Personal Finance Dictionary – Quick Reference

Table of Contents

• A‑C
• D‑F
• G‑I
• J‑L
• M‑O
• P‑R
• S‑Z

Quick‑Look Table

A – C

401(k)

• Employer‑sponsored retirement savings plan.
• Contributions are taken from your paycheck before taxes.
• Many employers provide a matching contribution.
• Penalty‑free withdrawals start at age 59½. IRS details

529 College Savings Plan

• Tax‑advantaged account for qualified education expenses.
• Earns tax‑free growth; withdrawals for tuition, books, etc., are tax‑free.
• State‑run but portable across states. IRS QTP info

Adjustable‑Rate

• Interest rate that changes based on a market index (e.g., LIBOR, Treasury).
• Can cause payments to rise or fall over the life of the loan. Wikipedia

Annual Interest Rate (APR)

• The yearly cost of borrowing, expressed as a percentage and including fees.
• Used to compare credit‑card offers, loans, and mortgages. Investopedia

Bankruptcy

• Legal process that allows you to eliminate or restructure debts.
• Remains on your credit report for up to ten years. Wikipedia

Chapter 7 Bankruptcy

• Liquidation case – non‑exempt assets are sold to pay creditors.
• Most unsecured debts (credit‑card, medical) are discharged.
• Credit impact: stays on the report for 10 years.
• Official overview: U.S. Courts

Chapter 13 Bankruptcy

• Repayment plan (3–5 years) that lets you keep property while paying creditors.
• After the plan, any remaining unsecured debt is discharged.
• Official overview: U.S. Courts

Cash Advance

• Credit‑card transaction for cash, usually at a higher APR than purchases.
• Often subject to a flat‑fee plus interest from the date of the advance.
• Details: Wikipedia

D – F

Credit Score

• Three‑digit number (300‑850) summarising your creditworthiness.
• Higher scores mean better borrowing terms.
• CFPB’s credit‑score guide: CFPB

Debt‑to‑Income (DTI) Ratio

• Monthly debt payments ÷ gross monthly income.
• Lenders typically like a DTI ≤ 43 %.

G – I

Florida Bankruptcy Exemptions

J – L

Means Test

• Calculator that compares household income to the Florida median.
• If income is below the median → eligible for Chapter 7.
• If above → must file Chapter 13 (or prove special circumstances).

M – O

Automatic Stay

• Immediate court order halting most collection actions once a bankruptcy petition is filed.
• Violations can lead to sanctions against the creditor.

Discharge

• Legal order that releases the debtor from personal liability for certain debts.
• Most unsecured debts are dischargeable; some (student loans, certain taxes) are not.
• Wikipedia overview: here

Reaffirmation Agreement

• Written promise to keep a debt (e.g., car loan) after filing bankruptcy, making you liable again.
• Must be filed with the court and approved (or creditor consents in writing).
• U.S. Courts explanation: here

P – R

Secured Loan

• Loan backed by collateral (home, car, etc.).
• If you default, the lender can repossess the collateral.

Unsecured Loan

• Debt not tied to any specific asset (e.g., credit‑card, medical bills).
• Lender relies solely on the borrower’s promise to pay.

S – Z

Settlement (Debt)

• Negotiated agreement where a creditor accepts less than the full balance.
• Often reported as “settled” on credit reports – may affect score.

Securitization

• Pooling of loans (mortgages, credit‑card receivables) that are sold as securities to investors.