Penny Wise, Dollar Foolish

Many families look for ways to trim expenses and save money, especially around the holidays. Eat out less often ... Rent movies instead of going to the theater ... "Brown bag" your lunch ... Sometimes, however, it is simply not wise to cut too many corners. In the pursuit of a penny wise lifestyle, we may at times become dollar foolish.

How do we avoid falling into the common traps? Knowing when it's wise to save money, and when you just need to walk away from the so-called "bargain". Here are some guidelines to help you along the way.

1. Traveling for deals: Driving a few miles more for cheaper gas might seem like a good idea at first, but consider the cost in gas and time driving there. Likewise, account for travel expenses for deals at stores that are a distance away. If the "savings" do not add up, the trip may cost more in the long-run.
2. Car leases: An inexpensive alternative for some ... a bad buying decision for others. Some drivers are unable to stay within the lease mileage limits and get nailed with charges that may amount to 10 cents for every mile over the max.
3. DIY oil changes: A $20 dollar oil change might not be such a bad deal when you consider the time, cleanup time, and meager savings you get from doing it on your own. Let the professionals do it, and invest your time in other endeavors.  
4. Water filters: Buying bottled water by the case isn't expensive, but think about how much money (and back pain) you can save by installing a water filter and carrying a durable water bottle.
5. Quality shoes: Sure, you may be able to find a good deal on footwear, but the lower the price, the greater the risk of blisters and daily discomfort. Invest in quality shoes that will take you through a workday for years, rather than months.
6. Baby furniture: Cribs, car seats, high chairs and other baby items must scream "safety." You probably do not want to collect your baby furniture at the local garage sale and risk an expensive accident.
7. Day care: There may be a reason why that nanny you found in Craigslist came with such a low price tag. She may be unreliable and inexperienced. If that is the case, you may pay a lot more in the long run. Always look for reputable day care that will provide your child with the necessary care and your priceless peace of mind.
8. Long-term gym memberships: Sure, you may save on the monthly fee, but most consumers do not keep up their workout routines and end up paying the monthly gym fees, even when their backside is glued to their couch. A higher priced, short-term commitment membership might be a better option until you are sure you will stick with your plan or buy a

Frugal and thrifty doesn't always mean buying what is cheapest. Always invest in quality, and research specifications for items that you will use heavily. They will last longer and pay for themselves in the long-run. 

Need help budgeting? Try AltaOne's online personal finance manager, BudgetPro. Users of financial management tools like BudgetPro report saving an average of $100 a month by tracking spending and setting financial goals. Best of all, it's free. 

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4 Big Benefits of Personal Loans

What is on your financial plate in 2014 -- car purchase ... urgent home repair ...  vacation?  If you are considering payment options for a time-sensitive expense, a personal loan may be right for you.  

Personal loans, sometimes known as “signature loans,” are fairly simple: you borrow a lump sum of money from your credit union and pay it back in pre-planned increments. In addition to being straightforward, personal loans come with a few other notable benefits over options like credit cards, home equity loans and payday loans. Here are four of the biggest advantages:

Convenience
Personal loans are often available in more flexible amounts than larger-scale loans and credit unions can make quicker approval decisions.  Although other lines of credit, such as home equity loans, can have tax advantages, the process for obtaining them tends to be slower and more complex.  In some cases, especially if you have a pre-existing relationship with the credit union in question, it’s possible for the money to be disbursed on the same day your application is received – this can make them a strong option in emergencies.  

Fewer restrictions
The phrase “no strings attached” is frequently used.  While some sources of funding, like student loans, describe one specific item, you can take out a personal loan for virtually anything -- from holiday shopping to school expenses.  People even use personal loans as a debt reduction tool to consolidate credit card bills and other debts into a single personal loan, which can simplify and/or reduce monthly payments.  

Affordable rates
The interest rates for personal loans tend to be lower than credit card interest rates.  This makes a huge difference when considering a purchase that you plan to pay off over months or years, rather than a few weeks.  Due to a system called “risk-rated pricing” (the lender charges more for loans that put them at higher risk), a poor credit history can subject you to higher interest rates.  However, you may be less likely to be flat-out denied for a personal loan, as you might be if you apply for a credit card. 

Personalized repayment
Your credit union may have a few repayment plans available. Many plans include fixed interest rates, which lock you into a consistent monthly payment for a set time period (generally 12 to 60 months).  A big advantage here is simplicity: you’ll know exactly what to expect each month. Speak to a credit union representative to find the best repayment plan for you.

Final Word
Although it is important to approach any kind of borrowing with caution, personal loans can be a responsible way to finance urgent needs.  Their simplicity, convenience and affordable rates make it possible to get funds now and repay them in a way that works for you.  

Be sure to check out AltaOne’s special holiday loan!

Sara Collins, NerdWallet

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Make Your Money Grow

If your hard-earned cash is collecting dust in a savings account, it may be time to look at some options for growing your money. One option is to invest in certificate shares (also known as a share certificate or certificate of deposit). Not only do certificate shares deter you from digging into your treasured savings, they actually allow you to make money off of those savings. Here’s how they work.   

WHAT IS A CERTIFICATE SHARE?

A certificate share is a short-term, low risk investment product – similar to a savings account – issued by a credit union such as AltaOne. Like a savings account, certificate shares are backed by the NCUA and typically have a fixed interest rate. Unlike a savings account, a certificate share is issued for a set period of time and has penalties for early withdrawal. 

Additionally, certificate shares offer a higher rate of return than the average savings account, which means you could be making roughly 0.10-1.5% more in interest from your principal amount. In order to take advantage of the returns from a certificate share, you must not withdraw the money before the date that it matures. For example, if you withdraw funds two months after opening a six-month certificate share, you will pay a penalty, which negates some of the interest you could be accumulating. 

LEAVE IT UNTIL YOU NEED IT

If you have several short-term financial goals, you’ll want to plan ahead. The key to using certificate shares effectively is to know when you will need the money you are investing. Do not invest in a 10-year certificate share if you know you will need the money in three years. For example: You have three short-term financial goals: $5,000 for a new automobile in one year, $1,000 toward a European vacation in three years, and $20,000 future down payment on a home in five years. With these three goals in mind, you could open three separate certificate share accounts: one with a maturity date of one year, another for three years, and a third for five years. This is a smart way to invest -- matching your maturity dates with your individual goals. Once you reach the maturity date, you can choose to withdraw or "ladder" your certificate shares.

LADDERING CERTIFICATE SHARES

If you have a decent amount saved, you should consider laddering your certificate shares.  This is a great way to grow your money with a bit more freedom, since you won’t have the total amount locked in for a long time. Given a balance of $20,000 for example, you could ladder five separate certificate shares with successive maturity dates at $4,000 each. This would look as follows:

• $4,000 for one-year
• $4,000 for two-years
• $4,000 for three-years
• $4,000 for four-years
• $4,000 for five-years

After the first year, you can roll (re-invest) the $4,000 -- plus interest -- into a five-year certificate share and do the same for each amount as it matures. Since credit unions offer different rates at different times, laddering allows you to take full advantage of the better interest rates given to longer-term certificate shares. 

FINAL NOTE

In general, certificate shares are a safe, effective way to earn a higher rate of return than the average savings account. Make sure you understand the terms and conditions of your certificate share and always try to choose a maturity date based on when you will actually need the funds to avoid any unnecessary fees.

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