Word of the Day

amortize

audio pronunciation
February 01, 2013
verb
\AM-er-tyze\
Definition
1
: to pay off (as a mortgage) gradually usually by periodic payments of principal and interest or by payments to a sinking fund
2
: to gradually reduce or write off the cost or value of (as an asset)
Examples
"It's time we made permanent decisions on policy that begin to amortize and reduce our debt over time...." — Senator Johnny Isakson (R-GA) on CNBC's "Squawk Box," January 4, 2013

"As early as 1990-91, the government began to amortize the surplus to better reflect the pension liabilities it would be on the hook for in the future." — From an article by Kathryn May in the Ottawa Citizen, December 20, 2012
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Did You Know?
When you amortize a loan, you "kill it off" gradually by paying it down in installments. This is reflected in the word's etymology. "Amortize" derives via Middle English and Anglo-French from Vulgar Latin "admortire," meaning "to kill." The Latin noun "mors" ("death") is a root of "admortire"; it is related to our word "murder," and it also gave us a word naming a kind of loan that is usually amortized: "mortgage." "Amortize" carries a different meaning in the field of corporate finance, where it means to depreciate the cost or value of an asset (as, for example, to reduce interest revenue on that asset for tax purposes).

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