Money Matters

MISSION MEDICAL Call for appointment 256-398-7212 Family Practice & Women’s Health “Our Mission is YOUR Good Health”

Melanie Malone, CRNP Walk-Ins Welcome! Se Habla Espanol Jean Stowe, CRNP · Carolyn Wilson, CRNP

Hours: Monday - Friday 8 am - 5 pm Most Insurance Accepted 14001 Hwy. 43 Suite 24, Russellville, AL

Franklin Shopping Center MONEY MATTERS

Five financial terms to know – and why

When it and more. Typically comes a FICO score ranges to the from 300-850, and world the higher the score, of finance, the jargon the better terms you is endless. You’re might be able to take faced with technical advantage of on your concepts and com- loan or credit card. plicated terminology 3. Five C’s of credit: – much of it short- It’s essential to know ened to acronyms you have to there is more to it than just a Google to find out what it stands credit score. Character, capacfor. Many of these are terms none ity, capital, collateral and conof us use on the daily, unless we ditions all play a part in what are in the biz, of course. But there lenders evaluate to determine are a few we all should aware of, a loan. These come into play and I’m going to give you a quick heavily depending on the type overview: of lending situation you’re look1. Compound interest: This ing at. An online lender might one is usually at the top of every- look more at capacity – that is, one’s list – and with good reason, your credit score and ability to since it equates to what you’re pay – whereas a local bank will earning on your money. This also take character and collatis the interest you earn on the eral into consideration. amount you deposit, plus any 4. Cash flow: According to interest you’ve accumulated over some, this is one of the most time. You can think of it as “inter- important terms in finance. est on interest.” It will make your Cash flow refers to the amount savings grow faster than simple of money “flowing” through interest, which is calculated on your personal finances. Money the principal amount alone. comes in and then goes out Conversely, compound interest when paying expenses; whatwhen borrowing money is the ever is leftover is your net cash interest charged on the original flow. A positive net cash flow amount loaned, as well as the means you have money left afinterest charges added to your ter expenses. Negative net cash outstanding balance over time. flow means your expenses are 2. FICO: You see this acro- more than your income, which nym on countless commercials can result in debt. for free credit reports, and we 5. Assets and Liabilities: often think about it when we These are the basic building start car shopping. FICO stands blocks of your personal balance for the Fair Isaac Corporation, sheet. Assets are what you own the company that came up with that can provide you future the methodology for calculat- economic benefit. Liabilities ing credit scores. This score is are what you owe to other parbased on several factors, such ties. Basically, your assets can as payment history, length of put money in your pocket, and credit history, total debt owed liabilities take money out.

Emily Mays is vice president / chief administrative officer at Community Spirit Bank in Red Bay, working in finance for 15 years. She is an enthusiastic social media marketer, financial literacy advocate and go local supporter. She lives in East Franklin and has one daughter, Lola.