Joe's Money

Certificates of deposit are sold by banks.  They are more widely known as CDs.  Typically, CDs are low risk but generally low returns.  CDs are great for keeping cash in a safe place where you won’t need it for months or years.  CDs carry a commitment.  You cannot withdraw the funs for a predetermined amount of time.  The duration varies quite a bit, anywhere from short term one month CDs up to 5 years is common.  Usually the longer the time frame required, the higher the interest is.  Unfortunately, if early withdraw is required, a penalty will likely be assessed.  All gains from CD accounts (unless in a IRA) are taxable.

CDs are very safe investments, about as safe as they get, in fact.  CDs are FDIC insured providing your bank is FDIC insured.  The predetermined rate the bank gives you is guaranteed.  If rates slide while you are in the CD, you are locked in at the original rate.  On the contrary, the same is true if rates rise.

Some common CD types are:

Traditional CD:  A predetermined interest rate is paid over the predetermined term, or length of time.  When the term is up, you can remove all funds plus interest or renew the CD at most current rate.

Bump Up CD:  Basically, these are the same as traditional CDs.  The only difference is you are allowed to contribute additional funds usually once, in addition to the opening amount.

Liquid CD:  This type of CD account allows you to withdraw funds before the maturity date.  Since you have more freedom, it comes with a cost, a lower interest rate.  The rate will still be higher than a typical money market account though.

In addition, most of the above accounts are available at your local branch or online.  I have found that online accounts usually have much better rates than local banks.

CDs are great investments.  For people nearing retirement, they are ideal due to their security.  CDs are guaranteed and will never lose money.  CDs can also be used for your emergency funds as well.  Simply pick a shorter term.  If needed, you can withdraw funds early, but the penalty will be assessed.  The penalty is usually a few months interest.  However, since this is your emergency fund and it should only be used for true emergencies, hopefully the interest has paid you far more than you will lose for early withdraw.

I hear a case of living beyond your means just about daily.  The entitlement factor in this country is unreal.  You need to get realistic and buckle down your finances.

Unfortunately, most people in our society have been brought up to live beyond their means.  We are surrounded by images and videos of people living extra large lifestyles that are simply out of reason for most.  Growing up with the constant barrage of the rich and famous, has created a society that not only thinks they need this lifestyle, but think they are entitled to it.

When growing up, most teenagers spend their parents money.  Unless they are working, they are likely spending their money on frivolous things like fancy clothes and electronics.  According to statistics, only about 42% of high schoolers find paid employment.  According to the statistics, less than 50% of teens are working, so their parents are funding their popularity contest.  They are simply keeping up with the teenage Jones’s.

Unfortunately, this upbringing sets the teenagers up for failure later in life.  They are taught that at no matter what expense, they must appear to be keeping up.  This is proven by their average credit card debt of over $5,000 for age groups 25-34 year olds.  Had they been taught the value of the dollar at a younger age, perhaps the frivolous spending would have stopped.

The worst part of this ridiculous spending spree is, that age is not a factor.  The statistics are similar for just about all ages.  Many books state the same.  The more you make, the more you simply spend.  Doctors, lawyers, and the like are all chasing their tails with the fast food burger flippers just on a different scale.  If you earn $20,000 per year, maybe you spend $10,000 on keeping up with the Jones items.  If you’re making $100,000 per year, your simply spending $50,000 on most expensive Jones items.

I don’t know the Jones’.

Many people have the ability to carry the perception of being well off for long periods of time.  However, eventually, the jokes on them.  The charade is over and all that is left is the consequences of leading this type of lifestyle.  The result is usually a lifetime of debt.  I like to refer to this as chasing your tail.  You can chase it all you want, but your never going to catch it.

What you need to realize is, you need to stop buying items you don’t need on credit.  If you don’t have the cash, DON’T BUY IT.  Its that simple.  You need to learn to sacrifice for the better long term goals.  Take a serious look at your spending. Tell yourself, you don’t know the Jones’.

Here are a couple of quick tips

1.  Learn to budget and search for bargains.  If you can’t pay cash, don’t buy it.
2.  Do not give children credit cards.  They do not have the financial foundation to handle them.
3.  If you have credit card debt, call your provider to negotiate a lower rate.
4.  Pay off small balances first, then tackle the larger ones.  Remember, always pay at least the minimum though.
5.  Once you’re out of debt, don’t go chasing your tail again, stay out of debt!

I can’t begin to tell you how much you can save by buying store brand or “value” brand groceries.  I never had really bothered to consider store or value brand items until I started to have the drive to save.  Now, I find myself constantly looking for value alternatives.  Between the grocery stores, and super stores, you can find almost any food or household item available in a value brand.  I have picked up many of these items to find virtually NO difference in taste or quality 95% of the time.  On the occasion, you will get a bad apple out of the bunch but overwhelmingly you will realize that this stuff is the same.  There have been articles online and news stories on TV about how many of the value branded items are actually manufactured by the name brand counterparts.

In most major grocery stores, the price tags on the shelves display the cost per ounce of food.  Compare the name brand to the value brand.  This is the easiest way to save and there is no confusion even if the package sizes are different since it is measured in ounces of actual product.

Expand your horizons and save!

Once you have your emergency bubble inflated and your debt paid off, you can pay cash for almost anything.  This can have its up side.

I have heard of multiple discounts given simply for paying with cash Vs. a credit card or check card.  The reasoning for this is merchants have to pay a fee plus a percentage of the sale just for taking the card.  The percentages are usually pretty low but if you run tight margins it can add up.

I have heard this specifically at gas stations.  Many times, gas is very low margin only making a few cents per gallon of gas.  Now if the credit card processor is taking only a few percent, they just ate up your profits.  By offering a cash discount in between the retail price and the loss price after the fees, they can save more profits.  Pretty simple for not having to do anything!  More times than not its the mom and pop shops doing this and it will usually be prominently advertised.

Another one that can save you tons is on labor work.  This can be anything from having your roof replaced to having someone cut the lawn.  Many times, the smaller contracting firms have to put materials on credit.  If you pay cash, they may be able to negotiate a better discount if its cash your paying with.  This never hurts to ask.  A few months back, I was able to bring a roof bid down from $9800 to $9200 and get much better materials in the process.

1.  Sell Things You Don’t Use

This is an easy one.  With tools like eBay and Craigslist, the possibilities are endless.  Take a look around your house and find some things you don’t need or use anymore.  Even if you are not sure it will sell, you have nothing to lose.  Craigslist ads are free and reach loads of potential buyers.  If you need an even larger scale, try eBay.  Both are very easy to learn.

2.  Computer Repair Services

Are you good with computers?  Well guess what, most others are not.  Throw an ad in the local paper or again, on Craigslist.  Most of the big box stores charge big bucks for the same services.  If you know how to fix em up, give it a shot.  There are even easy ways to create your own website to support your business.  You can list your qualifications and pricing info.  Be sure to offer in home service.  Most people do not like the idea of a stranger picking up their computers and being on the honor system to bringing it back.

3.  Help With Moving

Can you spare some muscle?  People are often looking for a extra set of hands or two to help out with the ever so fun task of moving.  Movers can expect to make $15 an hour or more.

4.  Lawn Care

Lawn care is yet another task that many of us don’t exactly look forward to.  Put your mower to work!  Start small with some residential customers and build your way up.  Once you save up some money you could purchase a larger, commercial grade mower and hit the commercial seen for some big bucks!

5.  Resell a Product

Many products can be found online at wholesale prices, especially if you buy in larger quantities.  Take a look around, there are tons of options.  Some wholesalers will even drop ship good for you.  This simply means you make the sale and they will ship the item directly to the customer for you.  That way you don’t have to actually order the product, store it at your home, and ultimately ship it to your buyer.

6.  Sell Crafts or Keepsake Items

Are you good with crafts or other keepsake items?  You can easily turn this hobby into cold hard cash.  Some crafty folks have been seeing selling anything from your regular craft items to custom wedding invitations.

7.  Write an eBook

Are you an expert on a subject not as well known by others?  Write an eBook.  An eBook is simply a digital book.  You can sell these on eBay or countless other websites.  I have personally seen many for sale including topics like workout routines, gambling tips, gardening, and many other how to topics.  The best part of this is, once the eBook is created, it is all profit and you don’t have to ship anything!  Delivery is usually via email.

8.  Cleaning Services

Are you neat and tidy?  Between bringing the kids to baseball practice and too many other errands to count, sometimes we all can’t keep up.  Take advantage of other people’s busy schedules (or in some cases, laziness) and offer you tidy hands up for hire.

9.  Get a Paper Route

Shockingly, some paper routes for the major newspapers can actually pay quite well.  The local paper here advertises up for $400 per month for simple delivery.  Check around and see if there is anything available in your area.

10.  Rent Out a Room

The big question…  Is an extra $500 per month worth having someone else in your space?  Depending on what you can tolerate, this could be a very easy way to generate some extra income.  Also, depending on your home design, you may already be setup for success.  You might not even notice anyone coming in or out if you have a separate entry.  Be sure to check local laws, etc before offering a room up for rent.