My friend Clinton Middleton wanted to follow-up on my saving money video, suggesting the Rolling CD:

I admit, I am one to dip into money if I need to, this is not always a good idea. A CD helps discourage doing this and provides a better money return with decent interest rates. But what if you really do need to have some liquid cash for a big emergency, but still want to enjoy the CD rates? A rolling CD is for you!

It works like this: Let’s say you have a chunk of 3000 dollars, and you are thinking about a CD. Don’t put the entire amount in at one time, it will be a whole year before you can touch it. Instead, put in 500 (usually the minimum amount for a CD). Then 60 days later, buy another CD for 500. In a year’s time you will have invested your 3000, and if you get in a pinch, you have 500 plus interest coming your way every other month.

If you don’t need the money, all the better, just let it roll over into a new year and enjoy the compounded interest. This should be the rock bottom for all your investments, a good solid base of cash, that you can get to if you need, without incurring big fees like those associated with borrowing from your 401K, etc.

Of course, if before you do the rolling CD, pay off those high interest credit accounts, with possible exceptions of you student loans, mortgage and maybe a low rate car loan.

Rolling CD (Certificate of Deposit)