Beating Broke

Personal Finance from the Broke Perspective

Beating Broke Rules: Certificate of Deposit

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What is a Certificate of Deposit?  Certificate of Deposit (commonly called CDs) are basically a savings account that pays a set rate over a set term.  The rate tends to be higher than a normal savings account rate because the money is locked into the CD for a set term. If you choose to withdraw your money before the term ends, you pay a penalty.  The penalty is usually a preset number of months interest on the CD. At the end of the term, you can renew for another term at another set rate or keep your money.

Rules: Certificate of Deposit
Safe and Stable Investments

CDs are a very stable investment. They are also a very liquid investment. As such, they make for rather poor returns on the long term and they carry a penalty for withdrawal before the “maturity”.  However, there are several uses that can make them a valuable part of your financial portfolio.

6 and 12 month CDs can be a great place to keep your emergency fund.  Chances are you won’t need the money, so you might as well invest it.  The key here is that the CD is a safe, stable, and easily accessible form of investment.  You’ll still get the higher interest rates that you would expect from a high-yield savings and, depending on the term length, sometimes better.

As you get older, CDs can play an important role in your retirement accounts as a small percentage of your portfolio.  Again, the stability and reliability of the nature of CDs makes is the key.  As you age, a growing portion of your retirement portfolio should be in stable cash investments.  Many will recommend something like a money market account or a high yield savings, but CDs are in that same group.  And with a retirement account, you can usually tie the money up a little longer and get better returns.  Look for something in the 2-5 year range for maturity.

As I mentioned before, one of the major drawbacks to CDs is the early withdrawal penalty.  In most cases (consult your CD paperwork) the penalty is 3 months interest.  So, if you were to withdrawal the money after only three months, you would only be able to withdrawal the original amount.  If you withdrawal the money at only one month, you would get less than the original amount.  Anytime after 3 months and you get the original amount plus any interest above the three months penalty.

While the penalty can be bad if you need the money early in the term, if you need the money for an emergency, it can be overlooked pretty easily.

Beating Broke Rule: CDs can be an important part of your investment portfolio

Frugal Tools and Strategies to Help Busy Families Get Organized

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If you’re like most families, you’re busy.  You spend too much time in your car running from activity to activity, and you spend too much money buying food out on the nights you don’t have time to cook.  Your house may be in a state of perpetual chaos.

This upcoming year, especially February through May, my family will be very busy.  To make sure that we remain organized, I’ve started using several tools and strategies.  Even though we’ll be busy, I plan to still have time to make food at home, keep the house clean, and maintain my budget.

Tools I Plan To Use

tools and strategies
Be Organized!

Motivated Moms.  Motivated Moms is an app or PDF file of a list of weekly chores meant to keep your home tidy.  I love that they think of tasks I always forget like clip the kids’ fingernails and clean the toaster in addition to more basic chores like vacuum the livingroom, etc.

I bought the entire year PDF for $6.  The chores for each day will be assigned to me and my kids based on level of difficulty.  Between the four of us, I’m sure we can knock out the chores for each day in 20 minutes or less working together.

Subscribe to eMeals.  For busy families, eMeals can literally save you hundreds of dollars.  For just $69 for a 12 month subscription, which averages $5.75 a month, you’ll get a custom meal plan for the week as well as a grocery list for all of the items you’ll need.  eMeals has 20 different meal plans to choose from including Paula Deen, slow cooker, Paleo, and many others.  Just choose the one that works best for your family.  Best of all, most meals are never repeated, so you get variety all year long!

Strategies I Plan to Use

In addition to the tools mentioned above, I plan to implement a few strategies to stay organized.

Get up early.  I really don’t like getting up early, but doing so let’s me get some of my freelance work done and also gives me time to exercise.  If I exercise early in the morning, I know it will get done.  If I wait until the evening, I almost never exercise.

Make freezer meals.  In the upcoming months, we’ll have three days a week where we will be gone all day, only coming home in time for dinner.  I’ve already started making freezer meals.  On the three busy days a week, I’ll simply put the freezer meals in the slow cooker.  We’ll come home to a hot cooked meal, eliminating the dinner scramble.  On the other days, I’ll use eMeals’ meal suggestions.

If you don’t have a full day to devote to a freezer cooking session, just double the meals you are making for the next two weeks or so and put one half in the freezer.

Make a schedule and stick to it.  I plan to make a schedule I can stick to and follow it.  That will help me manage my time.  For instance, I do one load of laundry a day; I’ll start it when I get up at 5 a.m. so it’s done before the day gets too busy.

Keep a regular sleep schedule.  When people get busy, they tend to skimp on sleep.  I plan on going to bed no later than 10 p.m. so I’ll be able to get up at 5 a.m.  I know skimping on sleep will ultimately make me less productive as the days go on.

Do you have a busy schedule?  If so, what tools and strategies do you use to stay organized and resist the temptation to spend money on conveniences?

Investing for Social Good

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This post brought to you by American Century Investments. The content and opinions expressed below are that of Beating Broke.

What if you could invest your money knowing that your investments were making a difference?  We all want to make a difference.  We usually do so by volunteering our time or by making cash donations to a cause.  We do it with intent.  But, we have to actively do it as well.  I’ve talked before about the benefits of passive income, or income that is generated with little to no work on your part.  Can we do more through passive giving?

American Century Investments is an investment company. As of March 1, they manage nearly $140 Billion dollars in investment assets.  But, that isn’t what makes them special.  What makes them special is what they do with their profits.

ACI was founded by a man by the name of Jim Stowers in 1958.  Jim  was a cancer survivor, as is his wife.  In 1994, they founded the Stowers Institute for Medical Research.  To help fund that institute, they created an endowment of $2 Billion that was made up of some cash gifts, and a 40% equity (ownership) in American Century Investments.  Why is that important?

Because of that ownership stake in ACI, more than 40 percent of American Century Investments profits have been distributed to the Stowers Institute for Medical Research, a non-profit basic biomedical research organization. The Institute is the controlling owner of American Century Investments and has received dividend payments totaling over $1 billion since 2000.

$1.2 Billion in dividend payments.  I’m going to let you think about that for a minute.

$1.2 Billion dollars is a lot of money.  And because of the social thinking of the Stowers’, that money is going towards medical research.  Research that could provide clues to cure disease.

Now, I don’t want this to come out sounding like a sales pitch.  I want you to do your research before you invest your money with anyone.  I do.  If you’ve got a financial planner, talk to them before you do anything.  But, what I do want to say is that, all things equal, if you can invest with a company that does a great deal of social good and still get equivalent returns with equivalent expense ratios, then wouldn’t you do that?

Ultimately, any financial decision you make shouldn’t be based on emotion.  It should be based on numbers and facts.  9 out of 10 times, if you make a decision based on emotion, it’s going to be the wrong one.  I know that.  You should too.

But, I also know that my grandmother is a cancer survivor.  My mother is a cancer survivor.  I lost an aunt to cancer.  Knowing that a portion of the profits of the company that I invest my money with is going towards research that could someday make cancer a curable or preventable disease is a pretty powerful motivator.  An emotional one, to be sure, but powerful nonetheless.

All things considered, when it comes time to choose investments in the future, I’m going to make sure that American Century Investments is included in the options.  That doesn’t mean I’ll pick them every time (or at all), but because of their structure, and the chance to do a little passive social good, they’ve earned a spot in the selection process.

What about you?  What do you think of the idea of passive social good?  How about the idea of an investment company with a higher purpose?

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