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Final Flashcards

1
Q

What are the different educational curriculums that Bank On Louisville offers?

A

Start Smart!, Start Fresh, Credit as an Asset

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2
Q

What is the Cliff Effect?

A

When a person headed towards financial security is give a wage raise, however, the raise prevents them from receiving their benefits but does not equal the ‘cost’ of their benefits

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3
Q

Minimum Wage

A

The lowest wage an employer can pay an employee based on their state or federal regulations

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4
Q

Living Wage

A

How much a person working full time needs to make in order to fully support them and their families and fall above the federal poverty level

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5
Q

What does underbanked mean?

A

When a person prefers cash transactions rather than using financial services. They typically only use financial services twice a month to cash checks

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6
Q

What does unbanked mean?

A

Unbanked households have no bank relationship whatsoever

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7
Q

What is Bank On 2.0

A

A program that was created to get all Bank On locations to follow the same procedures. It also created the National Account Standards and the National Data Hub

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8
Q

What are reasons that people do not have bank accounts/Why do payday lenders thrive?

A

generational trauma, feeling unwelcomed in financial institutions, or being in the ChexSystems. Payday lenders thrive because they dont require credit checks, cash checks and get money that day, very few regulations they have to follow

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9
Q

What does Nudge mean?

A

When you push somebody in a direction by making the process easier. For example, automatically signing employees up for a 401K but giving them the option to opt out.

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10
Q

This system is used by Banks and Credit Unions to check whether a person has had a bank account closed on them by a financial institution

A

ChexSystem

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11
Q

This is a resource that can produce value to the owner

A

Asset

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12
Q

Is considered one of the founders of the Financial Empowerment and Asset building field

A

Michael Sherraden

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13
Q

This city gave birth to the Bank On Movement

A

San Francisco

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14
Q

Was a piece of legislation to help correct the errors of the Great Recession and create the CFPB

A

Dodd-Frank Act

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15
Q

The activities that lead to an increased understanding of financial and personal tools, resources, and services

A

Financial Education

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16
Q

Having enough resources to pay for food, healthcare, housing and other basic needs, naviagate short term rises, and begin to build personal assets

A

Financial Stability

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17
Q

A process of accumulating, developing, and preserving financial human, and social resources to increase economic stability

A

Asset Building

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18
Q

A person’s knowledge about his/her own personal finances

A

Financial Literacy

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19
Q

Being able to take effective action to pursue financial stability and weather downturns

A

Financial Capability

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20
Q

A form of financial empowerment support that offers a relationship-based approach to encourage goal setting and self-accountability

A

Financial Coaching

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21
Q

Nationwide campaign to save money using social marketing

A

America Saves

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22
Q

Only Financial Empowerment Regulator at Federal Level

A

CFPB

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23
Q

Known for a yearly scorecard and organizing the Assets & Opportunity Network

A

Prosperity Now

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24
Q

Works with mayoral administrators to implement innovative programs and policies

A

CFE Fund

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25
BOL
Bank On Louisville
26
OFE
Office of Financial Empowerment
27
LADDER
Louisville Alliance for Development through Diversity, Empowerment, and Resources
28
LABC
Louisville Asset Building Coalition
29
CFPB
Consumer Financial Protection Bureau
30
FDIC
Federal Deposit Insurance Corporation
31
CFE Fund
Cities for Financial Empowerment
32
What is bounded rationality?
is inherent in the population, people have limited time and capacity to think deeply before acting. We underestimate the risk and overestimate others
33
What is a Financial Coach?
A person that helps consumers set goals, establish a plan of action, and change behaviors
34
Kentucky Payday Lending Interest Rate
469%
35
Community Reinvestment Act
Encouraged banks to help meet the needs of borrowers in all segments in their community, makes banks offer credit services to anywhere they take deposits, cant just offer to wealthy communities
36
CFPB Your Money, Your Goals
The CFPB educational curriculum
37
FDIC Money Smart
The FDIC educational curriculum
38
CRA
Community Reinvestment Act
39
What is the difference between banks and credit unions?
Banks are for profit whereas credit unions are not for profit
40
PIN
Personal Identification Number
41
Frank McNamara
Created the “Diners Club Card”. Diners all over would accept this card and card carriers would pay off their debt once a month. This was the birth of the credit card.
42
What are the Three Credit Bureaus?
Experion, Equifax, and Transunion
43
What is the difference between installment vs revolving credit?
Installment- you are approved for a specific loan amount taken out for a specific period of time. You pay back the total amount over that period of time. VS Revolving Credit- You are approved for a credit limit and you can spend any amount up to that credit limit. What you pay back each month varies depending on how much you borrow at the end of each month
44
FICO
Fair Isaac Corporation
45
JC Penney
JC stands for James Cash because, while he was alive, he never allowed for credit to be offered
46
What are the 5 C's of Credit?
Character (Payment History), Capacity (Income), Capital (Assets/Networth), Collateral (Loan security), Conditions (Of borrower and the economy)
47
What are the Four Walls?
Food, Clothing, Shelter, and Transportation
48
50/30/20 Budget?
50 towards necessities, 30 towards wants, 20 towards savings and debt
49
What is the difference between snowball vs high interest rate?
Snowball is when you start with the smallest amount but still make your minimums. When the debt is gone you throw all that money to the next debt. High interest rate is when you start with the largest interest debt and still make your minimums. When that debt is gone you throw all that money to the next debt
50
What are Dave Ramsey's 7 Baby Steps?
1. Have 1000 in emergency fund 2. Pay off all debt using debt snowball 3. 3 to 6 months of expenses in savings as a full emergency fund 4. Invest 15% of household income into retirement plan 5. Begin college fund for your kids 6. Pay off your home early 7. Build wealth and give
51
What are the 7 areas of Insurance?
Life, medical, home, auto, disability, long-term care, identity theft
52
What is the Brain Drain?
When the best and the brightest of a local area go elsewhere
53
What is outsourcing?
When a company turns control over to a cheaper company in a cheaper country
54
What is offshoring?
When a company moves manufacturing to a cheaper country
55
What are the 8 belts?
Rust, Sun, Energy, Wind, Wheat, Tech, Northeast corridor, research triangle
56
What's the difference between asset building and traditional benefit programs?
A process of accumulating, developing, and preserving financial, human, and social resources to increase the economic stability of individuals, families and the community VS Traditional approaches have emphasized increasing income
57
Dan Ariely
Wrote the book "predictably irrational' and is one of the founders of behavioral economcis
58
Elizabeth Warren
She proposed the Consumer Financial Protection Bureau and was appointed as a Special Advisor to the new agency. Also appointed as the Secretary of the Treasury to set up the new agency
59
Richard Cordray
The former Attorney General of Ohio and was nominated as the first director of the CFPB in 2010
60
What was the Panic of 1907?
Triggered by the failed attempt in October 1907 to corner the market on stock of the United Copper Company. When the bid failed, banks that had lent money to the cornering scheme suffered runs, leading to the downfall of the Knickerbocker Trust Company. The collapse caused a panic, which led to a vast number of people withdrawing their deposits from the regional banks
61
Why are checks being phased out?
Age demographic, cost to consumer, it takes time to clear, security issues, and direct deposit
62
Emergency Funds (5 general types, beginner emergency fund, etc)
5 general types of emergencies: car, home, medical, job loss, family. Put 1000 in a beginner emergency fund, emergency fund is not an investment it is insurance. Keep your emergency fund liquid and seperate
63
Interest
The money financial institutions pay you for keeping money deposited with them, but normally only on savings accounts. Compounding means earning interest on interest
64
What are Credit Bureaus?
Collect consumers’ credit information from creditors and store it
65
What is credit?
The ability to borrow money or access goods or services with the understanding that you’ll pay later
66
Hard credit check
is when you are looking to access credit (financial institutions, credit card companies, and car lots)
67
Soft Credit Check
is when it has nothing to do with accessing credit (employers, cell phones, utility companies)
68
Secured Credit Cards
Consumer and creditor agree to a credit limit. The consumer deposits that amount in a savings account that no one can touch while the card is active. When the card is closed, if there is still a balance the consumer has agreed to have the card paid off through the money set aside. The consumer is given the full amount when the card is closed and there is no balance.
69
What is the biggest action to build credit?
Making an on-time monthly payment and building a track record of it
70
Credit under the age of 18
Should not have a credit profile unless their parents made them an authorized user
71
Who is checking credit?
Housing (mortgage and renting), transportation (car dealerships, car insurance, renting), Employment (run credit checks to test reliability and responsibility), Cell phones (bill and deposit), Utility companies (deposits and rates), access (ability to get credit cards, apply for loans, and receive lower rates and fees)
72
Annualcreditreport.com
The way to request your credit report
73
Reading a credit report
Should Include: name, current address, SS#, DOB and Place OB, Employment History, Financial public record information such as consumer bankruptcies, judgements, and state and federal tax liens, collections, trades. Should NOT Include: race or ethnicity, arrests or convictions, marriage or adoption records, civil suits
74
Dave Ramsey
If you cant pay cash, you don’t buy it, FICO score is the “I love debt score” and has nothing to do with wealth or success, there's no good reason to have a credit card and responsible credit card se doesn’t exist
75
Which is worse, bad credit or no credit?
No credit is worse than bad credit. Bad credit they can see where your previous issues were but with no credit you are a wild card and a bigger risk
76
APR
Annual Percentage Rate
77
What CAN debt collectors do?
only contact the person who owes the debt and only contact you between 8 am and 9 pm
78
What CANT debt collectors do?
harass, oppress, or abuse you; call you at work, call third parties more than on time to obtain your location information, tell lies to collect debt, have you arrested
79
What are 7 reasons why people don't budget?
Afraid, don’t want to feel restricted/pride, intimidating, don’t know how, past failure, time and effort, volatile financials
80
What is Good debt?
Good debt is an investment in your financial future that should leave you better off in the long-term and not have a negative impact on your overall financial position
81
What is bad debt?
Bad debt are those that drain your wealth, are not affordable and offer no real prospect of being paid off in the future
82
Student Loan Forgiveness Avenue?
Public Service Loan Forgiveness- make payments for 10 years (120), only for government and nonprofit workers
83
National debt?
National debt is over 31 Trillion
84
Debt Clock
A clock that constantly calculates our national debt
85
What are the five taxes that come out of your paycheck?
Federal income, State income, city income, Medicare, social security
86
What is a financial plan?
A document containing a person’s current money situation and long-term monetary goals, as well as strategies to achieve those goals
87
What is the Net Worth equation?
Net Worth=Assets-Liabilities
88
What is a deductible?
What you have to pay out of pocket before the insurance company kicks in any money
89
What is a progressive tax?
Progressive is a tax that is higher for taxpayers with more money (like the US federal income tax)
90
What is a regressive tax?
Regressive Tax could either mean that the tax decreases as income increases or that the tax is flat (everyone pays the same rate)
91
Is a car an asset?
One of the worst investments you can make because it depreciates. They are a “necessary sinkhole"
92
EITC
Earned Income Tax Credit
93
VITA
Volunteer Income Tax Assistance
94
Liquidity
the availability of liquid assets to a market or company
95
Pension
The employer does all the saving and the money’s just there for the employee at retirement
96
Roth
you invest after-tax dollars, and it gives you more flexibility when retrieving the money (no penalty withdraws after 5 years, 10000 for first time home purchase, can be taken out with no penalties for disability)
97
Non-Roth
invest pretax dollars, government will take roughly 25% when you withdraw the money
98
Diversification
The 90/10 rule- 90% goes into something safe like index funds or highly rated mutual funds, 10% will go towards higher risk investments (single stocks) or more aggressive mutual funds
99
What are six social security issues?
Social security is expected to exceed its total income by 2034, meaning that it can pay full benefits until 2034 and then 75% of benefits after that, money paid into social security system is invested in bonds and other securities that pay interest but rates have been low, baby boom, longer life expectancy, fewer workers per beneficiary, lower birthrate
100
IRA
Individual Retirement Arrangement
101
Clusters
Geographic concentrations of interconnected companies or institutions that manufacture products or deliver services to a particular field or industry
102
GDP
Gross Domestic Product

Financial Empowerment (2 decks)

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