Debt Free Article

Debt Terms Glossary

Letters G-J

Ginnie Mae

This is a dual purpose acronym that stands for both the Government National Mortgage Assoc. (GNMA) and the mortgage backed securities that this government agency packages, guarantees, and sells to investors.

Good until canceled order

This is an order that some of our debt free advocates know to mean that a stock or bond can be purchased or sold at a certain price, which stays in effect until it is executed by the broker because that price was reached, or until you cancel the order.

Guaranteed investment contract (GIC)

This is an investment product. Many of our debt free investors get these through insurance companies. They work like a huge CD really. But, they do not come with FDIC coverage. Managers of 401(k) plans many times put these together into a fund and offer this type of investment to plan participants. This is an interesting investment for our debt free advocates to think about and consider.

Health care proxy

If you are one of our debt advocates that have insurance, you may know of this. It is a legal document that appoints someone to be capable of making decisions for you regarding your medical treatment should you become incapacitated.

Health maintenance organization (HMO)

HMOs are medical plans where you pay in advance for your benefits. The HMO handles just about all hospital and medical needs you may have. This is the most common form of health care coverage our debt consolidation customers have.

Health savings account (HAS)

This is a tax advantaged plan for the self employed and employed by company individuals. An HAS combines a high deductible health insurance policy with a deductible savings account that is compared to an IRA. Funds that you allocate to this account are free of tax, earnings grow tax deferred, and withdrawals are also free of tax if they are used to pay for health care needs. This is a newly popular form of health care coverage that many of our self employed or out of work debt free advocates now use.

Hope scholarship tax credit

This is a great tax credit that many of our debt free readers are now learning about. It is a tax credit of up to $1,500 each year for each student a tax paying parent pays for. Available for college Freshman and Sophomore years only.

Individual practice association (IPA)

IPAs area type of HMO where the physicians earn a fee based on services rendered, typically in their own office. Not common.

Individual retirement account (IRA)

Very well know to out debt free readers, regular IRAs are tax favored accounts built to encourage retirement savings. The maximum yearly contribution is four thousand dollars and is rising to five thousand dollars by the year 2008. Tax is deferred on this money until it is withdrawn. In most instances, there is a stiff penalty for withdrawal in an early stage. If your income is under a certain amount, and you cannot get a retirement plan through your employer – you can deduct this money on your taxes.

Junk bonds

These are high risk bonds with high yields. Rated BB or lower by Standard and Poor’s, BA or lower by Moody’s, or they are not rated at all by any agency. Issued by weak companies.

Keogh plan

This is a tax sheltered plan for retirement. Earnings grow tax free until removed. Our debt free investors who are self employed can contribute up to 25% of their income tax free here.

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