Your Money Making Money

Americans still own $9 billion of these bonds that are no longer paying interest. That’s $300 million a year they could be earning if they cashed in mature bonds and bought new ones.

To figure out if your bonds are still generating income, visit the Bureau of Public Debt website

(http://www.publicdebt.treas.gov/). Redeem your mature bonds, pay the taxes and invest in new Series EE bonds. At roughly 4 percent, their current yield is well above the typical savings account rate.

Certificates of deposit at online banks usually have higher yields than CDs at brick-and-mortar banks, and they carry the same FDIC insurance. Several online banks --- including NetBank (2.56 percent; 888-256-6932) and Ascencia Bank (2.6 percent; 877-369-2265) --- recently offered six-month CDs with yields more than half a percentage point higher than the national average of 2.0.

On one-year CDs, NetBank (3.05 percent) and ING Direct (3.0 percent; 800-464-3473) topped the national average yield of 2.4 percent. And on five-year CDs, Asencia Bank (4.94 percent) beat the 4.23 percent average yield.

In case of an Internet bank failure, the FDIC would sell the bank to another institution and transfer insured deposits to that bank. If the FDIC was unable to find a buyer for the bank, it would mail checks for the insured funds, up to the $100,000 limit, to customers.

Municipal bonds pay interest that is exempt from federal income tax and often from state tax in the states in which they’re issued. For instance, a tax-free bond or bond fund that yields 5 percent is equivalent to a taxable bond or bond yielding 7.14 percent if you’re in the 30 percent bracket.

The easiest way to own municipal bonds is in a bond fund, but expenses can take a tremendous bite out of returns. Your best bet? Stick with funds like these from Vanguard, where each has annual expenses of just 0.19 percent: Limited-Term Tax-Exempt (recent 30-day tax-free yield: 2.7 percent), and Insured Long-Term Tax-Exempt (4 percent)

The right time to get rid of  private mortgage insurance (PMI) on your home loan may be now --- with home values up an average of 37 percent over the past five years. Just think: You might save $1000 to $2000 a year on a $200,000 mortgage.

Lenders generally require PMI if your down payment is less than 20 percent of the purchase price. But after two or three years, if your equity equals 25 percent of the property’s newly appraised value, you may be able to shed PMI, which protects the lender in case you default. After five years, you need an equity stake of only 20 percent.

Say you bought a $250,000 home three years ago with 10 percent down. If the house is now appraised for $312,000, your equity --- your down payment, principal --- has grown to about 30 percent, or enough to get rid of PMI.

It isn’t unusual for one auto insurer to charge significantly more that another, so you can save hundreds of dollars just by doing some comparison shopping (start with InsWeb.com). Then save even more by taking advantage of taking advantage of special discounts.

Consider two 45-year-old parents and their 18-year-old son, who shared the use of a 2000 Ford Explorer XLS and live in Evanston, Ill. State Farm charges $3034 a year for a policy with a $250 deductible and coverage of $250,000 per person and $500,000 per accident. Applying State Farm’s discounts, here’s how to slash that rate:

·       Raise the deductible on collision and comprehensive coverage from $250 to $1000: 19 percent savings.

·       Consolidate homeowners insurance with the same company: 10 percent discount on the auto policy.

·       Install a car alarm: 15 percent discount on comprehensive coverage.

·       Inform the insurer if the son attends a college at least 150 miles from home: 34 percent savings. A discount of 5 to 25 percent for good students is also an option, but only one or the other may be applied.

At consignment stores over the years I’ve picked up $1000 --- plus Escada wool suits for $200 or less, a pair of $400 Ferragamo shoes for $50, and a hand-beaded silk dinner suit by Badgley Mischka --- original price, nearly $3000 --- for less than $300.

Don’t wrinkle your nose at buying “used” clothing. Many have never been worn. Look under “consignment shops” in the yellow pages and focus on those in the best neighborhoods.

When Linus Bauhs, a musician from Boston, sold some guitars, pedals and amps on eBay, he hoped to get $3000, double what he’d paid. Instead, he cleared more than $6000. “People paid premium prices promptly, and were pleased with the items they received,” Bauhs reports.

With some exceptions, eBay lets you sell just about anything. No item is too small or too beat-up. “I found a broken guitar amp in the trash,” says Bauhs. “I listed it on eBay; somebody bought it for $80.”

It costs between 30 cents and $3.30 (depending on your opening bid) to list items, and a fee of 1.5 to 5.25 percent, depending on the final sale price. To drum up interest, write a detailed description and include a photo. Be honest, so buyers won’t be disappointed by a less-than-perfect item.

If you pay someone to care for your children who are under age 13 --- or a disabled dependent such as an elderly parent --- while you work or look for work, you’re eligible for a tax credit. Remember, a credit is even more high-powered than a deduction because you can subtract it directly from your tax bill. The size of the credit depends on your income, number of dependents and cost of care.

If you earn more than $28,000 a year, you can shave up to $960 from taxes.

Unless your medical insurance includes prescription-drug coverage, you should pack a drug discount card in your wallet. Among the best are Prescription Benefits ( rxbenefits.com) and RxPower (877-797-6937), both accepted at most pharmacies.

Prescription Benefits says its customers have netted an average savings of 21 percent.

Membership runs $48 annually for singles and $60 for a family, the card is free if you’re 65 or older. For RxPower, which offers discounts of 15 to 60 percent, the fee are $41 a year for individuals or families.

Cut the cost of clear vision by buying lenses though the mail, on the Internet or at a warehouse club. (It may be tricky to get your optometrist to release a prescription, but in 31 states they are required to do so at your request.)

A year’s supply of aspheric monthly replaceable lenses from Cooper Vision costs about $180 at an optometrist’s office. Make that purchase from Vision Direct (visiondirect .com), and you pay only $92. Order from 1-800-Contacts, and it’s $72. At Costco, you can pick up the lenses for $112.

Offered by most major employers, flex accounts let you divert part of your pretax salary into a special account to pay for child-care or uncovered medical bills.

Paychecks will be smaller, but you can get the money back, untaxed, in short order. Say you divert $5000 to a  child-care flex account, and federal and state taxes consume 40 percent of wages. Your take-home pay shrinks by $3000 (the rest gone for taxes), but you have $5000 in your account.

One caveat: If you don’t use all the money in an account by the end of the year, you forfeit what’s left. To avoid overestimating, add up expenses you’ll definitely incur (the cost of day care, orthodontist payments, contact lenses and prescription sunglasses). Don’t forget less obvious expenses: tutoring for a child with learning disabilities, infertility treatments, and laser eye surgery.

For a list of expenses eligible for a tax deduction, see IRS Publication 502, obtainable at irs.gov.

Our family was spending more than $200 a month on long distance by using a mishmash of services, including long distance at 25 cents a minute, my collage-age son’s MCI calling card (an exorbitant 90 cents a minute) and our cell phones’ killer roaming costs.

So we bought prepaid cards from Costco (annual membership starts at $45). At 3.4 cents a minute, one $20 card pays for almost ten hours of talk time.

Later we discovered an even better deal from OneSuite.com, which lets us dial in to a toll-free number for 2.9 cents a minute with no monthly fee. (Saveonphones.com also turned up a plan that charges 4.5 cents a minute with no fees.)

Our cell-phone plan at Verizon offered free weekend calls, but clobbered us on roaming charges. Then we discovered another Verizon plan --- with the same $35 monthly fee --- that eliminates most roaming charges and still offers weekend freebies.

Why pay $20 or more a month for dial-up Internet service when you can get online for less --- even free?

Talent Group Enterprises (talentg.com) offers unlimited Web and e-mail access for $8 a month, with no pop-up ads or long-term service contracts. Among freebies, try Access-4-Free (access-4-free.com), which offers ten hours a month of online time gratis.

For a list of providers offering services at no or low costs, go to freedomlist.com.