Personal Finance Life lessons Taxpayer: “It’s my money!” Government: “Oh, you think so, huh…?”

Banking Credit union: depository institution owned by the members (usually some kind of union). Offer lower fees/rates & higher interest. Checking, savings accounts Loans: borrow $ +interest Interest: price you pay to borrow their $$$ Simple interest: SI=P+R+T (principal + interest rate +time) Compound interest: interest is earned on the principal PLUS the interest (mortgages, credit cards) [used to be called usury:illegal in Rome & denounced in the Bible!]

Compound interest: 20% (it will eat you alive)

Credit/Investing Incentive: motivation to invest Risk/return: high risk, high return; low risk, low return APR (Annual Percentage Rate): set by the lender for the year Credit cards: compound interest (!), high interest rates unless you have good credit (often follows APR—such as 3% above APR) Stocks: ownership in a corporation Bonds: promise to repay amount +interest Mutual funds: company that sells stock in itself & then invests the $ in other stocks/bonds 401K: retirement investment account— tax-deferred until retirement IRA: (Individual Retirement Account): retirement account; tax-deferred until retirement (Roth: NOT taxed!)

Only 2 things in life are certain: death & taxes… Progressive: higher % of tax as income rises (income tax) Regressive: higher % tax on lower incomes (sales tax on food) Proportional: same % tax on everyone (25%) Income: tax on your income (ours is progressive) Sales: local/state/county tax (7% in Henry Co.—not food) State, federal, county, city/township: Luxury tax: expensive cars, real estate, jewelry, boats, airplanes, sports teams, lottery winnings Inheritance/estate tax: tax in assets/$ of deceased (“death tax”: now 35%, set to go to 55% if fiscal cliff happens!)

Insurance Asset protection: methods to protect assets from liability (mortgages, limited partnerships, trusts, retirement accounts, clothing, personal property, Social Security); protected from bankruptcy, lawsuits Home/property: protection for your home, buildings Automotive: protection for your vehicle[liability: required by law, protects THEIR car; collision: repairs YOUR car] Life: insurance in the event of death (but not suicide) Disability: insurance for physical disability (length varies) Deductible: amount you pay before the insurance kicks in Premium: amount you pay per month/quarter/year Liability: your responsibility in an event