Christmas Day is just inserted in the title because it is referenced later and it nicely abbreviates to CD. This abbreviation also happens to be the same for a Certificate of Deposit, which is really what this post is about.
I imagine most of us have likely been in the position where it is right before Christmas, a family member’s birthday, or a trip and the time to pay for the event is upon us before we have set aside the money needed to pay. With the convenience of the credit card, we charge the necessary amount needed to get through the event. If we are fortunate enough, we pay off the credit card balance before finance charges start to build. If we are like the majority of Americans, we now have more debt hanging over us.
What I would like to propose here is a way to relieve the financial burden of such scenarios, and in the process actually make a small sum of money. In essence this small sum is like paying yourself for exhibiting self-control related to finances and planning.
In this scenario I will be using actual numbers for account minimums and interest rates from my local credit union. Collectively, local credit unions have lower minimums and higher interest rates. Credit union vs. Bank is a whole different post someday…
Here we go! For the sake of minimums I will be using our credit union’s CD minimum of $500. This $500 would be money used for purchasing gifts for the Christmas holiday. (By the end of this post my hope is you can insert any life event using the same concept).Continue reading