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.

a

Responsible Investing – Putting Your Money To Good Use

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.

Photo

a

5 Ways To Up Your Earnings

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.

a

FDIC: What You Need To Know

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.

a

The Money Diet

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.

a

Pinching Pennies

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.

a

CDs: Are They Right For You?

Ok, the unthinkable happened. You wake up one morning and get a cup of coffee on your way in to work. You swipe your debit card, there’s a pause, and DENIED flashes across the screen. Denied for a $2 coffee? How can that be? Embarrassed, you leave the coffee and slink out of the shop. You get into work and check your account online, only to find that you now have -$83.65 in your bank. You’ve been hit with debit card fraud.

Many people are surprised to learn that most debit card fraud occurs when the card owner still has the card in their possession. I certainly was surprised when I had to leave the coffee steaming on the counter and found that someone in California bought an X-Box with my money. Follow the tips in the Debit Card Fraud Prevention article to make sure this doesn’t happen to you. But if you’re like me and this has happened to you, keep reading to see how you can get your money and life back on track.

Do Some Detective Work
The best weapon you have against fraud is information. Check your bank account online to see what is going in and coming out. As soon as you see something weird, note the date it happened and the exact amount, and most importantly, where. If something was bought in New Jersey and you live in New Mexico, you might want to take a closer look.

Tell Your Bank
As soon as you think you’ve been defrauded, tell your bank. Each bank has different methods for dealing with fraud, mine had me fill out an affidavit stating that I did not authorize the transaction. This may be a long and tedious questioning process, but you have to realize the bank is going to end up paying you back your money and taking the fraud as a loss, instead of you. Therefore they want to make absolutely sure you’re telling the truth, and not just trying to get out of paying a big bill. This process can take up to 10 days while the bank researches the transaction to make sure that it was fraudulent.

Do it Fast
There is a limited amount of time between when a fraudulent transaction occurs, and when you can get reimbursed for the funds. Federal law states that a customer is liable for a maximum of $50 if they report the fraud within two business days, $500 if reported within 60 days, and unlimited amounts if reported after 60 days. Most banks, if the fraud is obvious and the customer is in good standing, will cover all funds that were stolen, but only after an investigation period.

The keys to recovering from fraud are information and communication. You have to arm yourself with knowledge not only of the comings and goings of your own accounts, but also the laws governing fraud. Once you are conscious of these things, getting in touch with your bank and staying in touch with them will expedite your recovery immensely.

a

Debit Card Fraud: Recovery

Debit card fraud is sometimes lumped into the same category as credit card fraud, but the two are very different. Debit cards link directly to your money, your real cash, and recovering those funds is a long and tedious process. Here are a few simple things you can do to shield yourself from debit card fraud.

Use the internet or automated phone service to keep tabs on all your accounts.

Checking the balance in your checking account every other day will arm you with the best defense against fraud: information. The more familiar you are with the comings and goings of your account, the quicker you can spot something fishy.

Don’t use your debit card for purchases at places you don’t trust.

If you’re unsure about the security at a place of business, use your credit card or cash to pay. A credit card doesn’t suck the funds from your bank account immediately like a debit card, so it gives you some time to check and make sure everything is alright before paying off the balance. This applies for online purchases as well. Treat websites the same way you would treat brick and mortar businesses, if it looks untrustworthy, don’t trust it!

Hold on to your card

Most restaurants are fairly trustworthy places, however it is an ideal environment for a devious waiter to make off with your card number. When you give them your card to pay the check, they take it back to the register, usually out of sight, and run the transaction. This gives them plenty of time to copy your number, your signature, even the little security code on the back.

Spread out your money

Don’t link all your accounts to your debit card! If someone gets hold of the number they can completely clean you out. Instead, have a small savings account that can only be accessed by the old fashioned human teller at a bank branch. That way if your checking gets wiped out, you still have some cash in your savings. This is important, because the bank could take up to 10 days to investigate your claim, and they won’t refund you until that time is up.

While using debit cards may sound insecure and dangerous, the reality is that with a little precaution and knowledge, they can be excellent tools. Banks are starting to emplace more safeguards on debit cards, such as transaction amount limits. These limits can be lifted for certain authorized transactions if you contact your bank, but in case your card number falls into the wrong hands, the thief can only take a certain amount out in a 24 hour period.

a

Debit Card Fraud: How to Prevent It

People looking to build and grow their money are finding it a bit difficult in the current American market. The stock market is more volatile than ever, and the impacts of those ups and downs don’t just affect our investment portfolios, but how much we pay for bread, milk, and gas every day. Investing the money we work so hard to earn in something like that is a frightening prospect, not to mention hard to do in the first place. Saving up enough money to buy stocks might take people a lot of time and effort, and when they finally have enough to buy a stock, it might plummet overnight and lose that person all their money.

While investments in stocks and international markets might be an option for people with a bit more “extra” cash lying about, most of us are saving a few dollars at a time, if at all. For people like us, these funds need to stay at least partially liquid (meaning we can spend it if we need to). We can’t wait for our CD to mature when emergencies occur suddenly and without warning. What then, is the solution?

A good ol’ savings account.

But not just any savings account. Online savings accounts, FDIC insured and high yield with limited to no prerequisites. These accounts are usually with large banks that can afford to give you much higher interest rates than so called “brick-and-mortar” institutions. But how do they work, are they safe, and where do you find them?

Is This a Scam?

Usually the first assumption made by jaded and cynical people like myself is that this is too good to be true. How can banks offer such high yield accounts with almost no minimums, and do it online? There’s a catch right? Upon further investigation, I learned there was nothing to fear. As a matter of fact, the more fine print I read, the more excited I got.

The banks that are offering these kinds of accounts are large banks, usually with very diversified interests in American markets. ING, HSBC, and Capital One to name a few. These banks have such a large asset base, they can afford to offer such high interest rates. Here is the current rundown of some online savings accounts:

• HSBC – 3.05%, no minimum balance, no fees
• E*Trade – 3.01%, no minimum balance, no fees
• ING Direct – 3.00%, no minimum balance, no fees
• Emigrant Direct – 2.75%, no minimum balance, no fees
• Countrywide Bank – 4.05%, $10,000 minimum balance, no fees
• Capitol One – 3.75%, $10,000 minimum balance, no fees

Is It Safe?

One of the first things you should look for when shopping for online savings accounts is the FDIC seal on the website. This is extremely important, as this delineates a real bank from an uninsured investment firm, or even worse, an outright scam. FDIC is insurance for your money, backed by the Federal Government. It gives you insurance on up to $100,000 for a deposit account in your name. More on FDIC insurance later.

You might ask, what about security? Most of these websites are very secure, with a lot of different password requirements. Also, in order to open one of these accounts, you will need an existing checking account at an existing brick and mortar bank. The online banks assume that your identity has been verified at your existing bank already, otherwise you wouldn’t have a checking account. In order to verify your checking account, the online bank will make two small deposits into it (a few cents each). You then need to respond back to the online bank with the exact amounts of the deposits. This is how they know your account is active and in your control (don’t get excited, they take the money back).

Sign Me Up!

Sound good to you? Shop around and see which account works best for your needs. Keep in mind the rates are variable, which means that as the markets change, so can your interest rate. Keep up to date on the latest offers so you don’t miss out.

a

Online Savings Accounts

Around tax time all kinds of fraud are reported, mostly people posing as the IRS on the phone and phishing for personal information to “confirm the information disclosed on your tax filing.” The new twist this season is using the Stimulus refund to gain access to your personal information.

Because this is not the usual refund most people expect, they are more susceptible to fraud surrounding it. Scammers will make calls to people, posing as the IRS and asking them to confirm their information so they can receive their Stimulus checks. Usually they are asked for their bank account information. When people hesitate, they are told that the only way they will receive their check is to disclose their account number. People might also be asked to disclose their social security numbers, addresses, driver’s license numbers, loan information, health insurance information, and more. These scammers will then take this information and open up credit cards, clean out bank accounts, or even file fraudulent tax returns in your name.

The same precautions that will save you from other tax scams will save you here as well. The IRS never sends unsolicited e-mails or phone calls, so treat any with caution. Call the IRS at 1-800-829-1040 to confirm any correspondence you receive. E-mails from the IRS might seem unusual, but now that more and more people are filing electronically, and having their refunds directly deposited into their bank accounts, e-mails asking for confirmation of your routing number and bank account are more believable.

These emails can be more dangerous than you think. They often look very official, with IRS seals and fine print on the bottom of the message, all in an attempt to lend credibility. These messages often have a link that you click to find out more information about “special rebates.” Clicking on these links at all, even out of idle curiosity, will download malicious software that allows hackers access to your computer and any personal info you have on it. So if it seems too good to be true, don’t click on the links “just to see.”

The cousin of the refund email scam is the audit email scam. This method uses scare tactics instead of the promise of money. The victim receives an email saying that they are being audited, and they must follow a link to a “secure” site to provide information. This of course instantly downloads the same software as before, and as a bonus any information you input into their website is now theirs to do with as they please.

Taxpayers have received more than 33,000 of these scam e-mails, reflecting more than 1,500 schemes. If you receive one of these emails, forward it to phishing@irs.gov to report it.

a

Economic Stimulus Scam