Tools

Glossary

All the vocabulary words from the site.

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 savings: Money set aside for surprises, so a flat tire is a problem and never a crisis. You set the target. Many people start at $1,000.
junk spending: Spending money you do not have on things that do not really make you happy. Buying to feel something instead of buying to use something.
dividends: Money some companies pay you just for owning their stock. It is a kind of income, and it shows up without you selling anything, usually every three months.
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.
liquid asset: Something you own that turns into cash fast: money in accounts, savings. A car or home has value too, but selling takes time. That makes them illiquid.
gross income: Your pay before taxes come out. The bigger number on the offer letter. You live on take-home, never on gross.
income tax: Tax taken out of your pay to fund public services. It is why gross pay and take-home pay differ.
sales tax: Tax added at the register on most purchases, set by your state and city. A few states charge none.
good debt: Low-rate borrowing for something that grows your income or your value. The interest rate and what the money builds decide whether debt helps you.
bad debt: High-rate borrowing for things that lose value: card balances that roll over, payday loans, rent-to-own. It drains you every day you hold it.

See a vocab word anywhere on this site with a dotted underline? Tap it for the definition right there.