Acronyms

U.S. Individual Income Tax Return: Primary tax return form for U.S. individual taxpayers

1099 Form reports income from non-employment sources (freelance, investments, etc.)

Nonemployee Compensation: Tax form reporting payments to independent contractors

403(b) Plan: Tax-advantaged retirement plan for nonprofits and public schools

American Bankers Association; also refers to the bank routing number (ABA routing number)

Affordable Care Act: Federal law expanding health insurance access and marketplace options

Automated Clearing House: Electronic network for processing direct deposits and bill payments

Americans with Disabilities Act: Law requiring accessible housing accommodations

Adjusted Gross Income: Gross income minus specific deductions; determines tax bracket

Asset Limited, Income Constrained, Employed: United Way metric for households above poverty line but financially struggling

Area Median Income: Median income for a metro area; used to determine housing assistance

Anti-Money Laundering: Laws and procedures to prevent disguising illegally obtained funds

Alternative Minimum Tax: Ensures higher earners pay a minimum amount of federal tax

Accounts Payable: Money a business owes to its suppliers or vendors

Annual Percentage Rate: The yearly cost of borrowing money, including fees and interest

Annual Percentage Yield: The real rate of return on savings, accounting for compound interest

Accounts Receivable: Money owed to a business by its customers

Adjustable-Rate Mortgage: A mortgage with an interest rate that changes periodically

Annual Recurring Revenue: Yearly predictable revenue; MRR × 12

American Recovery and Reinvestment Act: A 2009 stimulus bill passed during the Great Recession

After-Repair Value: Estimated value of a property after renovations are complete

Automated Teller Machine: Self-service machine for withdrawals and deposits

Assets Under Management: Total market value of assets a fund or advisor manages

Automated Underwriting System: Software used to evaluate mortgage applications

Business to Business: Selling products or services to other businesses

Business to Consumer: Selling products or services directly to individual customers

Bankruptcy: Legal process for eliminating or restructuring debts under court protection

Bank Secrecy Act: U.S. law requiring banks to assist in detecting money laundering

C Corporation: Standard corporation taxed separately from its owners

Cease and Desist: Letter demanding a debt collector stop contacting you

Collection Agency: A third-party company that collects overdue debts

Customer Acquisition Cost: Total cost to acquire one new customer

Compound Annual Growth Rate: Rate at which an investment grows annually over a period of time

Capitalization Rate: Ratio of NOI to property value; used to assess investment returns

Coronavirus Aid, Relief, and Economic Security Act: 2020 COVID-19 relief legislation, including stimulus checks

Certificate of Deposit: Time-locked savings account with a fixed interest rate

Closing Disclosure: Final document detailing all loan costs, due 3 days before closing

Consumer Financial Protection Bureau: Federal agency protecting consumers in financial transactions

Chapter 13 Bankruptcy: Reorganization bankruptcy with a 3–5 year repayment plan

Chapter 7 Bankruptcy Liquidation bankruptcy that eliminates most unsecured debts

Credit Limit Increase: An increase in the maximum amount you can borrow on a credit line

Combined Loan-to-Value Ratio: All loan balances combined divided by property value

Comparative Market Analysis: Estimate of a home's value based on similar recent sales

Charge-Off: When a lender writes off a debt as unlikely to be collected

Coordination of Benefits: Process determining which insurer pays first when covered by multiple plans

Consolidated Omnibus Budget Reconciliation Act: Law allowing continuation of employer health coverage after job loss

Cash-on-Cash Return: Annual pre-tax cash flow divided by total cash invested

Cost of Living Adjustment: Increase in income or benefits to keep up with inflation

Cost of Goods Sold: Direct costs tied to producing goods or services sold

Credit Report: Detailed record of your credit history from lenders

Credit Reporting Agency: Companies that collect credit data (Equifax, Experian, TransUnion)

Child Tax Credit: Tax credit for families with qualifying dependent children

Credit Utilization: Percentage of available revolving credit currently in use

Directors and Officers: Liability insurance for corporate board members

Doing Business As: Fictitious name a business operates under, different from legal name

Demand Deposit Account: A standard checking account accessible on demand

Dow Jones Industrial Average: Stock index tracking 30 large U.S. publicly traded companies

Dividend Reinvestment Plan: A program that automatically reinvests dividends to purchase more shares

Debt Service Coverage Ratio: Ratio of income to debt payments; used in investment property loans

Debt-to-Income Ratio: Monthly debt payments divided by gross monthly income; used by lenders

Debt Validation: Consumer's right to request proof that a debt is valid

Errors and Omissions: Professional liability insurance for mistakes in services provided

Earnings Before Interest, Taxes, Depreciation, and Amortization: Measure of core business profitability

Equal Credit Opportunity Act: A Law prohibiting discrimination in credit decisions

Emergency Fund: 3–6 months of living expenses saved for unexpected events

Electronic Funds Transfer: Any transfer of money via electronic systems

Economic Injury Disaster Loan: SBA low-interest loans for businesses in declared disaster areas

Employer Identification Number (Tax ID for businesses, similar to a SSN for companies

Earned Income Tax Credit: Refundable tax credit for low-to-moderate income workers

Earnest Money Deposit: Good-faith deposit made by a buyer when making an offer

Explanation of Benefits: Document from insurer explaining what was paid for a medical claim

Earnings Per Share: Company's profit divided by its number of outstanding shares

Environmental, Social, and Governance: Investment criteria measuring a company's ethical impact

Fair Credit Reporting Act: Law governing how credit bureaus collect and use credit info

Fair Debt Collection Practices Act: a law limiting how debt collectors can contact consumers

Federal Deposit Insurance Corporation: Insures deposits up to $250,000 per bank per depositor

Federal Housing Administration: Government agency insuring mortgages for low-down-payment buyers

Fair Housing Act: Law prohibiting housing discrimination based on protected characteristics

Federal Housing Finance Agency: Regulator overseeing Fannie Mae, Freddie Mac, and FHLBanks

Fair Isaac Corporation: The most widely used credit scoring model (scores range 300–850)

Financial Industry Regulatory Authority: Self-regulatory organization overseeing broker-dealers

Financial Independence, Retire Early: A movement focused on aggressive saving/investing to retire early

Family and Medical Leave Act: Law allowing eligible employees unpaid leave for family/medical reasons

Fair Market Rent: HUD's estimate of typical rent in a given area for voucher programs

Fixed-Rate Mortgage: Mortgage with an interest rate that never changes

Flexible Spending Account: Pre-tax account for medical or dependent care expenses

Federal Trade Commission: Federal agency protecting consumers from unfair business practices

Goodwill Deletion: Request to remove a negative item from credit report as a goodwill gesture

Good Faith Estimate: Lender's estimate of mortgage closing costs (now replaced by Loan Estimate)

Gini Coefficient: Statistical measure of income inequality within a population

General Liability: Business insurance covering injury or property damage claims

Government-Sponsored Enterprise: Fannie Mae and Freddie Mac; buy and securitize mortgages

Housing Choice Voucher: The formal name for the Section 8 rental assistance program

High-Deductible Health Plan: Health plan with lower premiums and higher out-of-pocket costs

Home Equity Conversion Mortgage: The most common type of reverse mortgage; FHA-insured

Home Equity Loan: Lump-sum loan secured by your home's equity

Home Equity Line of Credit: Revolving credit line secured by your home's equity

Household Income: Total income earned by all members of a household

Home Mortgage Disclosure Act: a law requiring lenders to report mortgage data to identify discrimination

Health Maintenance Organization: Health plan requiring referrals and in-network providers

Homeowners Association: An organization that enforces rules and collects fees in a community

Head of Household: Tax filing status for unmarried people supporting a dependent

Homeowners Insurance: Property insurance covering damages and liability for homeowners

Health Savings Account: Tax-advantaged account for medical expenses; triple tax benefit

Housing and Urban Development: Federal agency overseeing housing policy and fair housing laws

High-Yield Savings Account: Savings account offering significantly higher interest than standard

Income-Based Repayment: Student loan repayment plan based on your income level

Income-Driven Repayment: Student loan plans that cap payments based on income

International Monetary Fund: International organization promoting global economic stability

Initial Public Offering: The first time a company's stock is offered to the public

Internal Revenue Service: U.S. federal agency responsible for collecting taxes

Individual Taxpayer Identification Number (Tax ID for those without a Social Security Number

Individual Voluntary Arrangement: Formal debt repayment plan agreement with creditors

Key Performance Indicator: Measurable value showing how effectively a goal is being achieved

Know Your Customer: Bank process to verify customer identity and prevent fraud

Low-Income Housing Credit: Also referred to as LIHTC, a tax credit encouraging affordable housing development

Low-Income Housing Tax Credit: Federal tax credit program incentivizing affordable rental housing

Limited Liability Company: Business structure protecting owners from personal liability

Long-Term Capital Gains: Profit from selling an asset held for more than one year; taxed at a lower rate

Long-Term Disability: Insurance replacing income if unable to work long-term

Loan-to-Value Ratio: Loan amount divided by the appraised property value

Modified Adjusted Gross Income: AGI with certain deductions added back; used for Roth IRA limits

Mutual Fund: Pooled investment vehicle managed by a professional fund manager

Married Filing Jointly: Tax filing status for married couples combining income on one return

Married Filing Separately: Tax filing status where married spouses file individual returns

Mortgage Insurance Premium: Insurance required on FHA loans regardless of down payment

Multiple Listing Service: Database of homes listed for sale shared by real estate agents

Money Market Account: Savings account with higher interest rates and limited transactions

Monthly Recurring Revenue: Predictable monthly revenue from subscriptions or repeat customers

Municipal Utility District: Special district providing utility services; adds to property taxes

Minimum Viable Product: Simplest version of a product to test with early customers

National Association of Securities Dealers Automated Quotations: U.S. electronic stock exchange known for tech companies

Net Asset Value: Per-share value of a mutual fund or ETF

National Credit Union Administration: Insures credit union deposits up to $250,000

Non-Disclosure Agreement: Legal contract protecting confidential business information

Net Operating Income: Income from a rental property after operating expenses, before taxes

Non-Owner Occupied Property not used as the borrower's primary residence

Non-Sufficient Funds Fee: charged when a transaction is attempted with insufficient funds

Net Worth: Total assets minus total liabilities

Office of the Comptroller of the Currency: Regulates national banks and federal savings associations

Overdraft: When a bank account balance goes below zero

Owner Occupied: Property used as the borrower's primary residence

Out-of-Pocket Maximum: Maximum amount you pay for covered health services in a year

Price-to-Earnings Ratio: Stock valuation metric; stock price divided by earnings per share

Principal and Interest: The two main components of a mortgage payment

Profit and Loss Statement: Financial report summarizing revenues and expenses over a period

Private Equity: Investment in companies not publicly traded on stock exchanges

Pay for Delete Agreement to pay a debt in exchange for removing it from credit report

Personal Identification Number: Numeric password used to authorize transactions

Personal Injury Protection: Auto insurance covering medical expenses regardless of fault

Principal, Interest, Taxes, Insurance: Full monthly mortgage payment breakdown

Private Mortgage Insurance: Insurance required when the down payment is less than 20%

Preferred Provider Organization: A Health plan with flexibility to use out-of-network providers

Paycheck Protection Program: COVID-era forgivable small business loans through the SBA

Public Service Loan Forgiveness: Program forgiving student loans after 10 years in public service

Planned Unit Development: A community with shared amenities and its own set of rules

Qualified Business Income: Deduction allowing the self-employed to deduct up to 20% of business income

Real Estate Investment Trust: A company owning income-producing real estate; trades like a stock

Real Estate Owned: Property owned by a lender after a failed foreclosure sale

Real Estate Settlement Procedures Act: Law requiring disclosure of settlement costs in real estate transactions

Return on Equity: Net income divided by shareholder equity; measures profitability

Return on Investment: Profit made on an investment expressed as a percentage

S Corporation: Tax designation allowing business income to pass through to owners

Standard & Poor's: Refers to the S&P 500 index tracking 500 large U.S. companies

Small Business Administration: Federal agency supporting small businesses with loans and resources

Securities and Exchange Commission: Federal agency regulating U.S. securities markets and investors

Simplified Employee Pension IRA: Retirement plan for self-employed individuals and small business owners

Savings Incentive Match Plan for Employees IRA: Retirement plan for small businesses with 100 or fewer employees

Supplemental Nutrition Assistance Program: Federal food assistance program (formerly food stamps)

Statute of Limitations: Time limit on how long a creditor can sue to collect a debt

Standard Operating Procedure: Documented step-by-step instructions for routine operations

Social Security Number: 9-digit number used for identification and tax purposes

Short-Term Capital Gains: Profit from selling an asset held less than one year; taxed as income

Short-Term Disability: Insurance replacing income for a temporary disability

Society for Worldwide Interbank Financial Telecommunication: Network for international wire transfers

Temporary Assistance for Needy Families: Federal welfare program providing cash assistance

Troubled Asset Relief Program: a 2008 government bailout program for banks during the financial crisis

Total Expense Ratio: Annual cost of owning a fund, expressed as a percentage

Truth in Lending Act: Law requiring lenders to disclose loan terms and APR clearly

TILA-RESPA Integrated Disclosure: Combined rule requiring Loan Estimate and Closing Disclosure forms

U.S. Dept. of Agriculture (Loan): Government mortgage for rural and suburban homebuyers

Underinsured/Uninsured Motorist: Auto coverage protecting you if hit by an uninsured driver

Veterans Affairs (Loan): Government-backed mortgage for military veterans and service members

Venture Capital: Financing provided to startups and early-stage companies for equity

Wage and Tax Statement: Form showing annual wages and taxes withheld from an employer

Employee's Withholding Certificate: Form employees fill out to set federal tax withholding

W-9 Form: IRS form that contractors fill out for clients to report payments

World Bank: International financial institution providing loans to developing countries

Women, Infants, and Children: Federal nutrition program for low-income pregnant women and young children

Year-to-Date: Performance or value measured from the start of the current year