It’s no secret that some financial terms are a little mysterious, even obtuse. In honor of National Thesaurus Day on January 18th we want to shed light on some important but evasive financial terms that can have a huge impact on your financial health.
1. Debt Snowball
A debt snowball sounds foreboding, especially this time of year. But, instead of being the cold, steep fall into debt you might imagine, a debt snowball is a strategy for paying off your debt quickly. First, you sort your debts from those with the smallest to largest balance, then you tackle the smallest balance first, while paying minimums on the larger debts.
It’s true that you’d pay less money if you tackled the larger debts, or the debts with the highest interest rates first. It might even be smarter to consolidate your debt in some situations. But, the debt snowball is designed to make debt feel more manageable. The psychological boost you feel when you have a debt paid off (even a small one) is huge, and it can keep you on track when paying off the rest of your debt.
For those who struggle with financial motivation or who feel overwhelmed by their debt, the debt snowball is a helpful strategy.
2. RAM Scraping Attack
This is not something a hammerhead shark does to its prey, but it is just as dangerous. A RAM scraping attack is a strategy criminals use to compromise a store’s debit or credit machine.
RAM stands for random access memory. The point-of-sale machine uses RAM to store the details of your debit or credit card while it is processing your payment, then it deletes it. But, while the transaction is taking place, it is possible for criminals to “scrape” that information out of the RAM storage.
PIN numbers and card chips are security features designed to protect your card from falling victim to a RAM scraping attack. You can protect yourself from this type of attack by covering your PIN when entering it into a point-of-sale machine. On their end, stores should also take measures to protect against these kinds of attacks.
This term was coined in the 2008-2009 recession when many more men lost their jobs than women because male-dominated industries like manufacturing and construction were hit the hardest.
Financial commentators have continued to debate about whether the real “losers” or “winners” in the 2008 economic downturn and eventual economic “upswing” were men or women. For many heterosexual couples, it meant that the female partner became the major breadwinner, often for the first time. The term Mancession brings up an interesting question for families today: are men’s jobs less stable than women’s and what impact does this have, if any, on our family dynamics?
4. Expected Family Contribution
This term is vital to know when you are planning your children’s post-secondary education. Many parents don’t realize that they are expected to give their children a certain amount of money for their education, and that this money is taken into consideration when their child is applying to some grants and scholarships. Your expected family contribution will depend on your income and is an important factor when planning for your child’s tuition costs.
Think you can stump us? Share a weird or hard-to-understand financial term below and we’ll do our best to define it!