7 March 2008 One Comment Print This Post  Email This Post

There are a lot of terms that pop up on personal finance blogs and forums with meanings that would make little sense to someone who hadn’t been keeping up on the terminology. I’ve gathered together a few I’ve run across lately, and I hope you’ll add any you’ve noticed to this list. I’ve written definitions mostly out of the context that I’ve seen them in. If you have a different interpretation, let me know in the comments.

The Latte Factor: The idea behind the latte factor is that if you add up all the little non-essentials, like lattes from Starbucks in the morning, you’ll discover thousands of dollars you never knew you were spending. Items that figure into the latte factor are seem insignificant — a candy bar at work or a bottle of water while you are grocery shopping — but they do add up.

Ninja Loans: Ninja stands for ‘no income, no job or assets’ and refers to the person taking out the loan as being an extremely high risk. The risk doesn’t deter lenders though — they simply offer far more expensive loans than a low-risk borrow could get. There is an argument that these loans are predatory.

Microfinance: There are a number of microfinance organizations around these days which provide small loans to people trying to create businesses or otherwise improve their lives. Small can be a relative term: some groups lend $10 or $20 to women in third world countries while others start with loans of $600. Some companies even act as brokers for everyday folks who want to lend their money. Kiva and Prosper are both examples.

Aspenize: A town or city that Aspenizes focuses its economy on bringing in wealthy tourists, making the cost of living in the area too expensive for the workers who provide the services necessary to the area. For instance, a friend of mine worked as a plumber in Breckenridge and was easily earning twice what he could in Denver — but couldn’t afford to both rent an apartment and eat.

Exploding ARM: If an adjustable rate mortgage’s rates pass the borrower’s ability to make payments, it is an exploding ARM. By the time that a mortgage reaches the exploding ARM stage, it’s assumed that the borrower will lose the mortgaged property.

Disloyalty Fee: A disloyalty fee is the amount banks charge customers who use ATMs operated by other banks. I’ve also heard the term used for fees required to cancel a contract or reduce services.

SRI: Many investors have begun to look for SRIs — socially responsible investments. Companies considered SRIs are often focusing on lowering their environmental impacts, helping their communities and generally doing good deeds.

Thumbnail image by TW Collins