There’s been a lot of discussion lately about web-based personal finance tracking tools, especially since Intuit launched Quicken Online and Mint won the TechCrunch 40 award. These conversations have led in many directions – clearly these tools are useful, but are they worth the security concerns? Let’s take a look at what these tools have to offer and what the security implications are, and I’ll offer up my own take at the end.

What Do These Tools Do?

In a nutshell, Quicken Online, Mint, and Wesabe seek to provide centralized perspectives on your personal financial situation. They do things like categorize your credit card and checking spending into groups like “hobbies” and “food,” keep track of your net worth over a long period, and can even help you define and work towards goals. They aggregate your information automatically, helping you to see your spending and saving across all accounts at once. In other words, they’re all pretty nifty and offer some serious benefits.

Quicken Online
Having tried all three, I found Quicken Online to be the most usable and useful – but that may be because I am familiar with the desktop version of Quicken. Basically, Quicken Online is a web-based version of the classic Quicken software package. It collects information from all of your accounts and lets you review it in countless ways. You can set up goals, view the changes in your spending and saving over time (as you build up the data), and even helps you manage the lag between issuing a check and having it received by the people you’re sending it to. It’s easily the most feature-rich of the three and it’s ad-free, but it’s also the only one with a fee – $2.99 a month. Out of the three packages, I’m partial to this one – if I were to commit to using one of the three wholeheartedly, it’d be this one.

Mint
Mint is probably the most visually stunning and intuitive to use, but it’s also the one that makes me the most nervous about security. Mint offers many of the same services as Quicken Online, but without a fee – instead, they target you with very specific ad offers based on analysis of how you actually spend your money. If I was having trouble getting my finances in order, this would make me somewhat nervous, as it seems to be tempting fate. Still, their interface is stunning and, minus the offers, is probably the most useable of the three.

Wesabe
Wesabe is the most established of the three, is also free, and is likely the most secure. They never take any of your account information – instead, you use a tool on your own computer to build a report without account data in it, and this report is shipped off to Wesabe. They never see your specific account data. Also, they don’t mine their data to place targeted ads – instead, their business model revolves around selling “Pro” accounts with more features. It also has a lot of social networking aspects – you can quickly find people with similar financial goals and find out, in a broad sense, how your spending compares to the Wesabe community. It’s actually quite fun.

The Big Drawback

First of all, I don’t question that each of these sites have integrity when it comes to security. In fact, Wesabe was the first of these three tools to launch and I strongly criticized their security initially – and was pleasantly surprised by the openness of the company to discuss and resolve these issues. I believe that Mint, Wesabe, and Quicken Online all intend to keep your data safe.

But that doesn’t solve the problem.

The problem is something I like to call “information creep.” When you use these tools, you expose your personal information to them. With Mint, for example, you transmit your account information through mint.com and then through Yodlee to aggregate your info. Intuit (the Quicken Online folks) communicates directly with your account providers to scoop in information. Wesabe is perhaps the least onerous – you don’t directly submit account information to them, ever – but their tool isn’t as robust because of this limitation and they still do create a history of your spending.

In all three cases, you’re building up a substantial data set about yourself. With Quicken Online, they don’t milk the data (at least not on the surface) but you are charged a fee for their service. With Mint, it’s free – but they make their cash by showing you targeted ads based on that data. Again, Wesabe has the best method at the moment – they’re currently handling everything via venture capital money and plan a “Wesabe Pro” to generate revenue.

If that doesn’t concern you, consider this: the more information you have out there about yourself, the more likely it is that some sort of identity theft will happen no matter how secure individual sites are. It only takes one little accident for your data to get into the wrong hands – and even the most secure of places can have a little flaw. The more places you put your data, the more “little flaws” you’re exposed to.

What Do I Do?

I think tools like Quicken Online are great if you have a plethora of accounts to manage and have a hard time seeing the big picture. In that case, the benefits exceed the drawbacks – tools like these can really help you get a grip on things.

In my opinion, though, it’s not the best solution. The best solution is minimizing your accounts so that you’re not bogged down in account management. Do you need eight credit card accounts? Kill the ones you don’t use, save for perhaps your oldest one, and try to get down to two or (at most) three. How about five different retirement plans? Roll them together if you can – spend the time to see what your best option is and you’ll find yourself with a lot less effort to manage accounts.

Right now, I have one checking account, one savings account, two credit card accounts, one investment account, and one retirement account. It’s simple enough that I don’t need to use a tool like Quicken Online to see all of this information, and I don’t spend much time with account management either. I keep my net worth calculations in a spreadsheet – and it’s pretty clear from that data whether I’m doing well or doing poorly.

If you keep things simple to begin with, you don’t need complex tools to manage it. Quicken Online, Mint, and Wesabe are nifty tools, but you can often get just as much benefit by just simplifying your money – and then not expose yourself to even a tiny security risk, monthly fees, or highly targeted ads.

Other Perspectives

I felt it appropriate to include some additional viewpoints on these products from other blogs that I trust.

J.D. at Get Rich Slowly thinks Quicken Online looks promising, likes Mint with some caveats, and thinks Wesabe is a stellar Quicken supplement.

Lifehacker offers screenshot tours of Quicken Online, Wesabe, and Mint.

Consumer Reports has asked me to eliminate the content of my summaries and any other references to the content of Consumer Reports. I have complied.

Recently, I read an excellent discussion on why we don’t save money. I originally intended to include it in my weekly roundup this week, but as I began to write my thoughts on the topic, I realized that I had a lot to say on the issue.

Erica argues that we spend primarily for emotional fulfillment and that the message that personal finance writers send out is the wrong one:

We have failed. Instead of teaching kids that their worth comes from within, we’ve given in to the marketing bandwagon’s “emotional blitz” and bought stuff that we thought would make us happy. Yet we’re just as depressed as we ever have been.

Personal finance bloggers and financial columnists miss the mark when they write, “JUST SPEND LESS THAN YOU EARN!!” It’s not about that. Those daily lattes the financial columnists love to target as a key component of being frugal…when we buy them, we aren’t thinking about the $4. We’re thinking “This latte will make me more happy (somehow).” Spending less than we earn won’t make us happy in the same way, and that’s why, despite the plethora of financial advice available, most of us are still in debt.

Spend less than you earn is an easy mantra to repeat. It’s factually correct: by doing it, you will eventually get financially ahead. It’s also incredibly simple – anyone can spend less, and many people can earn more.

Personal finance is not just about dollars and cents. It’s about emotions and how we piece through the daily dilemmas in our lives. It’s about figuring out our goals and what the most important aspects of our lives really are. Doing a budget and living frugally doesn’t mean much if it doesn’t open our eyes to what our real values are.

The problem is that the average consumer gets emotional fulfillment out of spending. The guilt doesn’t come from the spending, it comes from the bills that come in later. People don’t feel bad about the purchase of a flat panel television – in fact, it’s usually a rush. The bad feeling comes when the credit card statements roll in and the paycheck isn’t big enough to cover it.

It’s that separation of feelings that creates problems for many people, including myself. Buying that $4 latte does bring happiness into my life, and it’s often hard to deny that little burst of joy. Many people say it’s worth it – those are the people who constantly encourage you to live a little.

Unfortunately, those are the same people who go home and dread looking at their bills, spending sleepless nights worrying about paying for everything and knowing that they’re just one false step from a financial meltdown.

Why are we in this state? Why do we derive an initial happiness from spending, followed by a later guilt? Why can’t we balance it all out easily?

My belief is that it’s due to a disconnect between spending and work. All of the money we have is the result of our work (or of the love of others). We invest huge amounts of our time doing things that aren’t as fulfilling as we’d like. I’d love to be in a situation where I could work in the garden all morning, drink lemonade and have a nice sandwich for lunch, work on my art in the afternoon, then prepare a hand-made artisan dinner for my family, but instead I work for others. At the end of a day, I go home feeling exhausted and spent, wondering whether it’s really worth it.

Here’s a shocking little experiment that somewhat proves my point. Figure out your net worth – the complete stock of all of your assets in your life minus all of your debts. Then figure out how many hours you’ve worked in your life. Divide the net worth by the hours you’ve worked. Over your lifetime, that’s roughly how much an hour of work is worth to you. For most people, that dollar value is frighteningly small – often less than a dollar per hour. Then, take that dollar amount and use it to see how many hours you’ll work (or have worked) to afford that television in your house, or that car in your driveway. Painful, isn’t it?

As our money becomes more and more abstracted from our work, it becomes harder and harder to really put personal value in that money. If we worked and were given food in exchange for that work, the connection would be obvious. Even working in direct exchange for cash in hand at the end of the day makes it clear. But when we work and have that money direct deposited, then we use our credit cards to buy things and use electronic transfers to pay those bills, that’s a lot of abstraction and the connection isn’t very clear. Since we’re unclear on the connection between a dollar and an hour of hard work, it becomes much easier to spend that dollar.

The key to solving the problem is figuring out how to connect the two feelings – the work and the money, the pleasure of spending and the pain of the bills – together, and the problem is that there’s no easy way to do that – and no method that works for everyone.

I think of it as a light switch in a darkened room. You’ll flail around in this room for a while, spending wildly, until you realize that you need help. So you start searching for the light switch, carefully and deliberately, but your finances are still in the dark. Eventually, you find the switch – and light floods the room. You’re suddenly able to see the connection between the two and it becomes much easier to keep your wallet in your pocket.

For me, the search for the switch didn’t take long – all I had to do was look into a baby’s crib and see my son looking up at me. For others, it takes a while – they hear the spend less than you earn mantra, but it doesn’t mean anything until they find their own switch.

In fact, today I often feel more emotionally fulfilled keeping my wallet firmly in my pocket. I no longer have bills screaming at me. I’m not worried about my family’s future. I know where I’m going and the picture as a whole fills me with a deeper joy than that little rush of happiness from buying a latte. On the occasions when I do indulge in a little treat, there’s no guilt later.

That’s a goal worth working towards.

How many people in your life do you trust completely? The kind of people that you’d not hesitate handing your wallet to, allowing them to dig through it. The kind of people that you’d allow to live in your house, no questions asked, and immediately be completely comfortable.

I can only think of four people (besides myself) in that group, and possibly two more. For some people that number is larger – for others, much smaller. How many people do you trust totally?

Confessions of a Personal Finance Blogger It’s often hard to follow all of the advice that’s out there. (@ gather little by little)

The New Emergency Fund I still believe the best part of an emergency fund is debt freedom – the fewer bills you have, the less money you need each month, and the more free you are to follow your own path wherever it leads. (@ consumerism commentary)

How to Cope with Frugality Burnout I cope by finding new inspirations – and also being very careful to avoid tempting places when I’m feeling burnt out. (@ get rich slowly)

16 Ways to Save Money by Not Being Normal Marketing convinces us that the “normal” way is to spend money when we don’t have to. (@ christian pf)

Identity Theft Is Too Easy – Phishing With A Fax Number There’s one simple rule to prevent identity theft – it always works. Never send any personal information in response to a solicitation of any kind. Always place the calls yourself, look up the information for contact yourself, and so on. Don’t trust the person that asks you out of the blue. (@ money smart life)

The Simple Dollar Retro: When A Frugal Life And Social Gift-Giving Come Into Conflict You don’t have to give social gifts if you don’t want to – and even if you do, there are better ways to go than shelling out cash.

What Charge Started $37,000 In Credit Card Debt? Tricia does some financial archaeology here, discovering what started a financial apocalypse. Unsurprisingly, it was something innocuous – quite often, the absurdity of credit card use doesn’t appear until the debt train really gets rolling. (@ blogging away debt)

12 Effective Ways to Afford Big Ticket Items I really like the idea of always making payments, so that when you need to buy the item, you aren’t buried in debt. Keep the interest on your side of the fence. (@ the digerati life)

It’s Going to Get Better I sometimes resort to telling myself this when I’m frustrated and sad. Thankfully, I’m usually able to pick up my own spirits and move on with life pretty easily. (@ an english major’s money)

What’s Better Than A 20% Return? Big returns don’t matter much if they’re positioned on top of an unstable financial lifestyle. (@ all financial matters)

25 Things I Don’t Want To Regret Once I Retire and Part Two The biggest thing I would regret is that I didn’t spend enough time with my children when they were young. (@ wise bread)

Whenever you make a significant financial move today that requires financial assistance, it’s often accompanied by a check of your credit report and often a retrieval of your credit score. Lenders (and, quite frequently, other agencies like insurance companies) use this information to help determine a customized offer for you, so it’s quite useful to have an idea of your credit score and to make sure that your credit report is clean, particularly in terms of incorrect statements that can hurt you.

The problem is that there’s no obviously clear way to acquire this information. Credit reports are managed by three credit bureaus (Equifax, Experian, and TransUnion), and these companies make money by selling your credit report and your credit score to lenders. They also hope to make money by selling this information to you, too.

Even worse, there are sharks in the water out there. Programs like freecreditreport.com seek to trick you into signing up for subscriptions to stuff you likely will never use in exchange for your credit report.

Here are the best ways I’ve found to find out your credit report and credit score. Please, if you know of better sources than these, leave a note in the comments.

Getting Your Credit Report

Your credit report is just a listing of all of the accounts and debts that you have and whether you’ve been paying them on time. When you go to get a loan, lenders will use this to see whether or not you’re a reliable person who can be counted on to repay debts. The more reliable you look, the better the rates.

You can get your credit report for free, no questions asked, at annualcreditreport.com. This is a service offered by the FTC that allows you one free download of your credit report each year from each agency (Equifax, Experian, and TransUnion). Since most of the time the three reports are the same, you can effectively grab your credit report for free every four months.

Do not use other services to get your report – you’ll end up being forced to sign up for services and pay fees that you don’t have to pay. The worst offender here is the heavily advertised freecreditreport.com.

Once you have your report, you should read it very carefully to make sure it’s accurate. If you find something that isn’t, start calling. Get ahold of both the credit bureau and the organization that put the false info on your credit report. False information on your credit report does nothing but hurt you and you should seek to get rid of it as soon as possible.

Getting Your Credit Score

Unfortunately, a service like annualcreditreport.com doesn’t exist for one’s credit score. The exact method for calculating credit scores are actually considered to be a trade secret, held by the Fair Isaac Corporation. That’s why credit scores in the United States are often called FICO scores. Thus, you can find out all of the information that makes up your score, but you can’t find the score itself.

The cheapest option is to not find out your specific score. If you’ve checked your credit reports at annualcreditreport.com, you know what your credit report looks like. You can use that information, along with knowledge of your personal finances, and use a FICO score estimator to get a pretty strong estimate of your credit score. I tried this tool and found that it predicted a small range of potential scores – my real score was in fact within that range.

For some, though, an exact number is necessary, and you’ll likely have to pay for that. When I was in the process of shopping for my house loan, I looked at several services and finally used myFICO to get my credit score. They give you several options – the best one, for the long haul, is to get your FICO score from the credit bureau with the worst credit report (you checked them at annualcreditreport.com, right?) for a one time fee of $16. That’s the method I used to find my “worst” score – and it wasn’t bad at all.

There are other options (like getting your FICO score from all three bureaus at once at myFICO, or going to each credit bureau individually), but they’re more expensive. No matter what, though, you should definitely avoid any subscription services – credit monitoring is nice, but you can get the same effect for free by going to annualcreditreport.com regularly.

Now That I Have This Info…

Once you’ve downloaded your credit report, ensured that it’s clean, and figured out your credit score, you can use that information to get realistic assessments of the type of loans you can get. This tool provides a good estimate of the benefits of a strong credit score. With this information, you can make up your own mind about whether you can afford a big purchase right now – or if you need to focus on improving your credit right now.

Remember the biggest rule of thumb: don’t ever sign up for a recurring service unless you’re 100% sure you want it. For credit scores and credit reports, given the strong free and one-time services available, I don’t believe there’s any reason for the average person to sign up for credit monitoring subscriptions. Keep that cash in your pocket instead.

As any regular reader of The Simple Dollar knows, I love to read. It’s a hobby that relaxes me, encourages me to think, and doesn’t cost very much to participate in, and it’s one I’ve enjoyed as far back as I can remember. I can scarcely leave my house without a book in tow and I’m far more content when business traveling to curl up in my hotel room with a book than to hit the town. I find that a hobby that’s financially frugal is a great way to reduce spending and leave yourself not feeling bored, ever.

I’m a busy person, though. How do I find time for such a time consuming hobby? The biggest key is to focus on a very small number of key interests, and devote real time to them. For me, those hobbies start and end with writing, reading, and a limited amount of games. Simply put, I put aside time for reading. I have a block of time each day, roughly an hour, where I simply do nothing but read.

I usually read in the most comfortable place in the house – leaned back on the incredibly comfortable couch in the basement with a big, cool beverage (and perhaps a small snack) at arm’s length. I feel very comfortable and happy here, with my immediate needs covered well. I can just let go of things – my seat is comfortable, my thirst and hunger needs are taken care of – and just sink into a book.

I tend to choose a mix of materials to read, from deep, involving books and complicated essays to light and simple fare. I’ll follow a treatise on systematic theology with a Terry Pratchett novel and not skip a beat. One makes me grow, the other makes me laugh. By mixing stuff up and not burying myself in “boring” items, I keep reading exciting and lively. In fact, I believe this is one of the big reasons people get turned off from reading – they get their face rubbed in something that’s really, really pushing their comfort level until they get so frustrated that they hate reading.

I also often take notes on what I read. About half the time, these notes wind up forming the core of a book review on The Simple Dollar. Basically, if I own the book, I’ll just jot down (in the margins) any thought of interest to me, and I’ll underline key points. Then, when I’m done, I’ll go back through and hit all of those points again in one sitting. Usually, this brings a book together for me. Even better, those notes are often a great place to start a blog post, if you’re a blogger (or thinking about starting one).

I also find that setting reading goals makes things more fun. A few years ago, I made it my goal to read every Charles Dickens novel. I’ve also read every single biography of Teddy Roosevelt I’ve been able to find (he’s probably the closest thing I have to a role model). I’m about to systematically start reading every Pulitzer Prize winning novel in reverse chronological order, even re-reading the ones I’ve already read. I follow these goals diligently, but not exclusively – I’ll throw all sorts of stuff in the middle to liven things up and lighten the mood. The success in reaching such a goal, though, is tremendous.

Because of these goals, I find it very easy to bargain hunt. If I know I’m going to read all of the novels of Charles Dickens, for example, I can turn to services like PaperBackSwap and the library to get most of them very cheaply. Suddenly, I have a lot of books to read – and it didn’t cost me much at all.

Here’s the game plan for a busy person if you want to start a reading hobby – or want to develop any hobby:

Set aside time Find a block of time that you can set aside each day (or with any intense regularity), and set it aside exclusively to follow your hobby.

Make it portable and easily accessible As best you can, make it so that you can take some aspect of the hobby with you wherever you go. If you like puzzle games and are trying to build lateral thinking skills, get a Nintendo DS or a pocket puzzle book. If you’re learning the harmonica, keep it in your pocket.

Do it where you’re most comfortable I find that during my regular readings, I get much more into it (and feel much happier afterwards) if I do it in a comfortable place. Sometimes this isn’t possible, but if you can plan to practice your hobby in a place where you feel happiest and most comfortable, the hobby will feel happier and more comfortable, too.

Mix guilty pleasure with challenge You might be tempted to dive into some of the most challenging pieces of your hobby right off the bat. Don’t. Mix the challenging stuff with the pure fun stuff. When I was learning to play the banjo, I’d play “Foggy Mountain Breakdown” over and over again and get incredibly frustrated. Instead, I found it went much better if I played the challenging piece for a while and when I felt the frustration really kicking in, I’d back off and play something easier that I really enjoyed, like “Yankee Doodle.” Do the same with any hobby and you won’t grow alienated from it.

Focus on bargains in your specific area Once you’ve defined a specific hobby and are actively following it, you’ll find your entertainment spending naturally goes down. Even better, you can kick the bargain hunting into high gear – it’s much easier to find a bargain when you know exactly what you’re looking for and it’s in a niche area.

Take notes – perhaps even start a blog Keep a record of your progress – what you like, what you hate, what you learned, and how it made you feel. This seems silly for some things, but it’s not – in fact, it’s a way of really savoring those good experiences, both now when you record them and later when you look back on them. One great way to do this is to start a simple blog about it, sharing your experiences with others.

Set goals Maybe you want to learn a song. Maybe you want to be able to solve a simple sudoku puzzle in five minutes. When I was a kid, I tried really hard to learn how to solve a Rubik’s Cube puzzle in under a minute. If you enjoy the process, the sweetness of achieving a goal becomes just that much better – it’s a milestone and a sure sign that you’re becoming more than just a mere novice.

When I was young, I was a budding entrepreneur. In the late 1980s, one could easy get forty cents a pound for aluminum, so I adamantly collected cans. I provided garbage cans for neighbors to toss their empty cans in, then I would go on a route and collect those cans, adding them to my own collection. Eventually, this became a pretty profitable enterprise for a ten year old boy living in a very rural area – I could make $30 or $40 a week working a few hours a day around whatever else was going on.

Unfortunately, several events killed my entrepreneurial spirit – chief among them, a painful experience where my collected aluminum for most of a summer was stolen by someone I trusted. The wind left my entrepreneurial sails – and it didn’t really come back until the last few years.

That’s a true shame, in my opinion, because I missed out on the best years to be an entrepreneur – late childhood until you settle down with a family. You have the time and the freedom to really let your sails unfurl and let that entrepreneurial wind push you towards your dreams.

Now that I’m a father, I’m looking at my children starting to grow up and I realize that it won’t be long before they reach the age where they will want to earn their own money. Here are seven techniques, learned from observing the parents and mentors of young entrepreneurs, that I intend to use to encourage my own children to make their own success. These techniques will work for anyone you might want to mentor, from

Let them see the possibilities from a very young age. Even now, I’m pointing out to my two year old son that people work to earn money. “Dad and Mom go to work every day so they can make money. We use that money to buy food, to buy our house, and our clothes. Usually, the harder and smarter we work, the more money we make for our time.” I try to constantly show him better ways of doing stuff – like it’s easier to stack the plates when taking them out of the dishwasher then putting the stack away than to put the plates away one at a time. That’s more efficient, and that’s the key to success.

Let their options for earning money be a choice with differing levels of success. I’ve fostered that a bit by having him help with household cleanup – he has some required things to do, like cleaning up his Legos, but he can sometimes earn a quarter by unloading the plates and saucers in the dishwasher, for example. He’s learning that he has an entrepreneurial choice – he can either go play and not stack the plates, or he can stack them and earn a quarter. Most of the time, he wants the quarter – he’s learned that quarters can be taken to the store to buy a new car. Tying the two pieces together, he’s learned that stacking the plates first gets the job done faster (while still doing it just as well as before).

Always provide positive encouragement. The worst thing you can tell someone is that they can’t do it. Instead, point out that they can do it, but before they get there, they’re going to need to add some skills. This is something that my parents and mentors both did quite well – my parents were always adamant that I could live my dreams once I got an education, and lately my mentors have shown me that effort and diligence can carry you quite far. I know that I can’t follow every dream, but I know that with the right tools, I can follow most of them – and it’s because of encouragement that I believe it.

Help them brainstorm. Entrepreneurship feeds on ideas, usually starting with a core idea that gets developed into a profitable enterprise. This requires creativity and critical thinking, and most of the time, both processes can be helped along with a guiding hand. Listen to their ideas and offer your own. Be willing to be a sounding board for what they’re thinking, and offer positive suggestions. For example, let’s say your nephew wants to start a lawn care business. He needs to think about equipment, about marketing, about policies and prices, and about time to execute these things. Suggest these, watch the wheels turn, and offer some help when it’s needed.

Strongly encourage them to plan ahead. The more planning one does in terms of the future, the more likely long term success will occur. Encourage them to write an actual business plan, and be willing to be an editor of that plan. Encourage thought about where this might potentially go, and whether or not it makes sense to make different basic choices to get there. Should you buy a sturdier lawnmower now, or get a cheap one to get started and upgrade later?

Invest in their work. Many beginning entrepreneurs are stymied by a lack of capital. They can’t afford equipment, business cards, or needed services. Offer to be an “angel investor” for their small enterprise, giving them an interest-free loan to get started. That way, you’re letting them get started while the fire is still burning hot and not putting them in a financial trap, either. I’ve invested in the budding entrepreneurship of multiple people in the last few years, including a person who’s starting a beverage company.

Let them fail, but help them get back up. Failure is going to happen. Vital equipment will fail, a key customer will quit, or all of your work product will get stolen – I’ve seen all of these happen. Let the person feel failure for a bit, but then help them get back up off the ground. This is something that I wish had happened to me when I was younger – I was reeling from the punch, but no one encouraged me to get back out there and keep fighting. Instead, I began to believe that entrepreneurship wasn’t for me – the biggest mistake of all.

The most important thing? Don’t be afraid to be a mentor. If you know someone who’s starting a business, offer to help them in some way, even just in the form of someone to bounce ideas off of. You’ll get nothing but benefit from this in the long run, in the form of a local businessperson who values you and a stronger sense of community and of your own sense of entrepreneurship.

One of the first major challenges I had to overcome during my financial turnaround was right there in my own back pocket. It was an overstuffed monstrosity, holding several credit cards, a gigantic pile of receipts, and a plethora of other nonsense. When I actually needed something out of it, it was a challenge to find it amidst the chaos – but somehow it was easy to find a credit card in amongst the junk.

What I eventually found is that an optimized wallet helps with personal finance recovery and with remembering seldom-used but key pieces of information. When I moved from using the wallet as a catch-all to using it as a tool, I began to realize that it could save me a lot of time and money compared to the way I used to do things. Here are six of the tactics I used.

Junk all but at most two of your credit cards.
This is the most important thing you can do, especially if you have a constant temptation to bust out the plastic more often than you should. First thing first: find a good general use credit card. Just one, and I can guarantee you it’s not the credit card you got at the checkout counter during your last giant shopping binge. Once you’ve identified that “best card,” take every other credit card in your wallet and chuck ‘em. Put them in a safe place that’s not in your wallet. Eliminate the balances on all of those extra cards, then eventually cancel them.

This tactic works well because you don’t have a lot of choices. You can’t look at eight cards in your wallet, think “This one doesn’t have a balance on it… I’ll use it!” and spend away – you have to face that one card and know that you’re putting a larger balance on it. Plus, if you’ve chosen the card well, you’ll be racking up some decent rewards with it.

Wrap a picture of your goal or inspiration around your credit card.
Still not convinced of your own willpower? Take that one credit card and wrap a picture of your personal finance goal or your inspiration around it. Wrap that picture around your card and tape one edge of that picture to the other picture, creating a pocket or a sleeve for the card to live in. Then, when you feel the urge to pull out that card, you’ll pull out that picture, too, and it will serve as an immediate reminder of the big dreams you’re postponing to make this little trivial purchase.

I personally used a picture of my son in this way for most of a year until I broke my bad credit card habits, because he was the inspiration for my turnaround. Whenever I pulled out my credit card, I’d see his face, and I couldn’t help but reconsider my purchase.

Use it for password storage.
For some people, this seems crazy, but it really works. I keep a half-sheet of paper in my wallet, folded up a few times, that keeps some of my passwords on it. I don’t keep ones that I use regularly enough to remember them, just the ones that I don’t use very often. I also don’t directly indicate which site each username/password is for – just something that reminds me what they’re for – a precaution against a stolen wallet.

Edit: Some people jumped on this as being a bad idea. However, Bruce Schneier, an expert on security issues if there ever was one, agrees with this approach wholeheartedly.

Merge some of your rewards cards.
I’m a big fan of maximizing customer loyalty programs to get free stuff, but one drawback of that is that you end up accumulating a bunch of cards in your wallet. No more. You can merge several cards onto one by using JustOneClubCard.com, which allows you to create a single card with the bar codes from up to eight programs. I have one of these and it eliminates the space for seven cards in my wallet – and makes it so that I don’t have to hunt for a particular card at the checkout.

Process your wallet once a week or once a month.
I find my wallet is the place to collect receipts and other small financial detritus. While it’s efficient as a junk collector, it doesn’t take long for that wallet to get nice and fat with garbage. Thus, once a week, I process what’s in my wallet, getting rid of all of the unnecessary receipts and other little documents that I pick up. If I need to do anything with these pieces, I just take care of it right then so that I don’t have to worry about it. This keeps my wallet thin and keeps me from embarrassing myself with a monstrous wallet full of garbage.

A corollary to this: if you find yourself actually in a routine of processing your wallet, it becomes a very convenient place to put stuff that you know you’ll need to look at again soon – almost like a mini-inbox in your pocket.

The next time you buy a wallet, don’t buy a cheap one.
I have owned four wallets in my life. The last one has lasted longer than the other three combined, but it cost double the price of the others right out of the chute. What does that mean? Don’t hesitate to spend more on a quality wallet that will last for years, even if there are cheaper options available. You’ll end up paying less per year with a really good wallet than with a cheap vinyl one, thus saving yourself a bit of money and a bit of time, too.