A few days ago, I was browsing through Amazon’s software category when I stumbled upon the software best seller list. Intrigued, I took a look. Here’s the top twenty five when I found it (go ahead and check, it’s probably very similar right now):

1. Microsoft Office Home and Student 2007 (Windows)
2. QuickBooks Pro 2009 (Windows)
3. Microsoft Office 2008 for Mac Home and Student Edition (Mac)
4. Adobe Photoshop Elements 7 (Windows)
5. Norton 360 (Windows)
6. Norton Internet Security 2009 (Windows)
7. Norton Antivirus 2009 (Windows)
8. Microsoft Outlook 2007 (Windows)
9. iLife ‘09 (Mac)
10. Adobe Photoshop Elements & Premiere Elements 7 (Windows)
11. iWork ‘09 (Mac)
12. Microsoft Streets and Trips 2009 (Windows)
13. Kaspersky Internet Security 2009 (Windows)
14. QuickBooks Basic Payroll 2009 (Windows)
15. VMware Fusion 2 (Mac)
16. Dragon NaturallySpeaking 10 Standard (Windows)
17. Adobe Photoshop Elements 6 (Mac)
18. Microsoft Windows XP Home Edition SP2 (Windows)
19. Corel VideoStudio Pro X2 (Windows)
20. Microsoft Office Professional 2007 (Windows)
21. Dragon NaturallySpeaking 10 Preferred (Windows)
22. TurboTax Deluxe Federal + State + eFile 2008 (Windows)
23. Rosetta Stone Version 3 Spanish (Windows/Mac)
24. Acronis True Image Home 2009 PC Backup & Recovery (Windows)
25. Mac OS X Version 10.5.6 Leopard (Mac)

Thousands upon thousands of dollars in software there - and thousands of copies are being sold each day. The amazing part is, for most of these pieces of software, there are free equivalents that do almost the same task. Let’s look at them!

OpenOffice
http://www.openoffice.org/
… instead of Microsoft Office Home and Student 2007, Microsoft Office 2008 for Mac Home and Student Edition, iWork ‘09, or Microsoft Office Professional 2007
OpenOffice is a top-notch replacement for the features of Microsoft Office. It includes word processing, spreadsheet, presentation, and database features and works on both Macs and PCs. I use my copy almost daily!

QuickBooks Simple Start Free Edition 2009
http://quickbooks.intuit.com/product/accounting-software/free-accounting-software.jsp
… instead of QuickBooks Pro 2009 or QuickBooks Basic Payroll 2009
Many small businesses dive straight into a paid copy of QuickBooks without even knowing if that’s what they need. Why not try out the free Simple Start version? If it works for you, it’s painless to upgrade later, and if not, you’re not out any money!

GNU Image Manipulation Program (GIMP)
http://www.gimp.org/
… instead of Adobe Photoshop Elements 7
The GNU Image Manipulation Program is a fantastic tool for editing images. It can easily handle most of the tasks that Photoshop Elements can handle and exceeds it in many areas.

ZoneAlarm Free
http://www.zonealarm.com/security/en-us/zonealarm-pc-security-free-firewall.htm
… instead of Norton Internet Security 2009, Kaspersky Internet Security 2009, or Norton 360
ZoneAlarm is one of the first pieces of software I put on any Windows machine. It does a spectacular job of keeping viruses and other malicious software from communicating back and forth using your computer, keeping you and your data safe.

AVG Free
http://free.avg.com/
… instead of Norton Antivirus 2009, Kaspersky Internet Security 2009, or Norton 360
AVG is the best free virus protection package out there, perfect for most home users. If you’re concerned about viruses, this is a must-have.

Google Picasa
http://picasa.google.com/
… instead of iPhoto/iLife ‘09
Picasa helps you manage your images in a clever yet easy to use visual tool.

Sizzle
http://mac.softpedia.com/get/Video/Sizzle-b.shtml
… instead of iDVD/iLife ‘09
Sizzle is a great alternative to iDVD, helping you make DVD menus and such and burn them to blank DVD discs.

ZS4
http://www.zs4.net/
… instead of iMovie/iLife ‘09, Adobe Premiere Elements 7, or Corel VideoStudio Pro X2
ZS4 is an incredibly powerful video editing tool, enabling you to manipulate video files and combine them to make movies on your computer.

Audacity
http://audacity.sourceforge.net/
… instead of Garage Band/iLife ‘09
While Audacity isn’t as full-featured as Garage Band, it does do a great job of simply recording your voice and your music. In fact, I prefer it for podcasting purposes - if you’re just getting started in recording, it’s likely that Garage Band is overkill and Audacity will meet your needs much better.

Wordpress.com
http://www.wordpress.com/
… instead of iWeb/iLife ‘09
Wordpress lets you host your own blog for free. It provides a very simple user interface and a very clean display for your posts, pictures, and other materials.

Google Maps
http://maps.google.com/
… instead of Microsoft Streets and Trips 2009
Google Maps can pretty much do everything that Streets and Trips can do. I’ve used it to plan every road trip we’ve taken in the last few years.

VirtualBox
http://www.virtualbox.org/
… instead of VMware Fusion 2
VirtualBox does for free what VMware does at a cost - allows you to run Windows on a Mac.

Digital Dictation
http://download.cnet.com/Digital-Dictation/3000-7239_4-10156035.html
… instead of Dragon NaturallySpeaking 10
Want to dictate your words? Give Digital Dictation a shot before shelling out the money on expensive software. It does the trick for my (admittedly limited) dictation needs.

Ubuntu Linux
http://www.ubuntu.com/
… instead of Microsoft Windows XP Home Edition SP2 or Mac OS X Version 10.5.6 Leopard
Ubuntu is nearly as user friendly as Windows, not nearly as prone to security holes, and costs nothing. What’s not to love?

Intuit Tax Freedom Project
http://turbotax.intuit.com/taxfreedom/
… instead of TurboTax Deluxe Federal + State + eFile 2008
If you make less than $30,000 a year or are a member of the military, you can do your taxes for free!

LiveMocha
http://www.livemocha.com/
… instead of Rosetta Stone Version 3 Spanish
LiveMocha helps you to learn foreign languages online for free - no need to invest hundreds of dollars in Rosetta Stone!

SugarSync
https://www.sugarsync.com/
… instead of Acronis True Image Home 2009 PC Backup & Recovery
SugarSync provides all the backup support that individual people might need. Just get a backup drive and SugarSync and your data is safe.

You could shell out your hard-earned dollars for this software - or you could try out some free alternatives first and keep your wallet firmly in your pocket where it belongs.

I spend hours each day at one of my two computers - either my desktop Mac (a Mac Mini - the most cost-effective type of Mac) or my Linux laptop. As a result, finding a core set of software to use for the things that I do every day is vital. Also important to me is that this software is cross-platform - I’d like to be able to run many of the same things on my Mac and on my laptop. I’m also pretty frugal, so I like to look for free software options.

After a lot of searching and a ton of trials of different pieces of software, I’ve found nine pieces of free software (both open-source and otherwise) that I use every day on both my Mac and for Linux - and all of these are available for Windows as well. With only a few little exceptions, these software packages are the only ones I use during a given day. I will also say that in many cases, I have donated to the creators of the software - my belief is that you should support what you actually use, and I certainly do use these pieces of software.

Let’s dig in!

Firefox
http://www.mozilla.com/firefox/

My web browser is my primary tool, and Firefox is unquestionably the best option available to me for cross-platform use. It’s stable, fast, and runs every web application and web site that I need without a bit of worry. (Yes, I’m aware that Opera is an excellent browser as well - I just haven’t felt a compelling reason to switch.)

If you’re still using Internet Explorer, I beg you - give Firefox a try. Fewer security issues, fewer popups, and fewer hassles all around.

Key web applications I use through Firefox include Instapaper (a nifty way to save things I want to read later), Evernote (keeping notes; see below), Remember the Milk (checklists), Gmail (email), and GCal (calendars). I keep these sites on the bookmark bar on both my Mac and on my laptop, so the tools I need are available in both places

Evernote
http://www.evernote.com/

I use Evernote for pretty much all my text editing, not only on my Mac and my laptop, but on my iPod Touch as well and also on my parents’ Windows PC. Evernote is basically just a tool to keep notes synchronized across computers. You create a new note, save it, and then you can see it (and edit it) on any other computer with a web browser. Even better, notes can be little pieces of text, web clippings, voice recordings, or pictures. My notes are a mix of post ideas, things to think about, post drafts, and tons of other things - I literally have hundreds of notes at any given moment.

So why do I list this as a separate application? On Macs and Windows PCs, you can download a separate piece of software that allows you to do the same thing much more cleanly and offline, so that I can continue to edit notes and add new ones if the internet is out. When I’m on my Mac, I use the desktop client - when I’m on my laptop or any other computer, I use the website.

iTunes and Juice
http://www.apple.com/itunes/ and http://juicereceiver.sourceforge.net/

Listening to music isn’t that big of a deal - I have a pile of mp3s on both computers, but I often listen to radio stations via the web browser. My big concern is podcasts (for those unfamiliar, podcasts are basically short “talk radio”-style programs you can listen to whenever you want) - I listen to a number of podcasts and I like to be able to access them anywhere.

On my Mac (and on Windows, too), I use iTunes for this. It’s incredibly easy to just browse the podcasts available on iTunes, pick the ones you want, and iTunes will just download them for you so you can listen to them as you please. On Linux, I use Juice for much the same effect, though it’s a bit more difficult. I usually find interesting podcasts on my Mac, then subscribe to them later using Juice. This lets me listen to the podcasts I enjoy wherever I am.

Skype
http://www.skype.com/

I use Skype for both voice chatting (i.e., telephone calls) and video conferences with friends and family on both my Mac and my laptop. You can do this for free to other Skype users or make unlimited calls to phone numbers in the US and Canada (plus an hour’s worth of international calls) for just $2.95 a month. Videoconferencing works like a charm with Skype, which has been essential for some of my work-related opportunities, plus it’s fun to talk to family using it so they can see the kids and so on. It costs nothing if you do this with other Skype users - talk about a good deal!

I waxed ecstatic about Skype in the past - while it hasn’t replaced our phone service as of yet, I use it much more than our normal phone service at this point.

Tweetdeck
http://www.tweetdeck.com/

I’m a Twitter addict. I don’t tweet that much myself, but I follow a small handful of people and love to dive into random conversations on topics that interest me. You can do Twitter via their website, but I often find it cumbersome to do this kind of thing, plus it’s easy to get massively overloaded with people who update too much.

So, I’ve been trying out Twitter clients that help with those problems, and the best one I’ve found (by far) is Tweetdeck. The big feature is “grouping” - I can define my own groups of people on Twitter and just pay attention to that group, like “Personal Friends” or “Interesting Thinkers” or “Fellow Money Bloggers.” This lets me follow certain sets of people closely without getting flooded with minutiae too much. I can also easily search Twitter for topics of interest, browse through conversations on those topics, and dig into conversations to my heart’s content. Yep, I’m a Twitter addict - and Tweetdeck makes it very easy to do what I like.

OpenOffice
http://www.openoffice.org/

Quite often, I need to edit and share documents with friends. I also use spreadsheets to keep track of my money, plus I use presentation software as I begin to engage in speaking opportunities. For most people, this means ponying up for Microsoft Office, but OpenOffice does all that for free - and it works almost identically on my Mac and on Linux (and on my parents’ PC).

OpenOffice includes document creation, spreadsheets, presentations, databases, basic drawing tools, and lots of other little bits - and it doesn’t cost a penny.

Audacity
http://audacity.sourceforge.net/

I’ve been experimenting with podcast recording for a while now, trying to figure out what I want to do and how I want to do it. At times, I’ve recorded at my desk and on my laptop using a USB microphone. In both cases, I’ve found that Audacity does everything I need to do - I can edit pieces together, add music snippets, move pieces around, record from the mic, and it all just works.

I tried using GarageBand on my Mac, but it often felt like using an elephant gun when a peashooter would do the trick. Other solutions I tried crashed or had stability issues. Audacity just does the trick whether I’m at home or on the road.

Freemind
http://freemind.sourceforge.net/

What is Freemind? Freemind is basically a workspace where you can jot down little pieces of ideas, connect them together, and organize them really easily. I use this whenever I’m trying to figure out how to organize my ideas for a complex post. Where it is really shining right now, though (and I’m using it a lot lately), is for putting together the basic framework for my next book. I can just take little ideas (keywords or phrases) and move them around in groupings and connections however I wish.

Freemind makes all of this easy. If you’re trying to put together a complex idea, it can be truly invaluable. Better yet, it works on tons of different platforms - I use it on both of my machines and I’ve used it on PCs in the past. If you do creative work or are dealing with a large project, give it a shot.

BOINC
http://boinc.berkeley.edu/

BOINC? BOINC doesn’t really do anything, but it runs more than any other program on both of my computers. To put it simply, BOINC takes your unused computer cycles and contributes them to large research projects, like SETI@home or protein folding. For example, when I’m working, I’m usually not using much of my computer’s processing power - text editing doesn’t really eat up the processor, you know. So I keep BOINC running, and it uses those wasted resources and puts them toward a good cause. It’s a way to be charitable with something you would otherwise completely waste. I run it constantly on my Mac and (when I think of it) on my laptop when it’s plugged into a wall socket.

BOINC keeps track of your progress and lets you see your contributions to whatever projects you choose (I usually contribute to SETI@home). It’s kind of fun to look at the data I’ve helped to analyze and realize that I’m helping a large scientific project go forward - and it only costs me a few pennies in electricity.

One final note… one free application I used almost constantly for Windows was Digsby. It allowed me to keep track of updates on every instant messaging service I use, most of the social networking websites (like Facebook and Twitter), and emails, too. Unfortunately, it’s not yet available for Mac and Linux, so I’m still waiting… but for all you Windows users, this one’s great.

About two years ago, I wrote a very popular piece for The Simple Dollar called 30 useful Pieces Of Free (and Open) Software for Windows. In it, I talked about how I had a new Dell laptop and that I didn’t want to spend a lot of money on additional software for it, so I went hunting. I sought out open source software so that I knew it would be not only free, but the code would be peer-reviewed and it wouldn’t have any bugs or malicious elements in it. And, eventually, I found thirty pieces of software that really met my needs.

Eventually, though, I switched to using a Mac. And, just as with my PC, I wanted to find a lot of open source software to meet my basic computing needs. I didn’t want to shell out the big bucks for Office or other such expensive pieces of software - I’d already spent enough. So I went hunting.

What follows is a list of twenty five pieces of software that are the cream of the crop of open source software for Macs. Not only is every piece of it free, many of them directly replace expensive software packages.

1. Firefox
http://www.mozilla.org/products/firefox/
Replaces Internet Explorer and Safari
Safari is a very solid web browser out of the box, but it’s not nearly as extensible or useful as Firefox. With add-ons like Book Burro, FareFirst, and Package Mapping, plus the speed and reliability I’ve come to expect, Firefox is the only web browser for me.

2. Quicksilver
http://www.blacktree.com/
Unique but useful (productivity)
Quicksilver lets you set almost anything you can imagine in Mac OS as a keyboard shortcut. This allows me to do things like start iTunes and have it auto-play a specific podcast with a specific keyboard shortcut (I have one that auto-plays This American Life, for example). It’s a bit complicated at first, but once you get used to it, it makes you feel massively productive and it becomes almost an essential part of the OS.

3. Thunderbird
http://www.mozilla.com/thunderbird/
Replaces Mail
For most purposes, the default Mac OS Mail does the trick, but I find Thunderbird essential because it allows me features like auto-replying to certain kinds of messages and far better IMAP support, and it’s faster, too. Even better - it works identically both on my PC and on my Mac.

4. Sunbird
http://www.mozilla.org/projects/calendar/sunbird/
Replaces iCal
I like iCal, but Mozilla Sunbird does one thing that iCal doesn’t - two-way syncing with Google Calendar. When I’m traveling, I’ll use Google Calendar at any terminal I’m at to print out tomorrow’s schedule, make little changes, and so on. When I get home, it’s just a click of a button and it all syncs up with Sunbird. That’s an amazing feature for me and it makes Sunbird far superior to iCal.

5. AbiWord
http://www.abisource.com/download/
Replaces Microsoft Word
This is, by far, the best open source word processor for Macs. It functionally replaces Microsoft Word for almost every purpose I’ve come across and has a fast and slick interface to boot. This is the word processing program I used to write my book with, in fact.

6. OpenOffice
http://www.openoffice.org/
Replaces Microsoft Excel and PowerPoint
Need to make spreadsheets or presentations on your Mac? OpenOffice provides the tools you need for that (as well as word processing, but I prefer AbiWord for that). I often use OpenOffice Spreadsheet for the number calculations you see on The Simple Dollar, as well as using it for tracking my net worth (as in this tutorial I wrote).

7. Seashore
http://seashore.sourceforge.net/
Replaces (for most uses) Adobe Photoshop
This is a fairly simple image editor that takes care of most of the basic uses of Photoshop and is simple enough for most users to pick up. This is a great solution for those who want to do simple image manipulation but don’t want to shell out the big bucks for Photoshop.

8. Scribus
http://www.scribus.net/
Replaces Adobe Pagemaker (desktop publishing)
I’m actually elbow-deep in Scribus right now as I work on a special side project. It’s a very powerful desktop publishing program, giving you tons of freedom to lay out pages however you like. Another use: I’m thinking about making a family newsletter to ship out in the Christmas cards this year.

9. Adium
http://adiumx.com/
Replaces iChat
iChat is pretty slick, allowing me to chat in AIM and GTalk at the same time, but what about all of the other chatting protocols out there. Adium allows you to be on YahooIM, Windows Messenger, AIM, ICQ, and several other messaging services at the same time with the same program.

10. OneButton FTP
http://onebutton.org/
Replaces “command line” FTP
On occasion, I need to FTP some files from one place to another (usually from one computer to another within our home network, when I’m too lazy to use a memory stick). OneButton FTP does the job in the simplest and easiest way possible - much easier than the default “command line” FTP.

11. Audacity
http://audacity.sourceforge.net/
Replaces/supplements GarageBand
Need to make audio recordings of your own? All you need is a microphone of some sort and Audacity - and you can create podcasts, record music, or pretty much anything else you can imagine. I’ve actually considered using it to read aloud some bedtime stories for my kids in advance of any traveling I might do.

12. Cashbox
http://www.fadingred.org/cashbox/
Replaces Quicken
This is a very nice personal finance data manager for Mac OS. It doesn’t have quite all the bells and whistles of Quicken, but it provides a strong feature set and a huge number of different views of your personal finance state. If you’re a Quicken fan but don’t want to drop the cash for a Mac version, look into this one.

13. Vidalia
http://www.vidalia-project.net/
Unique but useful (privacy)
Many people are concerned about online privacy and don’t want their IP address shared with web sites that they visit or file servers that they access. Vidalia easily allows you to use proxy servers for your accessing needs, enabling you to disguise your computer on the internet.

14. Books
http://books.aetherial.net/wordpress/
Unique but useful (book cataloguing)
This one’s just for fun, but I’ve found it very useful. It allows you to catalogue all of your books, create reports, and so forth. I’ve been using it heavily in conjunction with PaperBackSwap to help me as I read through a pretty big pile of classic literature.

15. Bean
http://www.bean-osx.com/
Replaces TextEdit
I use this software for the editing of virtually every post that appears on The Simple Dollar. It’s a slick little editor with features like automatic word counting that really help when you’re trying to keep some semblance of control on the length of your articles.

16. GanttProject
http://ganttproject.biz/
Replaces Microsoft Project
This is an excellent tool if you’re involved in the management of large projects with many staff members, particularly if budgeting is tight (as Project can be expensive). One of my closest friends uses this for mission-critical projects in the workplace.

17. Nvu/BlueGriffon
Now: http://www.macupdate.com/info.php/id/15699
Soon: http://bluegriffon.org/
Replaces Dreamweaver (HTML editing)
I prefer coding my HTML by hand, but many people prefer the aid of a tool to help them with layout, and that’s what these provide. Nvu is a bit outdated but is still very useful - the creator has moved on to a new project, called BlueGriffon, which should be available soon.

18. Blender
http://www.blender.org/download/get-blender/
Unique but useful (3D graphics creation)
Blender is a magnificent tool if you like tinkering with 3-D graphics creation. It’s perhaps overkill for most people, but if you’re involved in graphic design at all, using and knowing Blender can be invaluable.

19. Colloquy
http://colloquy.info/
Unique but useful (IRC)
If you chat on IRC, Colloquy is essential software. For the uninitiated, IRC is a very large network of chatrooms on various specific topics, often developing their own culture. Colloquy is a wonderful solution for IRC chatters on Macs.

20. FreeMind
http://freemind.sourceforge.net/
Unique but useful (brainstorming)
Whenever I’m struggling to organize my thoughts and ideas, I open up FreeMind. Basically, it’s a tool that lets you toss out your thoughts in an unorganized structure, then build connections between them however you like. I often use it for posts where I have a collection of thoughts and research notes, but I haven’t really decided how to order them or tie them all together. It’s brilliant in any brainstorming setting.

21. Celestia
http://www.shatters.net/celestia/
Unique but useful (planetarium)
If you’re a space buff (like I am), Celestia is incredible software. It’s a great way to create star charts, help you identify good nights for viewing constellations and other stellar objects, and simply stumble around different views of the sky. I simply love looking at the night sky, and Celestia is a wonderful free companion for this hobby.

22. Transmission
http://www.macupdate.com/info.php/id/19378
Unique but useful (file sharing)
Many people like to upload and swap their own files with other users, such as live recordings of concerts, recordings of their own performances, free application software, and so on. BitTorrent is one of the most popular protocols for doing this, and Transmission is easily the best of the open source Mac clients for swapping them.

23. MacLibre
http://www.maclibre.com/
Supplements Software Update
Many of these software packages are updated fairly regularly by their authors. MacLibre serves as something of a “Software Update” tool for these things, fetching updates for you and helping you to easily install them with just a click or two. It’s a great way of keeping up to date on software updates for open software on a Mac.

24. Aleph One
http://source.bungie.org/get/
Gaming
Like games like Quake and Half-Life? Aleph One is an excellent open source game in this vein, available for the Mac. The graphics are a bit on the simple side, but online play is quite slick and one can’t argue with the cost.

25. Battle for Wesnoth
http://www.wesnoth.org/
Gaming
The final choice on this list is a turn-based strategy game with a fantasy theme. Battle for Wesnoth presents you with a wide array of scenarios that require you to take turns moving pieces around the landscape, thinking about your moves, and engaging in skirmishes. This one ate up a lot of my hours a few years ago!

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.

After my recent discussion about why I’d rather use a spreadsheet rather than Quicken or Microsoft Money, several readers challenged me to actually fire up both packages and see if they’re really as cumbersome as I thought.

So I installed and fired up Quicken Premier 2008 and started making a list of my thoughts as I used it. I thought that this would provide a more interesting review than many of the standard software reviews of Quicken 2008 that you can easily find via Google.

So, without further ado, here are ten things I think I think about Quicken Premier 2008.

1. The install puts a lot of icons on my desktop. Generally, the only things I have on my computer desktop are documents I’m currently working on. The install dumped four icons on my desk (Quicken itself, a Quicken-branded credit card offer, a credit report offer, and a one month trial of Quicken Bill Pay). It’s easy enough to dump these in the trash, though - just kind of surprising.

2. Setting up a single account is easy. I started off setting up my primary checking account, and it was done very quickly, automatically downloading all of my transactions from it.

3. Setting up a lot of accounts took some time. I set up an investment account, two retirement accounts, several savings accounts, two credit cards, and so on… that took some time. I ended up clicking around for a good hour just setting up accounts. Once they were set up, though, things were largely smooth…

4. A few accounts had some very odd issues during setup. I regularly saw things like double balances (Quicken reported my balance as being double what was in the account) and other little issues. I got all of them straightened out, but it was rather confusing, and at least once I had to turn to some message boards for help.

5. It does not handle multiple ING Direct savings accounts very well. I use the multiple savings account feature at ING Direct to “compartmentalize” my savings accounts. While Quicken 2008 handles these, it’s not particularly smooth. You have to actually log on via the web interface to ING and click on the Download link each time you want to get the information for all of your accounts.

6. The net worth displays are incredible. Once you get all of your data in the program, however, the data displays really begin to shine. One view that I particularly enjoy is the net worth display, which shows your current net worth as a bar graph and allows you to mess with the time range over which this is shown. It’s very similar to what I have set up for myself in Excel, which means that I quite like it.

7. The long term trend data displays are also amazing. In fact, I spent a whole ton of time playing with the features under the “Financial Overview” tab once I got my data in there. I can see how incredible this would be if you had many years worth of financial data in it.

8. One tool that really intrigued me was the “debt reduction planner.” I played around with it using my current debts and it basically spelled out the appropriate order for repaying them and correctly forecasted when I would pay it off. I had built a similar calculator in Excel, but this one was far easier to set up and also to alter and play around with.

9. Many of the other tools available can be quite useful, but many of them do not apply to everyone. For example, I found that the “My Savings Plan” tool was a very nice budgeting tool, but I personally don’t find a traditional budget to be useful.

10. Here’s the bottom line. If you’re willing to jump through all of the hoops to get all of your accounts in place, know the variations on how to get data in there, and know how Quicken wants you to do things, the reporting functions of Quicken are very useful. In other words, if you don’t know how to create the data views you want elsewhere - or don’t really know what you want - and just want a system that you can learn that tells you where to put your data, Quicken is a great choice.

I actually spent about five hours just playing around with my data inside of the program. I did discover a few useful bits about my spending and other things, but I’m not entirely convinced it was worth the time that I invested in it. I can easily see how, if someone was trying hard to budget and plan for a specific goal, that Quicken could be a home run, but I don’t use a budget as formalized as the one that Quicken sets up for you.

For me, I’ll stick with Excel - I have everything set up exactly like I want there. I knew what data views I wanted and I created worksheets in Excel to allow me to easily create those data views. If you’re able to clearly specify exactly the data views you want, then a spreadsheet is the way to go. However, there are a lot of people out there that could get a lot out of a program like Quicken - if you have a hard time seeing the big picture of your finances, Quicken can really open your eyes.

Perhaps the most common question I get from readers is what about Microsoft Money and/or Quicken? Do I recommend them to people, and if so, which one of the two do I really recommend?

First of all, Money and Quicken are both excellent packages for what they do. If you want to track your personal finances in great detail, both packages will certainly do the job, providing countless reports and views of the data.

When I first went through my financial meltdown, I tried both packages for a short time, first trying out Money via Microsoft’s free trial of the product, then trying out Quicken using a free copy that came with my computer. I did not feel that one package had a huge advantage over the other - in fact, they felt pretty similar to me. I liked Microsoft’s data views somewhat better, but I had more difficulty connecting to my accounts with Money - but, honestly, they both did the job just fine.

So why did I stop using them? They were overkill. I sat down and thought about the time I was spending entering information into the program, appropriately categorizing all of my spending, and looking at reports, and I realized two things.

First, it wasn’t a good use of the time. Sure, I could see areas where I was spending a lot, but almost always my own mental accounting told me where I was spending too much. I also had a great picture of my month-in month-out money flow, but it was a lot of work to get this picture.

Second, I could be doing a lot of other things with that time. Like, for example, working on The Simple Dollar or working on my computer consulting business or spending time with my family.

Another nit that bothered me was the regular bombardment with what amounted to ads. I was constantly being introduced to mutual funds and other financial products that “matched my financial picture.” I’m really not interested in being served up ads by a program that I paid for (or, in Money’s case, was using on a trial basis to decide if I wanted to pay for it).

There’s another problem: both of these programs are on a constant upgrade cycle, which means roughly every three years, it ceases to function and you have to upgrade. Why? It ensures consistent product purchases from people who are actually using the program.

Eventually, I figured out that the one feature I really liked and that kept me on track was the constant updating of my net worth - I felt motivated to keep it moving in the right direction. So I just built my own in a spreadsheet exactly how I wanted it and moved on to just using that. I couldn’t be happier - it’s very easy for me to update and I don’t have to worry about upgrades or any other issues that Quicken and Money introduce into the equation.

Here’s my serious recommendation if you’ve never used either package and are interested in trying one out. Try out Microsoft’s free trial of Money for 90 days and see whether or not you’re still using the program after that period - this will let you know whether such software is actually useful to you. If you are still using it, then spend a bit of time and research both Money and Quicken to find out which one works for you (Quicken will import all of the stuff you set up in Money quite easily).

It wasn’t quite my cup of tea (though I am considering giving Quicken ‘08 and Money ‘08 detailed run-throughs for future posts on The Simple Dollar), but it might be yours. Give it a shot and find out.

In the past, I gave a brief discussion about the difference between APR and APY when talking about simple and compound interest. What I didn’t explain, however, is why the difference is important and how you can use Microsoft Excel to calculate one from the other.

First, let’s define the two:

APR (annual percentage rate) is the return your money would earn in an investment over a year without any compounding. Let’s say you put $10,000 in a bank account with a 5% APR, but instead of putting the interest straight into the account, they paid the interest directly to you instead. Over the course of a year, the account would pay you exactly $500.

On the other hand, APY (annual percentage yield) is the return your money would earn in an investment over a year with compounding. Let’s say that same account with the 5% APR actually compounded monthly and left that money in your savings account to earn interest the following month. At the end of the year, your account would have $10,511.62 in it, meaning you actually earned $511.62 over the year. Thus, your APY would actually be 5.1162%.

Why doesn’t everyone just use either APR or APY to represent the earnings on an investment, instead of some situations using one and other situations using the other? To put it simply, companies will use whichever one makes their product look better in print. When you’re the one paying the interest, like on a credit card, they’ll quote APR; when they’re paying you interest, they’ll quote APY.

Let’s look at HSBC Direct, for example. Their savings account interest rate is quoted as being 5.05% APY. Their actual APR, though, is roughly 4.93% - the monthly compounding is what lifts the interest rate to 5.05% APY. On the other hand, let’s look at a credit card with an 18.99% APR, but it’s compounded daily … what’s the APY? 20.91%. For every dollar you have on an 18.99% APR credit card and don’t pay interest on all year, you’ll owe almost 21 cents at the end of the year.

So how can I convert back and forth between the two? It’s very simple to do with the aid of Microsoft Excel or Open Office Calc. If you know how to use the two programs, the instructions below should be very simple; if not, it’s well worth educating yourself on how to use a spreadsheet as they can be invaluable tools for personal finance (here’s a nice primer to get you started).

Converting APY To APR

These instructions will set up Excel to convert APY to APR, useful for figuring out how much a savings account is really paying you.

In cell A1, type APY
In cell A2, type # times a year
In cell A3, type APR
In cell B3, type =((1+B1)^(1/B2)-1)*B2

Now, type your desired APY value into cell B1 and the number of times a year the interest is compounded into B2 (most of the time it’s monthly, so you’d type in 12). The APR will appear in B3. You may need to set B3 to have the “percentage” data format; just right click on B3, choose “Format Cell…” and then choose “Percentage” in that box.

Converting APR To APY

These instructions will set up Excel to convert an APR value into an APY value, useful for evaluating how much you’re really paying on a credit card.

In cell A1, type APR
In cell A2, type # times a year
In cell A3, type APY
In cell B3, type =(1+B1/B2)^B2-1

Now, type your desired APR value into cell B1 and the number of times a year the interest is compounded into B2 (most of the time for a credit card it’s daily, so you’d type in 365). The APY will appear in B3. You may need to set B3 to have the “percentage” data format; just right click on B3, choose “Format Cell…” and then choose “Percentage” in that box.

These instructions should help you really understand what bank account offers and credit card offers really mean and how you can get them on the same terms.

I recently had a lengthy IM conversation with a reader who asked me what financial software I use to keep my finances in order. I responded with the truth: I use Microsoft Excel (I received Office as a gift - otherwise, I would use OpenOffice Calc). This launched a lengthy discussion about various software packages and why I don’t use them.

The two “big” commercial personal finance packages (Microsoft Money and Quicken) are pretty similar - don’t let anyone tell you otherwise. Their interfaces are a bit different, but most of the primary functionality can easily be found in both packages: tracking expenditures, keeping track of your investments, and so forth.

However, there’s one big problem I have with both of them: they’re both the equivalent of attacking a peanut with a jackhammer. Both packages have reached a point where they’re so laden with features that they’re not intuitive to use or figure out, and the time investment required to learn the package and figure out the flow of work that works best for you is rather large.

I know very well that if I were to sit down and really invest the time to get one of these packages customized to how I want to do things that it could be very useful, but the truth is that I mostly am seeking a small number of data views to understand where I’m at: the balances of all of my debts and their interest rates, my monthly net worth calculation over time, and my active account balances. Guess what? With the exception of the account balances, these were all easy to set up in just a few minutes in Excel and I have them exactly like I want them.

I’m sure that Quicken and Money fans will respond to this post by listing a ton of features of their favorite software package that I’m missing out on, but that in itself is another problem: it takes significant time to really take advantage of those features. I’m not really interested in downloading and labeling transactions every single day (or facing a huge backlog of them after a week or so) just so I can see my current account balances - I can already see these things through online banking. I also don’t want to spend time correcting debits and credits between various accounts so that the reports on each account aren’t completely nonsensical - sure, I could “learn” the ins and outs of each system, but why not just do them in Excel?

Even worse, both mainstream packages force you to upgrade to a newer version within three years because they shut off many of the online features.

In the last month, I thought that it might be interesting to write detailed reviews of both packages and perhaps a “getting started” guide for each, so I downloaded them both and gave them a long time to prove themselves to me. I spent hours trying to use each program and figure out what’s good and bad about each of them, and all I kept facing was interfaces that took a lot of work to figure out and maintain and regular program crashes. For me, this is just not something I’m interested in dealing with just to track expenses, and I can’t honestly recommend either to my readers.

I’ve given both packages an extensive chance to prove themselves to me, and all I’ve faced are unintuitive interfaces, time investment without fruition, program crashes, and confusion. The time would have been better spent for me just to set things up how I like in Excel and move on with life - so that’s what I’ve done. I’d love to hear a truly compelling reason why I should abandon my Excel spreadsheets and move to one of these software packages - after trying each for several weeks, I certainly don’t see it.

You can try a sixty day trial of Quicken Deluxe for free if you want to give it a whirl. Similarly, Microsoft Money Deluxe has a ninety day free trial.