2. Personal Financial Literacy Mrs. VanWart

3. 1.CD = certificate of deposit lock in a guaranteed interest rate for specific period of time usually slightly higher than savings account incur penalty for early withdrawal

4. 2.credit cards: charge a purchase bill comes once a month can pay minimum balance or more interest charged on unpaid balance merchant typically pays 3% of transaction

5. 3.IRA = individual retirement account must have earned income can contribute up to $5500 per year (+$1K “catch-up” if over age 50) may be income limitations can use either: -pre-tax money (traditional IRA) or -after-tax money (Roth IRA)

6. 4.stock: publicly-owned company sells shares for capital shareholder owns part of the company prices can be volatile

7. 5.mutual fund: group of stocks (by sector, type, etc) actively or passively managed allows investor to buy more types of stock for less money

8. 6.bond: similar to an IOU bondholder gets interest from issuer types of bonds: -corporate -treasury -savings (EE or I) -municipal

9. 7.mortgage: loan on a home or other real estate secured by that property “under water” mortgage: -more is owed on the mortgage than the property is worth

10. 8.formula to calculate simple interest: I = prt (interest = principal x rate x time)

11. 9.FICO score: credit score that lenders use to determine interest rate of loan approval ranges from 350-850 Fair Isaac Corporation request one free credit report each year: www.annualcreditreport.com

12. 10.FAFSA = Free Application for Federal Student Aid: parents usually complete the form colleges use it to determine financial aid and expected family contribution (“EFC”)

13. 11.529 plan: tuition savings plan earnings are tax-exempt if used for qualified expenses different states have different rules

14. 12.401(k) plan: company sponsored retirement savings plan often company will match contributions current limit = $17,500 per year (+ $5500 if over age 50) withdrawal at age 59 ½ or later -or incur a penalty

15. 13.Income tax filing deadline: April 15 (usually)

16. 14.New Jersey unemployment rate: 9.8% (July 2012) 7.8% (Dec 2013) U.S.: 6.7% Rate dropped “for wrong reasons”

17. 15.New Jersey sales tax: 7% 3.5% in urban enterprise zones