Tools
Every money word, in plain words
No jargon survives here. If a word on this site confused you, it is on this page.
- income
- Money coming in. Your pay, plus anything else you earn.
- expense
- Money going out. Rent, food, phone, all of it.
- asset
- Something you own that has value or puts money in your pocket. A home, savings, a car you own outright.
- debt
- Money you owe someone. A loan, a credit card balance, a payment plan.
- liability
- Anything that takes money out of your pocket. Debts are liabilities.
- net worth
- What you own minus what you owe. This is the number we grow.
- interest
- The price of borrowing money. When you borrow, you pay it. When you save, the bank pays you.
- interest rate
- The percent that sets how much interest you pay or earn in a year.
- budget
- A plan for your money. What comes in, what goes out, and what you keep.
- take-home pay
- What actually lands in your hands after taxes come out. Budget with this number, never the bigger one.
- pay schedule
- How often you get paid: weekly, every 2 weeks, twice a month, or monthly.
- emergency stash
- Money set aside for surprises, so a flat tire is a problem and never a crisis. First goal: $1,000.
- save first
- Putting savings away the moment you get paid, before you spend. Even $10 counts.
- overdraft
- When you spend more than your account holds and the bank covers it, usually for a fee.
- autopay
- A bill that pays itself on time automatically from your account.
- credit
- Your track record of paying money back. Good credit makes borrowing cheaper.
- credit score
- A number, usually 300 to 850, that tells lenders how you have handled money you borrowed.
- credit report
- The record behind your score: your accounts, balances, and payment history. Free at AnnualCreditReport.com.
- credit utilization
- How much of your card limits you are using. Under 30% helps your score.
- secured card
- A credit card backed by your own deposit. A common first step to build credit from nothing.
- collections
- What happens when a bill goes unpaid long enough that it is sold to a company that chases it. It hurts your score, and it can be recovered from.
- principal
- The amount you actually borrowed, before interest.
- down payment
- The cash you put in up front when you buy a home. Often 3% to 5% for first-time buyers, never only 20%.
- closing costs
- The fees to finish buying a home: lender, title, taxes. Plan on about 3% of the price.
- mortgage
- A loan for buying a home, paid monthly over many years, usually 15 or 30.
- PMI
- Private mortgage insurance. An extra monthly cost most lenders charge when your down payment is under 20%.
- PITI
- The real monthly cost of a home: Principal, Interest, Taxes, and Insurance, together.
- property taxes
- Yearly taxes on a home, usually collected monthly inside your mortgage payment.
- homeowners insurance
- Insurance that protects the home. Lenders require it. Also paid monthly in most mortgages.
- DTI
- Debt-to-income. The slice of your monthly income that goes to debt payments. Lenders want it under about 43%.
- pre-approval
- A lender's written estimate of what they would loan you. It is a shopping tool, and it is free.
- appraisal
- A professional opinion of what a home is worth, ordered by the lender before they fund the loan.
- inspection
- A professional check of a home's condition before you buy. Never skip it.
- equity
- The part of the home you truly own: what it is worth minus what you still owe on it.
- appreciation
- When a home's value rises over time. Never guaranteed, and never the whole plan.
- cash flow
- For a rental: rent money in, minus every cost, every month. Positive cash flow means the property pays you.
- vacancy
- The weeks or months a rental sits empty and pays you nothing. Real math always budgets for it.
- cash-on-cash return
- The yearly cash a deal pays you, divided by the cash you put in. A quick honesty check on any rental.
- house hacking
- Living in part of a property and renting out the rest, so tenants help pay your mortgage.
- flipping
- Buying a home, fixing it, and selling it for more. Profit lives in the buy price and the rehab discipline.
- ARV
- After-repair value. What a fixed-up home should sell for. Every flip starts with an honest ARV.
- BRRRR
- Buy, Rehab, Rent, Refinance, Repeat. An advanced way to recycle the same cash into several rentals.
- refinance
- Replacing a loan with a new one, usually to pull out cash or get a better rate.
- landlord
- The owner of a rental. A part-time job with real duties, never free money.
- generational wealth
- Wealth that outlives you and lifts your family: a paid-off home, savings, things you can pass down.
- financial independence
- When your money and assets cover your life, so work becomes a choice.
See a money word anywhere on this site with a dotted underline? Tap it for the definition right there.