GP Flashcards
Features of series EE/I bond
- special savings bond through which an exclusion from taxation on interest is available when used for qualifying educational expenses
- must be owned by parent
- max series EE is 10,000 per year per owner. Maximum series I is 10,000 digital and 5000 paper per year per owner.
- qualifying expenses are tuition and fees
- phase out exist for interest exclusion
- counted as an asset of bond owner for FAFSA
- no penalty if not use for qualifying expenses, but interest will be included in income
Consumer credit protection act
Right to know costs and terms of credit
Equal credit protection act
Right to fair opportunity to obtain credit
Fair credit reporting act
Right to know what’s in your credit file
Fair credit billing act
Right to have billing mistakes resolved
Fair debt collection practices act
Right to be protected from collection agencies
What is still required to be paid back under Ch 7 bankruptcy?
Alimony, child support, taxes (less than 3 yrs past due), secured debt, student loans
Max debt levels for Ch 13 Bankruptcy
$419,275 unsecured
$1,257,850 secured
What is considered a jumbo mortgage?
Amounts over $766,850 (2024)
Series EE/I tax free interest calculation if only part of the proceeds are used for qualified expenses
Total IR x (Adjusted qualified education expense / proceeds)
AOTC credit amount
2500
100% first 2000
25% next 2000
1000 refundable
LLC max amount
2000
20% first 10,000 expenses (tuition + fees ONLY)
Non refundable
What applies for UGMA/UTMA?
Kiddie tax rules
Qualified education expense withdrawal from ROTH or Traditional IRA
10% penalty waived
For Roth: income tax may still be applied if pre 5 year + 59 1/2
Contributions to coverdell
Up to age 18, use by 30
$2k per year per bene
Penalty for Coverdell or 529 non qualified withdrawal
10% + taxes
Consumer debt ratio
<20%
Total monthly consumer debt (non housing) / monthly NET household income
EFC asset/income amounts
Parent assets: 5.64% (home equity/retirement don’t count)
Parent income: 22-47% (AGI minus allowance for taxes and living expenses)
Student assets: 20%
Student income: 50% (above protected amount of $9410 for 2024)
Return on equity
EAT/equity
Debt to equity
Total long term debt/equity
Times interest earned
EBIT/interest expense
Debt ratio
Total debt/total assets
Front end/mortgage ratio
PITI/gross monthly income
Goal is 28% or lower
Back end ratio
PITI + other debt/gross monthly income
Goal is 36% or lower
Quick ratio
Current assets - inventories / current liabilities
Working Capital
Current assets - current liabilities
Inventory turnover
COGS/average inventory
Days to sell inventory
365/inventory turnover
Days to sell inventory
365/inventory turnover
Illiquid personal assets on a balance sheet
The fair market value is the last price that was paid for the asset until an appraisal or a new transaction price can be obtained, do not fall into the unknown value trap
Acceptable emergency fund assets
Cash
Checking and savings accounts
Money market mutual funds
T-bills
CDs
Cash value life insurance
Lines of credit
Home equity loans
Assets in the fund must be liquid and marketable
How to decide between a fixed rate or a variable rate mortgage?
- when rates are low and/or the homeowner is expected to stay in the home for a long time —>fixed rate is advisable
- when rates are high and/or the homeowner is not planning to keep the home long-term —>a variable rate may make sense
Credit score rating categories
<580=poor, risky borrower
581-669=fair, many lenders will approve loans
670-739=good, most lenders consider a good score
740-799=very good, dependable borrower
800+=excellent
How FICO scores are calculated
Payment history 35%
Amounts owed 30%
Length of credit history 15%
Credit mix 10%
New credit 10%
529 Able Plans
- diagnosis of significant disability prior to age 26
- condition expected to last 12 consecutive months
- receipt of SSI or SSDI or able to obtain disability certification from a DR
How long does a respondent have to deliver a written answer to an amended complaint?
No later than 14 days of delivery of the amended complaint or the date an answer to the original complaint was due
What is the long end of the yield curve reflective of?
Market rate and anticipated economic conditions
When the yield curve is inverted
Long term investors will settle for a lower yield due to the outlook that the economic conditions are bleak
LLC: can multiple household members qualify?
Yes, each eligible household members qualified ed expenses may be combined to maximize the credit up to the annual limit of $2k per return (20% on the first $10k of qualified education expense)
Does Ch 7 bankruptcy eliminate mortgage debt?
Yes, Ch 7 bankruptcy can eliminate your personal responsibility to repay mortgage debt but the lender retains a lien on the property and can foreclose if payments stop
Suspension time frame
Not less than 90 days or greater than 5 years
Framing bias
Occurs when people decide based on how information is presented as opposed to just on the facts themselves
Dunning Kruger Effect
Occurs when a persons lack of knowledge and skills in a certain area causes them to overestimate their competence
