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Valuable Definitions
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Non-Profit Credit Counselling: Exists throughout the
country to help individuals experiencing financial debt.
A counsellor can review an individual’s full financial
situation and offer concrete suggestions on how to deal
with the debt.
Consumer Proposal: A proposal to creditors to reduce the
amount of debt and/or to extend the time that you have
to pay the debt.
Debt Repayment Program: Offered through non profit
credit counselling services, in which you ask creditors
to reduce payments and reduce and/or stop interest.
Bankruptcy: Bankruptcy is Financial Death. A legal
process in which an individual or company is unable to
pay off debt. All or most assets must be surrendered in
order to qualify for a bankruptcy.
Power of Attorney (POA): Written document that
authorizes an individual to perform certain actions on
behalf of another individual and is drawn up to ensure
that sound decisions are made, in the event of absence
or incapacity.
Power of Attorney for Personal Care: Power of appointing
someone to act on your behalf with respect to
health/medical/personal care and prolonging of life
issues.
Power of Attorney for Property: Power of appointing
someone to act on your behalf with respect to your
financial affairs.
Beneficiary: An individual or organization who receives
the death benefit/plan proceeds of a life insurance
policy/retirement plan upon the death of the insured/planholder.
Asset: A physical or intangible item that has economic
value (e.g. financial assets such as stocks, bonds or an
intangible asset such as goodwill).
Hard Asset: Investments in “physical” assets such as
art, gold and other precious metals as well as coins,
antiques and collectibles.
Liquid Assets: Financial assets that can easily be
converted to cash.
Liability: The amount of money owed by a borrower to
creditors.
Gross Pay: Amount owed to employee before applicable
taxes have been deducted.
Net Pay: Gross Pay less certain specified tax deductions
Principal: The amount of capital that has been loaned or
borrowed.
Interest: The price paid for borrowing money. It is
expressed as a percentage rate over a period of time and
reflects the rate of exchange of present consumption for
future consumption.
Collateral: An asset, such as a building, an automobile,
or a bond or stock, that acts as security for the lender
on a loan. In the event of default by the borrower, the
lender can liquidate the collateral to cover the loss.
Compound Interest: The growth of money over time, where
interest is re-invested as capital to earn additional
interest.
Credit: The right to obtain the use of money or goods on
the promise to repay at a future date.
Credit Bureau: An organization that supplies credit
information to financial institutions and others who
demonstrate an acceptable need for the information.
Credit Rating: An assessment of an individual’s credit
worthiness by the credit bureau.
Net Worth: The resulting value (equity), due to the
family or individual if all debts were paid off with
assets listed on the net worth statement.
Net Worth Statement: An inventory of an individual’s or
family’s physical and financial assets, their
liabilities and their net worth at a specified point in
time.
Trustee: A person who acts as a custodian and
administrator of property held in trust for someone
else, usually referred to as an executor.
Will: A legally enforceable declaration directing the
disposal of a decedent's property.
Registered Retirement Savings Plan (RRSP): A plan
registered with the CCRA (Canada Customs and Revenue
Agency) that allows individuals to save for retirement
by making tax-deductible contributions.
Registered Educations Savings Plan (RESP): Tax sheltered
plan that allows individuals to save for children’s
education.
Canadian Pension Plan or CPP: Program designed to
provide income for retirement. It also provides income
to those who become disabled.
Cohabitation Agreement: Domestic contract signed by a
couple who live together and don’t intend to marry.
Agreement addresses the ownership and division of
property if the relationship ends…it does not deal with
the matters or custody or access to children.
Marriage Contract: Better known as a pre-nup where the
responsibilities and obligations of each partner are set
out. It stipulates how the assets are to be divided if
the marriage ends in separation, divorce or death of one
of the spouses.
References:
"The Fundamentals of Personal Financial Planning", 2001,
Credit Union Institute of Canada (CUIC)
Laurie Campbell, Public Relations Manager, Credit Canada
Barry Fish, Wills and Estate Lawyer, Fish and Associates
Ayse Hogan, Personal Finance Coach |
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