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October 2004

Short-Term Savings

This article was written by in Saving. 2 comments.

The Motley Fool on the importance of short-term savings.

Having an easily accessible cash stash can prove to be one of the most important parts of your saving and investing strategy. Maintaining the liquidity of the equivalent of six-to-twelve months of your expenses means that if you run into an emergency, you don’t have to sell stock (incurring tax) or dip into retirement funds (incurring tax and/or withdrawal fees) in order to CYA.

Certificates of Deposit (CDs) usually give you good rates on your savings while maintaining liquidity. If you have to withdraw funds from your CDs before they mature you may be hit with a penalty, but depending on the CD you choose, the interest gaines will still be higher than what you might yield on a regular savings account.

Right now, I don’t have six months worth of expenses saved up in cash, although I used to. Once I have about $5,000 to put to the side for an emergency fund, I plan on laddering CDs with different terms of maturity.

This is how that works: Suppose there are five levels of maturity, one year, two years, three years, four years and five years. The longer the term, the higher interest yield. To ladder the CDs, I would spend $1,000 on each type.

At the end of the first year, the first CD will mature. I’ll take that $1,000 plus interest and buy a five-year CD. That CD will now expire at the end of year 6. At the end of each year, another CD will expire, and with that money I will purchase another five-year CD.

When I’m ready to start this, I’ll go with ING Direct because they offer great interest rates and I already have my savings account with them.

I may consider starting sooner with less than $5,000. It would be a good idea to start getting those rates, even if it is on a smaller amount of money.

Not-So-Good Realization

This article was written by in Planning. Comments Off

Remember when I was happy to realize I would be receiving three paychecks in December? I miscalculated. However, I will be receiving three paychecks this month, with the third one coming in next Friday. It’s a good thing, too, since I’ve been feeling financially strained lately. It would have been nice to have that “surprise” income in December, too.

Perhaps I shouldn’t have purchased that additional 250 GB hard drive ($150) a few weeks ago.

My Name is Flexo, and I Approved This Message

This article was written by in Investing. Comments Off

Last week, I received the following email. I have changed the name of the firm for the safety of the author:


I enjoy reading the posts on your blog ‘Consumerism Commentary’. It is a well put together site. I was reading a post on 9/29 about your brokerage recently charging you an annual fee. You should check out ShareDesigner, ShareDesigner is one of the few brokerages around that does not charge you an annual fee. Furthermore, you will not be charge inactivity fees if you decide you do not want to trade.

The reason I write is to see if I could interest you in putting a ShareDesigner link on your website. Being that it deals with personal finance, I think there would be a good possibility that a small discrete link to our website (for those that read your blog) would be able to earn you some additional money. We pay 20 dollars per opened and funded account, and the readers of your blog just might be the right targeted group for this to work.

I’m not sure how I feel about this. There are fees associated with the account (transaction fees, like all brokers) but no monthly maintenance fee, only for the lowest “version” of their service. I suppose, according to this afilliate program, if I could get one new subscriber a month, the account would be free to me.

I don’t think that the number of readers I have can support one new referral a month. So, I’ve pretty much decided that this wouldn’t really be worth it to me. However, I did write the individual back asking if they would be willing to refund the annual and/or transfer fee incurred by my previous discount brokerage. If they were to spend that $125 ($50 annual fee plus $75 transfer fee, not yet incurred) for me, I would definitely move my assets to them. I have yet to hear a response, as expected.

I don’t like the idea of endorsing a company when being paid to do so. It happens often though, even in the blog world. You never know if the author of a website endorsing a product is being paid to. You never know if product reviews on websites such as epinions.com are actually written by the company offering that product or by honest consumers.

Blogs are often used to gain prominence in Google search listings and use that advatange to attract readers who will click through to advertisements, resulting in income for the “blog” writer. These are not blogs.

Back to the fees from last month. It turns out the old discount brokerage hid the notice of the new fees in a newsletter whose topic is general investing; just the place one would not expect to see such a notice pertaining to their accounts… They feel I have been warned and will not refund my money. Bummer.

At least I was able to negotiate my rent down, at least until the end of April.

Good Realization

This article was written by in Planning. Comments Off

I looked at the calendar this weekend and realized that I have three paychecks coming to me in both October and December. That will definitely help ease my money issues since I budget for two paychecks monthly.