Thrifty Spending Issue 72

FEATURE ARTICLE:   Better management of your short-term cash

For the vast majority of people, it is essential to keep a portion of their assets in liquid form in order to meet monthly commitments.

For example, most families have to meet their mortgage or rent payments, grocery, utility, and transportation bills out of their monthly paychecks. There are a host of other expenses that arise from month to month, such as auto insurance, that help keep the pressure on the family cash flow.

If people are fortunate enough to have anything left over once all the expenses have been met, then they can worry about saving or investing for the future.

The paychecks that you deposit in your checking account, which seem to swiftly disappear as you pay monthly expenses, constitute a portion of your short-term cash. The money is no sooner in your bank account than it flows out again as payment for goods and services.

However, because the money that we use to meet our monthly expenses is so liquid, there is a tendency to simply look at it as a method of payment. We often leave more than we need in our checking accounts, gaining little or no interest until we need it for a future expense.

By actively managing the short-term cash that passes through your hands, you can provide a means of saving for the future. You can use this money to increase your net worth with little or no additional risk to your principal.

Short-term investment instruments, such as Treasury bills, certificates of deposit, and money market mutual funds, can provide you with the liquidity needed to meet expected and unexpected expenses and to increase your short-term investment income.

There are numerous alternatives available to enable you to get your short-term cash working for you. The key to successfully managing your short-term cash lies in understanding the alternatives and choosing the one most appropriate to your particular needs and circumstances.

Treasury bills are backed by the full faith and credit of the U.S. government as to the timely payment of principal and interest. Bank CDs are insured by the FDIC for up to $250,000 per depositor, per institution in interest and principal.

Money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in money market funds.

Mutual funds are sold only by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.

This material was written and prepared by Emerald.
© 2011 Emerald Connect, Inc.

MONEY SAVING TIP:   Try not accepting initial offers. Many people pushing for a sale are willing to negotiate because they want your money as much as you want the product. In Confessions of a Serial Haggler, I explained how I have personally gotten discounts on cable service, hotels, doctor bills, and more. It never hurts to ask.

DID YOU KNOW…debt collectors may not reach you at odd hours, such as before 8 a.m. or after 9 p.m., unless you grant permission for them to do so?  Under the Fair Debt Collections Practices Act you are protected from aggressive debt collectors. The law holds collectors to strict conduct rules.

  • Debt collectors may not contact you at work if they know your employer dislikes such calls.
  • Debt collectors must go through your attorney, if you have one, in regard to your debt. They can only contact a third party once about where and how to find you.
  • Consumers must receive written notice five days after first contacted by a debt collector. It must detail the amount owed and provide instructions on how to dispute the amount if the consumer believes it to be wrong.
  • A collector may not contact you if within 30 days after you receive the written notice, you fire off a letter to the collection agency stating you do not owe the amount. However, a collector can resume collection procedures if they send proof of the debt, such as a copy of a bill for the amount owed.
  • Collectors may not threaten harm, harass the debtor or third parties, make repeated calls to annoy the debtor or use profanity during the calls.
  • Collectors may not misrepresent themselves as attorneys, government agents, credit bureau workers or any other entity other than debt collectors, nor may they lie about the amount owed or what will happen they don’t receive payment.
  • If you have a complaint, file it with the FTC and your state’s attorney general.

Bankruptcy Certificates to be Provided by Nonprofit Credit Counseling Agency

Debt Management Credit Counseling Corp (, a nonprofit charitable organization (“DMCC”), is now providing bankruptcy certificates for the pre-filing counseling and pre-discharge education required under the U.S. Bankruptcy Code. Consumers are not required to pay for the counseling or education course in advance. Open accounts are provided to attorneys to expedite the issuance of bankruptcy certificates for their clients.

Read more

Thrifty Spending Issue 71

FEATURE ARTICLE:  A safe way to invest

A relatively safe investment instrument is the traditional certificate of deposit (CD) that you may purchase from your local bank. Federally insured for up to $250,000 per depositor, per institution in interest and principal, CDs offer you a fixed interest rate for depositing your money for a specific period of time. If you withdraw your money before that period is up, you may be subject to interest rate penalties.

CDs may also be purchased through most brokerage firms. The brokerage firm will shop the market and find the most attractive rate for you, even if it is out of state. This is something you might find difficult to do on your own. CDs purchased this way are called Brokered CDs.

CDs are most suitable for purchasing and holding to maturity. However, you may find it necessary to dispose of CDs prior to maturity. An important distinction between Brokered CDs and Bank CDs is the different means for early redemption. With a Bank CD, should you redeem your CD early, you will typically be assessed an early withdrawal penalty. Brokered CDs trade in the secondary market which provides you with the opportunity to sell your CD at prevailing market prices, which may be worth more or less than the original amount you invested.

Brokered CDs are more complex and carry more risks than CDs offered directly by banks. Brokered CDs may not be suitable for all investors. Before you purchase a Brokered CD, make sure you fully understand all of its terms and carefully read its disclosure materials provided by your financial professional.

MONEY SAVING TIP:  Don’t buy new

There’s no two ways about it – getting something in the original packaging often means paying twice the price. This mistake is most costly when it comes to cars, but it applies to many things: furnitureclothingtextbooks…the list is endless. So whenever practical, skip the stores and showrooms and choose thrift stores, yard sales, eBay, and Craigslist.


DID YOU KNOW….Many employers use credit history as a tool in their pre-employment screening?  It is used as a measure of judgment and character. If you can’t manage your financial obligations, employers may think it’s a sign of irresponsibility. Some employers think that if your monthly debt payment is higher than your salary, it may distract from your performance.

To make sure you know what employers will be looking at, check your credit reports before they do.  Consumers can check their credit report as often as they would like, without it affecting their score. Everyone is entitled to one free report from each of the bureaus every 12 months. Visit for more information.

Thrifty Spending Issue 70

FEATURE ARTICLE:  What advantages does a biweekly mortgage offer?

One of the most precious assets that you are likely to possess as you progress through life is your home. Owning their own homes is something that most Americans strive for.

Unfortunately, for the vast majority of people, one of the major drawbacks in owning a home is the long-term mortgage that must be paid off. Mortgages often stretch out 30 years with interest and principal repayments.

Most mortgage repayments are made on a monthly basis. However, arranging to make payments biweekly can have a dramatic effect on the amount of money you have to pay and the time frame before it is all paid off.

Under a biweekly mortgage, instead of making the payments once a month, you make half the payment every two weeks. If your mortgage is $1,000 per month, under a biweekly system it would be $500 every two weeks.

You make 26 payments per year, which is the equivalent of 13 monthly payments rather than 12. The extra payment should be taken directly off the principal, reducing the payment schedule accordingly.

The effect of biweekly mortgage payments can be dramatic. For example, if you currently have a $150,000 loan at 8 percent fixed interest, you will have paid approximately $396,233 at the end of 30 years.

However, if you use a biweekly payment system, you will pay $331,859 and have it completely paid off in 21.6 years. You save $64,374 and pay the loan off 8.4 years earlier!

The savings you realize using a biweekly payment schedule can save you nearly half of what it cost to buy the house in the first place.

An increasing number of mortgage companies are now offering a biweekly payment option. It is even possible to convert your current monthly payments into a biweekly schedule.

Some companies will attempt to charge you to refinance the loan. However, this is not always the case and shopping around can save you money in refinancing charges.

Be wary of independent companies offering to do this for you for a fee — you can do it for yourself for free.

You should receive professional financial advice when considering switching to a biweekly mortgage payment schedule.


Unless you are a vegan, look for generic brands of cow’s milk no matter where you shop. It’s packed with the same nutrients as name brands, and is produced following the same guidelines. The only difference is the higher price tag.

DID YOU KNOW…that with your car loan, you may also need gap insurance?

After you got rid of that old car, you purchased a shiny new car complete with that brand new car smell that everybody loves. You took out a loan for $25,000 and drove home. Two weeks later your car was totaled and the insurance company offered to pay you $21,000 for the car. The bank is going to still want the $25,000 you owe, so you’ll be on the hook for the other $4,000.

Without gap insurance, you have to pay it out of your pocket. Bottom line, if you have a loan for your car, you should also consider gap insurance