A CD Ladder Plan For Beginning Savers

a ladderAre you just starting off building up your savings? I’ve mentioned before that a great way to save is by putting money in a high yield savings account such as Capital One 360 Savings.  A way to make a little more interest is to open a Certificate of Deposit, or CD for short.

What is a CD?

Here’s an excerpt from Wikipedia:

A certificate of deposit or CD is a time deposit, a financial product commonly offered to consumers by banks, thrift institutions, and credit unions.

CDs are similar to savings accounts in that they are insured and thus virtually risk-free; they are “money in the bank” (CDs are insured by the FDIC for banks or by the NCUA for credit unions). They are different from savings accounts in that the CD has a specific, fixed term (often three months, six months, or one to five years), and, usually, a fixed interest rate. It is intended that the CD be held until maturity, at which time the money may be withdrawn together with the accrued interest.

So if you are investing/buying a  CD you want to make sure you don’t need that money for the length of it’s term (otherwise you will have to pay a penalty to cash it in).

Here’s a great way a beginning saver can get started with CD’s:

  • Figure out a monthly amount of money you know you won’t need for 12 months.  Don’t be scared now.  It can be a small amount like $10.
  • Log into your ING account and go to their products page.  Click on CD’s and proceed to open up a $10 CD for a 12-month term.  (If you can afford more by all means do so.  Remember this is money you won’t touch for a year.)
  • Now every month do the same thing for a total of 12 months.
  • At the end of a year you will have 12 CDs worth more than $120 (imagine if you put more in each month?).  If you can, re-invest the CDs as they mature.  See if you can add to the amounts, again even if it’s only a few dollars.

“What have we done?  Anyone can buy CDs!”, you may ask?  Remember this is for a beginner who is starting to build up their savings.  Here is what the beginning saver has accomplished:

  • This builds up a habit of saving.  By putting the money in a CD we’re limiting the ability to take the money out (without a penalty at least).  Once this habit is in place a beginning saver may have the discipline to expand their savings.
  • It creates a great sense of self-esteem for the saver.  You get to see your CDs growing every month.  How great is it to see a year’s worth of savings?  Once a person realizes that saving is an achievable goal they will be more likely to continue!
  • You’re earning interest.  Not only have you saved but you’re savings are growing too!  You’re taking advantage of laddering.

Savings aren’t usually built overnight.  But by saving bit by bit you will see your savings blossom over time!

photo credit: naama

New York State Empire Passport – Summer Saving

Beach Chair

Summer’s here!  How are you going to spend your time? Will you go to the beach?  Maybe a pool or a lake is more your speed?  Maybe go to the park for a picnic?  How about camping?  Perhaps you’ll go for a bike ride or maybe a nice hike through the woods on a historic trail?

If you live in or near New York State then you have access to all of these activities and more in New York’s State Parks!

A great way to take advantage of all that NY State Parks have to offer is to purchase the NYS Empire Passport. For $65 you get access to most of NY State’s parks and facilities.  Consider this: parking is easily $8 for Jones beach.  That means the pass pays for itself with about 7 visits to the beach!  But what’s great is the pass can be used for so much more.  In fact it’s good from April 1st until March 30th of next year.  Using it 7 times over the year is easy!

My wife has the summer off as she works in education.  This gives her all summer to go to beaches such as Jones Beach or Robert Moses State Park.  We worked it out a couple of years ago and the Empire Passport easily saves us money!  You can also use the passport to pay for parking for concerts at the Jones Beach Theater (park in an adjacent lot and walk over, it will also be easier to leave after the concert)

Outside of summer beaches we’ve also gone to Harriman State Park, Bear Mountain State Park, Fahnestock State Park, and Valley Stream State Park.  Harriman and Bear Mountain aren’t too far from the Woodbury Commons shopping center where you can find some frugal deals.

I’ve gotta say, in putting this article together I’m seeing how much we can do and what we’ve been missing out on!  I can’t wait to get out with the family again!

You can order an Empire Passport online.  The site says it could arrive in 3-4 weeks but we got ours in a week.  You can also visit a state park office and buy it direct.  Check online to see which parks sell the pass directly.  The quicker you get yous the sooner you can enjoy all that NYS Parks have to offer!

How will you use your NYS Empire Passport?

This article is #14 of the Summer Savings Series from the Money Life Network. Check out the article on the MLN site to see how you can participate in the Summer Savings Series and possibly win a $100 Amazon gift certificate! You can see tip #13 at My Investing Blog. Article #10 will be at Milk Your Money tomorrow!

 

15 Things To Do With Your Economic Stimulus Check

The government Stimulus checks started going out on April 28th. If you are expecting one you should start looking for it in May (here’s a post listing the dates).

So what are you going to do with the extra money? Here are a list of ideas for using your stimulus check:

  • Pay off credit cards – If you have any credit card debt the stimulus check will be a great way knock some of that out! Paying off the debt gives you an instant return in savings of whatever you would have paid in interest fees. Psychologically, you will help in getting the debt monkey off your back.
  • Contribute to a Roth IRA – You can take your money and put it into your Roth IRA. For 2008 the contribution limit is $5000.
  • Start an emergency fund – If you don’t already have some sort of emergency fund (three to six months expenses seems to be the conventional wisdom) then your stimulus check is a good way to start one. Even if you have one you can use the money to increase your fund. A great place to start one is with ING Direct (you can even get a $25 bonus by opening your account with $250).
  • Contribute to a 529 college savings plan – You can use the money to help save for your kid’s education by putting the money in a 529 plan. Not only do you help save for college but you might get a tax break as well depending on your home state’s plan.
  • Pre-pay your mortgage – Take the money and make additional payments to your mortgage. By making additional payments you will own your home faster and pay less in interest. Just make sure the payments go towards the loan principle and not next month’s payment (also check that your lender will accept pre-payments without fees or penalties).
  • Go on vacation – You may have been planning to do this anyway so here is a good way to fund the vacation. Go and do something that will be a great experience for the family that you will all remember.
  • Improve the house – If there’s something you’ve needed to improve on your home, such as a furnace, you can use your stimulus check to pay for it (or at least help). Other options could be new paint job, carpet, furniture, appliances, etc…
  • Car maintenance – Have you been putting off a car repair? Need new brakes? New tires? Your stimulus money can fund it. If your car is about to go kaput your stimulus check could help pay for a new car (or a good new used car).
  • Learn to invest – Do some research and take the money and start investing. Companies such as Sharebuilder and Zecco offer low-fee investing. You have to do your homework with this option but it might be just enough money to start investing but not so much that you will be crazy worrying if you lose it. If you invest through Sharebuilder you can buy partial shares of Berkshire Hathaway B class shares. I hear that Warren Buffett is pretty good at investing.
  • Pay off student loans – If you have high interest student loans then your stimulus check can be a great way to help pay your student loans off. Just like with credit cards paying off your high interest student loans give you the instant return in savings of what you would have paid in interest.
  • Have a nice evening out – Take your spouse out to a really great meal. Get babysitting and go to that great restaurant you wanted to try. Go see that new show that everyone’s talking about. Make an experience you will always remember.
  • Get physically fit – The stimulus check should be enough to pay for a year’s gym membership (or more than a year). Use the stimulus check as a catalyst to get in shape and make your life healthier. Not sure about a gym? Find a class such as yoga or martial arts to join. Not into that? Buy a new bike and go riding. Or get yourself some good running sneakers and running attire. Join your local running club and enter a few small races. You never know, you may one day run a marathon.
  • Go to school – Use your stimulus check to enroll in a college course or two. This can be toward a degree or just continuing education. Hey, you can take a personal finance course. Maybe learn a second language?
  • Do nothing – This is the easiest of them all. Put the money in your savings account and forget about it. You don’t have to spend it or find any particular purpose for it. It doesn’t have to burn a hole in your pocket. One day you might find a good use for it but for now it adds to your savings.

Personally, we’re closer to the Do Nothing suggestion. Our stimulus check will come via direct deposit right into our ING account. We have no specific plans for the money so it will be added into our savings. Our check may pay parts of many of the suggestions or for none of them. Either way it will earn interest until it finds a home somewhere else.

Do you have any other ideas for using the economic stimulus check?

photo by Argenberg

I Switched To Sprint SERO And Saved Some Money

A little over a week ago I signed my wife and I up each for the Sprint SERO cell phone plan.
We were already on Verizon Wireless. So why switch? First let me explain our Verizon experience:We had been looking into upgrading our phones since they were over two years old and we were due a credit for a new phone as part of Verizon’s plan. We even went so far as to visit a few Verizon stores but I felt like I was getting the run-around at each. See I was supposed to get $100 towards a new phone. At each location I went to they told me only $50 even though when I called Verizon they confirmed the $100. Two of three of the stores pretended to not know about a buy-one-get-one-free offer that was being advertised. This didn’t sit well with me. The next concern was cost. We had a family plan for 700 minutes that could be used between our two lines. This cost us $79.98 without any taxes or extra charges. Any texting was extra. Like 15 cents a text extra. We try to keep our texting below $5 which is what we would pay for their text plan (I don’t generally text much but my wife sometimes does). Our bill would end up between $90-$100 a month. Oh, did I mention that we got terrible reception in our home? We’ve traveled all over and Verizon has had great signals but our luck has it that our service stinks in our living room. So, we were willing to stay with Verizon but our minds were open to finding another service.

Fortunately we never found a Verizon phone deal to upgrade to.

I had remembered reading an article from Cash Money Life about how he transferred his cell plan to someone else and ordered the Sprint SERO service. Since we were already off our contract I figured I’d check the plan out. I went back to the post and saw that he got his info from fivecentnickel, checked out his site and checked out the Sprint SERO site. And isn’t fate funny? The day after I was looking at the SERO site Cash Money Life published 15 Ways to Save on Your Cell Bill. If that’s not synchronicity for you… Suffice it to say I signed us up for two plans.

So what is Sprint SERO? It’s the Sprint Employee Referral Offer. Here’s the $30 plan:

- 500 anytime minutes (they have bigger minute plans that cost more)
- Unlimited nights and weekends starting at 7PM
- Domestic long distance
- Unlimited mobile to mobile
- Unlimited Web/Data access
- Unlimited picture mail (with compatible devices)

Currently there’s unlimited texting until 5/31/08. I was told that they tend to keep extending the free texts. Hopefully this is true.

What I really love about this plan is the unlimited data/web access. I can now access my Gmail account on my phone as well as many other web functions (Gmail is really great for on phones BTW). From what I recall from Verizon their data plan is much more expensive!

But wait. How do I sign up? I don’t know any Sprint employees! If you use the email savings@sprintemi.com at the Sprint SERO site you should be fine. This worked for both Cash Money Life and fivecentnickel when they ordered their phones. Check out fivecentnickel’s article for details.

Me, I’m still a little paranoid about getting stuff online (there’s a bit of irony in there somewhere, no?) so I entered the email address then checked the site for what I wanted. I settled on the Motorola Q9c Smartphone for me and the LG Rumor for my wife. I was a little skeptical about the email address working based on info I read so I picked an employee email from the Sprint Media page (check out this forum on FatWallet.com for SERO info). Next I called their SERO ordering number. I gave the salesperson the email and it went through with no problems. He asked if it was ok for them to check my credit. This is a requirement to make sure you can afford the phones and the plan.

Here’s where it paid to speak to a human: online there is a spot to enter any promotions codes you have (you might be able to find some online). On Nickel’s site he mentions that he used the code URANG to get a $25 credit on the first two bills. This no longer worked on the site but I mentioned it to the Sprint rep anyway. He was able to still apply the credits to each line so I should be getting a total of $100 back in credits. It always pays to ask! Also, if you order by phone make sure you don’t pay for shipping. They wanted to charge me for this but I mentioned that shipping was free when ordered online and they agreed not to charge me (it also pays to check out the deal online first).

So far we love are phones and couldn’t be happier with the text and data plans!

Pros:

- $30/month for 500 minutes. That’s $60 for the both of us. I went in for the insurance plan on my phone which is $7 extra a month. The phone’s a little more expensive than my wife’s and we have two kids. Still, this is cheaper than our last plan and has more minutes ($67 versus $79).

- Unlimited data/web and texts. I’m loving having the web on my phone!

- We have a great signal at home now and have had no problems so far with dropped calls (make sure you check your area for service on the site).

Cons:

- Sprint customer service is horrible! You probably don’t have even a 50/50 shot at getting someone who knows what they are talking about! Seriously. When I called to activate the phones I mentioned to the rep that we would be porting our old numbers over (you have to order the phone with a new number then port over your old number when you activate the phone if you want to keep your old number). The rep didn’t know what to do and at one point told me I had to call Verizon and tell them to release the number. Had I actually done that I might have lost the number! He finally put me on with the porting dept. and they were able to get it taken care of with no problem. Why their reps don’t know what the process is I don’t know (my guess is their customer service is outsourced to another part of the world). Next, my wife’s phone wasn’t working. I spent a lot of time over several days getting them to fix the problem. I finally found a woman who was kind enough to take a real interest in my problem and she put a ticket in to tech support. Finally my wife’s phone was fixed but it took a LOT of time and patience! Note: If you plan on using your old cell phone number make sure you don’t cancel your plan until after you’ve ported you’re number to the new plan. Canceling it before can cause you to lose the number.

- I got the first bill already and it’s wrong. They didn’t include the credits. More time with customer service not knowing what to do. Eventually I was told that the credits were there it just didn’t update. We’ll see soon.

- It’s not open to existing customers. We switched from Verizon so it was no problem but if you already have Sprint you may not qualify.

All said we are very happy with the phones and the phone service so far. And we’re saving money and getting more services from our phones. If you’re looking into a new phone plan then you should consider the Sprint SERO plan. Check out fivecentnickel’s experience as well as the FatWallet forums and decide for yourself if it’s worth it.

Let me know what you think if you sign up or if you already have the plan!

ING $25 Referral Bonuses

Have you wanted to open an online savings account?

Well here’s your opportunity to open one with ING Direct! They offer high-yield savings with no minimum to open (this includes both savings and CD’s). This means better interest earnings than most other banks. I’ve been using them since April 2003.  If you use one of the referral links below you will receive a $25 bonus. You’ll also be giving me a bonus of $10 so it’s great for us both. In fact, once you open an account you can refer your friends and receive the same bonus as I would. The catch (isn’t there always one) is that you need to open the account with at least $250. What about those no minimums? You can always open an account with any amount lower than $250 but you won’t be eligible for the $25 bonus.

And check this out - If you open with $250 your $25 bonus is an instant 10% return!

Here are the links to use:

Shoot me an email for a link!

ING Sign-up Bonus
ING Sign-up Bonus
ING Sign-up Bonus
ING Sign-up Bonus
ING Sign-up Bonus
ING Sign-up Bonus

If you get the message “We’re sorry, but the referral link within the email you received has expired and is no longer valid. We recommend that you contact the sender and ask them to re-send the referral email. Or click ‘Continue’ to proceed with the application process without the account opening bonus” then the referral has already been used. Shoot me an email and I’ll send you a new link.Like I said, I’ve been using ING Direct for years and I highly recommend them. If I had kept my savings in my brick and mortar bank I would have missed out on a lot of savings and earnings. So what are you waiting for? Go open up a high-yield savings account!

If you don’t have $250 but still want to open an an ING account please click the banner below (please note this is for the Electric Orange account not savings):


As always read the fine print from ING to make sure their online savings is right for you. You should never sign up for anything online without understanding what you are getting into.

Loose Change Gets Us Free Meals On Vacation

So we usually go on vacation in the Summer.

Every time we get free meals from loose change!

Let me explain – We have two change jars in the house: one for quarters and one for all other change. This gets filled up whenever we come home for the day with change in our pockets. The quarters are for laundry so those get used pretty quick and isn’t part of our free meals. The other jar though slowly fills up over the course of the year and is usually filled to the brim by the Summer.

All year we watch the jar fill up higher and higher. It almost becomes a calendar for us to tell when it’s time for vacation! The week before our trip my wife and daughter will go to the local Commerce Online bank (yeah, it says online but they have a ton of brick and mortar locations where I live) and use their coin counting machine which is free for anyone! [This is better than Coinstar since Coinstar charges 8.9% to count your change (though if you convert your change to a gift card or eCertificate the counting is free)].

Now with cash in hand we’re ready to go on vacation.

We can usually get anywhere from $60-$100 depending on the change that’s in the jar. Maybe this only covers one special dinner or maybe this covers the first few meals for us. Either way we look at the meals as being free, paid for by change that accumulated in our pockets over the year.

Of course we understand that the meals aren’t really free.

What’s important is this is another small, disciplined way for us to save some money that we get to use on vacation. What’s more is it’s fun to watch the change grow and fun for our daughter to pour the change in the counting machine (extra bonus here is that she gets to see how saving small amounts can turn into large amounts in time).

What small tricks do you use to save money? Let me know!

Buying A Car – Know Your Credit Score And Get Financing Before Hand

Monster+Car+Sale

A few years ago I set out to buy my first car.

This was a big deal for me, it was to be my most expensive purchase as well as my greatest debt.  Thankfully I was able to get a lot of advice from the site The Motley Fool (check out their steps to buying a car).  Even if you don’t follow each of their steps I think you will find their information useful.

I don’t want to go into what my whole car-buying process was like.  That might be too long a post (there was much drama but that’s for another time).

What I want to discuss is knowing your credit score and getting financing before-hand.

I knew I needed to check my credit report and score before making a big purchase.

 

I purchased all three reports and my score online.   I was surprised at what I saw!  I expected to have a mediocre score due to past late fees and debt but what I found was that my score was actually very good.   I guess my efforts at reducing my debt and transferring balances to 0% cards helped.

With my credit score in hand my next step was to secure financing.

Included in my credit score was a description of how the score was determined as well as what kind of credit I could expect.  I applied for financing through an online bank and received a check to fill out when the purchase was made.  Due to my credit score my interest rate on the financing was favorable and below the average for a car loan.

Credit_report_history_225I don’t know how many of you have purchased a car but you may not know that you aren’t done negotiating after you have figured out the price of your car-to-be.

Oh no!

You spend your time and effort haggling over the car price with the sales person and maybe the sales manager and you finally come to an agreeable price and you let out a sigh of relief.  Finally, all I have to do is pay for the car and it’s mine!

Well at this point the sales person brings you into the office of the finance manager!  Sitting in the manager’s office, he looks over my forms and tells me I can get financing for X percent and goes into what I need to sign (it’s in his interest to give me a loan with as high a rate as possible).   “Whoa,” I say.  “I know my credit score can get me better financing” I tell the manager (keep in mind I already have financing in place).   The manager looks at my credit report and tells me I do have a good score and offers me a lower interest rate.  This rate is still higher than my outside financing!  It’s then I tell him that I already have financing so I don’t need to finance through the dealership.  Wanting to have my debt through his dealership he then offers me a rate about half a point below what my outside loan was.  I accepted the new rate and was finally able to buy my new car.

If I didn’t have a loan already and didn’t know my credit score before hand I would have paid significantly more for my car!

It would have been very difficult to negotiate at this point without those two pieces in place.   Having my credit score and a loan in place allowed me this:

  • I knew what kind to interest rate to expect.
  • I was able to get a rate lower than the financing I already had set up.
  • I saved money.

Finally

Remember, the price you negotiate with the sales person is not what you are paying for the car (unless you’re paying in full of course).  You have to add in the cost of your loan.  When you go into a major purchase you need to have as many tools and as much information as possible because you can be taken advantage of and you might not even know it.

Make sure to check your credit score and know your financing options before-hand!

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