Investing hard earned money is something that many Americans tend to shy away from. There are a variety of reasons why, perhaps it’s too risky, too complicated, or we think we don’t have enough money to invest at all. Our attitude towards investing needs some adjustment. We shouldn’t look at investing as something power hungry suit wearing tycoons from the 80’s do, rather we should look at it as an opportunity to help out companies and causes that have the same ideals we do.

Companies We Can Believe In
The first thing we should realize when we start investing is that we are giving our money to someone else. Generally, we wouldn’t give money to someone we didn’t like, right? So supposing you were against Big Oil, would you give your money to an oil company? No, you would most likely give your money to an alternative energy company, like solar or wind power. The reason why some people hesitate to do this however, is that the cash return on investment with solar or wind power would be significantly less than returns from an oil company.

As investors, we need to determine what our goals are. Are we trying to make money, or are we trying to help out a cause we believe in? If we are simply trying to make money, then we don’t have to worry about what those companies are doing with our investment money, as long as we get our return. If we’re investing in something we believe in, then return on our investment may not come in the form of dividends, but as advances in the field we bought into. My choice to invest in solar power may not net me much in cash returns, but hopefully in the future the technology will have developed enough to change the way this nation uses energy. Personally, I find that outcome much more rewarding than a check for a few dollars every month.

Returns Other Than Cash
The term ‘investing’ often conjures the image of climbing stock market charts and cash returns. But when you think of it in broader terms, investing can take many forms. Investing something implies that you are willing to help out a cause simply because you agree with its goals. Whether it be your time, your money, or your resources, investments are sometimes the only way those causes can realize those goals.

Nonprofit organizations are a major player in world change, and often they are solely supported by the contributions of individuals of like mind. If your goal is the same as these organizations, you may consider investing in them. Benefits from the government like tax credits are of course a major benefit, but more than that you’re working to help a cause that otherwise couldn’t succeed without your help. Investing doesn’t mean you have to give money to corporations, it means you give money to anyone who you deem worthy.

While most personal finance gurus suggest cutting back on your spending to make your paycheck go farther, you may reach a point where your paycheck just won’t stretch any more. That doesn’t mean that you’ve reached a personal finance dead end, though. It just meants that it’s time for a new strategy. Rather than trying to make your dollar buy just a little bit more, why not try to get a few more dollars in your pocket?

1. Your Day Job — There’s one simple (although not always easy) way to up your earnings. You can ask your boss to give you a raise. This tactic works best if you can point to something you’ve done recently that is desrving of a raise. It can be a bit easier if you remember that a raise doesn’t always have to mean that your boss is handing you a bigger salary. Perhaps you can convince your employer to cover more of your health insurance, or provide reimbursement for the gas you use to get to work.
2. Sell Your Stuff — A lot of people don’t necessarily want to get rid of their stuff, and that’s understandable. But it’s worth considering if there really is nothing in your home that you wouldn’t like to be rid of — I try to take a look around once a month and check if there’s something that isn’t really worth dusting. A movie that I don’t watch, a shirt I don’t wear… they can all be sold. Consider eBay or a garage sale. If you have a hobby that involves creating something (knitting, wood carving, etc.), you might also consider selling a few of your creations. After all, Junior can only wear so many sweaters. Etsy can often provide you with customer right away.
3. Start A Side Business — In high school, one of my teachers hired a couple of students to trim lawns in the summer time and shovel snow in the winter. My teacher supplemented his salary, my fellow students got some cash and great recommendation letters and everyone was happy. Maybe you don’t have a ready made work force, but there’s probably a side business that you’ve been thinking about starting ’some day.’ Why not today?
4. Build Passive Income — If you create a project that brings in money long after you finished working on it, with very little continuing effort from you, you have a source of passive income. If you write a book and receive royalties — that’s a passive income stream. So is renting out an apartment or investing in stock. Passive income tends to take more effort (or money) up front but can save you from have to spend tons of time trying to earn more money in the long run.

The great thing about these options is that, if you dedicate some time and effort to them, it’s very possible that you’ll make a significant amount of money from them. There are tons of stories about people who started out selling their DVDs on eBay and then started going out to find more to sell. It’s possible to turn any of these projects into a full-time job, if you want. At the same time, though, you can get just a little money for a little effort, which can be enough to make your finances more comfortable. It’s up to you.

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If you’ve been reading the news lately, you may have heard of the recent failure of Indymac Bank. After facing a liquidity crisis by making too many high risk loans, Indymac has been officially taken over by the FDIC. This is the second largest bank failure in United States history, and it is expected that the FDIC will have to disburse 4 to 8 billion dollars to the former customers of Indymac, or 10% of the total FDIC fund. The past few days have seen lines of angry people trying to withdraw their funds from the failed bank, but what many of them don’t know is they may not walk out with all their money.

What Is the FDIC?
Most people aren’t fully aware of exactly what the FDIC is, much less what their rights are under it. Most know that a bank with an FDIC seal is a good thing, but not why. The Federal Deposit Insurance Corporation was created after the stock market crash and massive bank failures of the Great Depression. During that time, people were simply out of luck if a bank failed. Once the bank closed, the customers usually were broke (hence the tendency of many of our grandparents to stuff money under the mattress). To counteract the devastating effect this had on the rest of the country, the government created a corporation to insure depositors money.

Account holders are now insured for up to $100,000 on regular deposit accounts, such as checking, savings, or CDs (A recent change to law in 2005 changed the coverage of IRAs from the standard $100,000 to $250,000). Because the FDIC has taken over Indymac, each customer is only allowed to withdraw up to that $100,000 limit. Customers who had more than that in their accounts will have to sue Indymac for the balance, which could take years and never result in a payout. So does this mean you’re screwed if you have more than $100,000 in your bank? Not necessarily, if you know how the system works.

The Breakdown
The FDIC has a few rules that, once you know how they work, can cover every penny you have.

- Each depositor is covered for up to $100,000 for accounts held in their name at a financial institution that is a member of the FDIC.
- If the depositor has accounts at another institution in addition to the first, the depositor is covered for $100,000 at the second institution as well. Therefore the depositor will have $200,000 of coverage between the two banks. Have accounts at eight banks? You have $800,000 of coverage, as long as you don’t exceed the $100,000 limit at any one bank.
- Accounts held in a different title are considered separate. Joint accounts, trusts, or beneficiary accounts are all considered to have their own $100,000 coverage.

The rules get a little more complicated the more spread out the money gets, but these are the basics that would apply to most people. Remember that banks aren’t guaranteed to be around forever, so you should take as many precautions as you can to protect your hard earned cash.

Saving money is like being on a diet. And like most Americans, we’re pretty bad at sticking to them. What then, is the solution to being financially fit? The same techniques you use to get rid of that spare tire are the ones you can use to keep that spare change.

Saving money is difficult for most of us mainly because we don’t have a lot of it to begin with. So in order to put some cash away, we have to deny ourselves the little instant gratification purchases we get everyday. Being able to stop ourselves from grabbing that candy bar, coffee, or MP3 download is exactly the same kind of willpower that is required for staying away from Big Macs and cheesecake.

But saying you’re going to do something and doing it are, as we know, incredibly different things. Everyone makes that New Years resolution to lose a few pounds and put away a few bucks for vacation, but inevitably at the end of the year we’re heavier than we were and in debt. So I propose an interesting solution, one that will impact both your gut and your wallet: take all the money you’d spend on snacks and take-out, and save it. Here’s a breakdown:

Say you spend about $15 a day between lunch, snacks, and coffee in the morning. If you start eating healthy, make your coffee at home, and take other calorie and cost cutting measures, you can get down to $5 a day. Now that extra $10 you’ve been spending is suddenly in your pocket. What do you do with it? If you leave it alone it will become $300 at the end of the month. Not bad. But if you invested that $300 with a 5% rate of return, after five years you’re looking at $20,402. After ten years? $46,585. Not too shabby!

But this is where saying you’ll do something, and then actually doing it comes into play. After reading those numbers on paper the plan doesn’t seem so bad, in fact it seems fairly easy. But there will be mornings when you look at your carrot sticks and think “what I would give to have a bacon egg and cheese sandwich right now.” Stay strong. A little slip up now and then isn’t the end of the world, but it can be a slippery slope. Many people who have trained themselves to deny the easy and the quick did it by simply making it routine. Remind yourself why you’re doing this, you want that vacation, you want that new car. Put up pictures of something you want to use the money for, keep a ledger of how much money you’re earning each day and watch it grow. Seeing your balance get bigger (and hopefully your gut get smaller) will inspire you to keep going.

Let’s face it, our money is not looking good right now. Whispers of recession and reports of a weak dollar translate into higher gas prices and lower home sales. Investing in the stock market is a scary and dangerous endeavor, particularly for people who aren’t very wealthy. Some of us may have scoffed at our grandparents, how they scrimped and saved and hid their money under mattresses to achieve their financial goals. Now many of us are starting to see the wisdom of a piggy bank on the dresser. The problem, of course, is that we aren’t a country of savers, we’re a country of instant gratifiers. We want the latest greatest of the biggest best, and damn the consequences. It’s the American Way.

Now we’re reaping what we’ve sown. Debt is one of the major crises facing this nation, and irresponsible or ignorant spending is to blame. How do we counteract this cancer of the economy? By holding off on that triplegrandemochafrappewhatever, and stowing away a few bucks for rainy days. But just putting spare change in a jar isn’t good enough these days. We’re far behind in the savings race, and we need every edge we can to catch up and build our wealth. How do we do it? Smart financial decisions, and the first smart decision is a savings account.

Possibly the simplest, and most overlooked method of building wealth is using the banking system to your advantage. Savings accounts have been around forever, and are still a solid way of putting some money aside. Here are some tips to make the most of your account:

• Save where you bank – It is a good idea to set up a savings account at the bank where you have your main checking account. Often banks will offer better rates or more attractive benefits to customers who have all their accounts with them. They aren’t as likely to do that for a customer who bounces around from bank to bank looking for the best deals.
• Don’t link your accounts – A savings account that links to your debit card is just asking to be tapped…don’t do it! You are your own worst enemy.
• Set up automatic transfers – When you receive your paycheck and deposit it in your checking account, have the bank automatically draft your checking for a certain amount and have it deposited into your savings. Personally, my direct deposit goes into my checking every other week. I set up a transfer to occur at the same time for $50. Essentially, I’m automatically saving money without even thinking about it.
• Go Online – Believe it or not, the best savings accounts are online. HSBC, ING Direct, and EmigrantDirect are all good examples that have extremely high interest rates. There are two catches however; you have to have an existing checking account at a physical, brick and mortar bank, and the interest rate is usually variable. As far as security goes they are usually very tight, so expect to have a lot of passwords. Here’s how it works: you sign up for an account online and enter your information. Then in order to fund the account, you have to provide your checking account information and sign/receive authorization via postal mail. The funds are then wired from your account (no fees) and deposited into the online account. And the best part? They’re FDIC insured, just like your local bank.

Certificates of Deposit, or CDs as they are more commonly known, have long been the go-to savings product that people depended on to grow their cash reserves. With a guaranteed rate of return, CDs are considered one of the safest and most stable financial vehicles out there. But with interest rates so low, are they still a viable option?

CDs are essentially how banks are able to make money. When you deposit your money in a banks Certificate of Deposit, you are essentially loaning the bank your cash. The bank then takes this cash and uses it to make loans to other customers in the form of mortgages, auto, and personal loans. When those loan customers make payments, a certain amount of the interest (profit) the bank makes goes back to you, the CD customer. This is the interest you gain on your money during your CD term.

Pros and Cons

One thing that differentiates a CD from other accounts is the term. CDs are not transaction accounts, therefore once you put your money into a CD account, it’s locked in there for however long the CD is written for. Usually the longer you put your money into a CD, the higher the return interest rate. The point is to basically freeze the funds so the bank can then use them to write out loans. As the bank gets paid back, part of their profit goes to you. The longer you allow the bank to use your funds, the more they’re going to pay you in interest. They want to have as much of your money in their CDs as possible, for as long as possible, so they’re going to give you better rates to keep you interested.

So what’s the problem with this approach? Your money is stuck! If you open a ten year CD at a certain interest rate, and a better one comes out the next week, or even years later, you can’t take your money out and switch (well, you can, for a hefty fee. Usually this fee is more than you would earn by switching to the higher interest rate). You then have to sit and wait until the ten years is up to get your cash. Another thing to keep in mind is emergencies. If you suddenly have a medical expense or car repair, your money is stuck in that CD.

So why invest in CDs at all? They’re guaranteed. You will never lose any of your principle to market changes or botched stock trades. You will always walk away with more money than you started with. The question is, of course, how much more. Shopping for rates can be a tedious and frustrating experience, particularly if you’re investing in shorter term CDs. You might spend forever going from bank to bank to find the best rate of return, only to have to do it all over again in a year or two when it matures. However, if you’re saving for your kid’s college fund or your retirement, it would make sense to include several CDs in your portfolio. Even if more risky investments, like stocks don’t work out and lose you money, you’ll always have a safety net in the form of your CD. Another little perk is the fact that it stops you from those impulse buys. If you want that brand new plasma TV and have easy access to junior’s college fund, you might be tempted. CDs are not only secure in terms of return, but they also save you from your worst enemy: yourself.