Manager and the Debt Manager sends your payments to your creditors for you each month.

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.

Defined-contribution plan

The employer makes predefined contributions for the employee, but the final amount of benefit received by the employee depends on the investment's performance.

Deflation

A downward trend in prices; the opposite of inflation.

Delinquency

When loan payments are not paid according to the terms of the agreement/promissory note. Late fees are often assessed on delinquent accounts, and delinquency results in default.

Delinquency Assessment/Late Fee

A fee that is charged for a late payment.

Demand

The quantities of a particular good or service that consumers are willing and able to buy at differ­ent possible prices at a particular time.

Deposit Account

An account at a bank or credit union that may pay interest and is usually insured against loss

Disability Insurance

Replaces a portion of income lost when a person cannot work because of illness or injury.

Disclosure Statement

A disclosure statement details the actual cost of a loan, including all estimated interest costs and loan fees. For credit card accounts, this information may be found in the Cardmember Agreement.

Discounting

The process of computing how much you need to set aside today to reach a future amount, based on interest-rate assumptions.

Discretionary Spending

Spending that isnÔÇÖt necessary. This refers to things like magazines, going to the movies, grabbing some fast food for dinner, internet access, gifts for people, clothing, etc.

Disposable income

Gross pay minus deductions for taxes.

Dispute

To question the accuracy of information on a credit report. Disputes can now be effectively resolved online by notifying Equifax.

Diversification

Holding several investments that have different risks. The concept of "Don't put all your eggs in one basket." The chance that a single stock or other investment will lose money is offset by the chances of your other stocks and investments making money.

Dividend Reinvestment

An arrangement that allows dividends on stocks or mutual funds to be used to purchase additional shares of the stock or mutual fund. A way of compounding the return on your investment.

Dividend Reinvestment Plan (DRIP)

An arrangement that combines dividend reinvestment with the opportunity to purchase additional shares of stock directly from the company at a reduced price.

Dollar Cost Averaging

The process of purchasing stocks or mutual funds periodically at different market prices. Over long periods of time, the average cost of your shares tends to be less than the current market price.

Domicile

A person's permanent home. The place where a person lives and intends to live for the indefinite future. Sometimes called legal residence. At any one time a person can have only one domicile.

Donor

Same as grantor.

Down Payment

The amount of cash that a purchaser needs to put toward the cost of a home, automobile, or other large purchase that is being financed (taking out a loan).

Due Date

The day a payment is due to a creditor. After that date, a late fee can be charged, the payment can be recorded as late, and the account can be considered delinquent.

Durable Power Of Attorney

A power of attorney that remains valid when the principal becomes incapacitated.

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