Debt Free Article

Debt Terms Glossary

Letters K-L

Kiddie tax

This is a nickname that was given to the tax rule that states that a certain level of unearned income like interest or dividends received by a child that is under fourteen years of age will be taxed at the parent’s rate, not the child’s. The idea behind this tax rule is to stop high income parents from avoiding taxes by putting assets in their child’s name. This is an interesting rule than many of our debt free article readers will want to know about for certain.

Leveraged buy out

This is the usage of borrowed money to finance the purchase of a firm. Many times, this concept is financed by raising money through the insurance and sale of junk bonds.

Leveraging

Leveraging is investing with borrowed money in order to try to multiply gains. Meaning, if you were to buy a hundred thousand dollars worth od stock and its price rises to one hundred ten thousand dollars, you have earned 10% on your investment by leveraging.

Lifetime learning credit

This tax credit that is equal to 20% of the first $10,00 a taxpayer spends for tuition in the third or fourth year of higher education. There are many individuals out there that are going back to school to earn more money to get out of debt and this is a great credit to know about for many who are trying to go to school as debt free as possible.

Limit order

This is an order to purchase or sell a security if it reaches a certain point. Again, this is something our debt free customers who invest nee to be familiar with.

Limited partnership

This is a business arrangement that is put together and managed by a general partner (which may be a company or even an individual) and financed by the investments of limited partners – called this due to their liability being limited to the amount of money they invest in the situation. Limited partnerships can invest in virtually anything and this is of interest to our high income debt free advocates. Real estate is the most common limited partnership investment ytou8 will find. One thing we will tell our debt readers is that theur are usually high fees in this area of investment.

Liquidity

This is the ability top quickly convert an investment portfolio or other asset into cash quickly. Many of the individuals who are in debt trouble liquidate their assets to pay off high debt. You should know that real estate and limited partnerships are usually pretty liquid.

Living will

Living wills are essential and not many dent free advocates completely understand them. They are legal docs that explain your wishes in great detail should you need medical treatment that you are unable to express due to being incapacitated in any way.

Load

This is the debt term used for a fee or commission charged when you purchase a mutual fund, insurance premium policy, or other financial investment. Load is also used to describe a level of debt. A debt load is the amount of money you are in debt to.  

(523)

Back to Debt Free Articles