I get contacted quite regularly by groups who are creating Web 2.0 personal finance applications, and I’ve taken test drives of a lot of them. I’ve even been asked to advise on a few that are in the pipeline. If you’d like to sample a few, I’ve linked to a few of the best ones at the bottom.

What are they? These tools are basically online versions of Quicken. They allow you to aggregate all of your personal finance data in one place so you can get a clear picture of how you’re doing. Most of them have very slick user interfaces, too. Even better, they allow you to share some aspects of the data so you can compare goals with other users.

Yet, even though the features of many of them are amazing and I can easily see the usefulness of them, I haven’t yet reviewed any of them in detail, nor do I plan to.

Why not? All of these systems have one key issue that concerns me: personal security. I’m not talking about whether your data is safe from hackers. What concerns me is trusting my key personal finance information to a Silicon Valley startup company. Almost all of these products come from relatively small, non-public startups that are currently running on venture capital money.

To me, this is a giant red flag waving around in the sky. I watched an awful lot of dot-coms blow up in 2001 and their data went away to … who knows where. Where will the data go if these companies go under? Will the owners dispose of that data ethically? Will they sell it? Most of them have privacy disclaimers, but a legal document doesn’t really help if your bank login information and your credit card data is floating around on a laptop in Armenia.

The one key piece that these organizations forget is that your personal information and logins are extremely valuable. Your logins provide access to your money and your personal data, and if these logins fall into the wrong hands, bad things can potentially happen – lost funds, identity theft, and so on.

The best solution to this is to minimize the number of places that have your key personal data. I trust my banks and my credit card holders – and that’s pretty much it. The fewer places that my personal data resides, the better.

This sounds like an indictment of these tools, but it’s not – they have a lot of potential. But that potential lies with integration with the banks themselves, like ING or HSBC. Make it so that the access to your accounts lie with the bank itself, the entity that already has your information, and the risk to personal data issues is reduced. These tools shouldn’t be a separate entity from these institutions, but integrated into their online interface.

In other words, Mint et. al. should evolve to be the front end for online banking services. I like the ING Direct interface (after all, it’s my primary bank), but if that site had the interface of Mint, with all of the interesting tools and such and was already within the secure environment of a bank that already had my data, I’d feel far more secure about trying out such a tool.

In the future, I hope to jump into such a tool head first – my enthusiasm would know no limits. But the security issues keep me from signing up with this first generation of Web 2.0 personal finance tools.

Want to see what I’m talking about? Here are three of the best Web 2.0 online personal finance tools. I recommend looking at them, but I don’t recommend giving them any personal information.

Mint is the “hot” one at the moment, having recently won the TechCrunch 40 “contest.” I also think their user interface has the most potential if used in the ways I describe above.
Wesabe is probably the most personable of the lot – the CEO will directly answer your questions. I also think their security model is the best of those out there right now, but it still makes me nervous.
Yodlee is the most established of the group, but the interface isn’t nearly as slick.

This post is part of The One Hour Project, in which you can spend just one hour to put your finances in a better place without a big lifestyle change, through frugality or other financial choices.

One of the most valuable things that a person can do when learning about personal finance issues is to get a diversity of perspectives and ideas. The more ideas you learn about and the more perspectives you get, the better your undersanding of personal finance will be and the more likely you are to make strong choices.

The advent of blogging has made this much easier than before – it used to be that you would have to read lots of personal finance books and magazines to get a variety of perspectives. Now, with just a mouse click or two, you can read lots of different perspectives and ideas for free from the convenience of your own computer.

I encourage you to spend an hour digging into the archives of a personal finance blog so you can really begin to learn the basic perspectives of a particular site. Here are some things you can do, using The Simple Dollar as an example at first, then giving you some pointers to other sites if you want to look for excellent ideas and opinions elsewhere.

Read the “About” page. Find out what kind of perspective the blogger is offering. Quite often, this will clue you in to some of the assumptions of the writing on the site.

Sample some of the “best” posts. Look for a “best of” section and, if you find it, sample a few of those articles. This will give you some very tasty morsels to start off with.

Dig into the archives. Most sites provide an archive of some sort that’s easy to browse through; on The Simple Dollar, the best place to start is probably the one page chronology of all posts. I usually find it best to start from the beginning with a site, not necessarily reading everything, but focusing on those articles that are interesting to me.

Ask questions. Don’t hesitate to leave a comment or directly contact a blog if you have questions. I strongly urge you to be complimentary if you write to someone, though – if you look through a blog’s archives, recognize that all of the writing is a labor of love by a single person (or a small group) and they’re basically giving the material away for free for you to read, paying for the server space where that information is stored.

Here are a few blogs that are worth digging into that I particularly enjoy:

Get Rich Slowly has an about page and has a wonderful single page archive to get you started.

Money, Matter, and More Musings has an about page, a page of the most popular posts, and also a single page of extensive archives.

Generation X Finance has an “about” page and a extensive, well organized archive.

Any of the other sites listed in the sidebar here are also worth digging into.

Welcome to the 114th Carnival of Personal Finance! For those unaware, the Carnival of Personal Finance is a series of weekly posts hosted by various blogs in which we highlight great posts on various personal finance topics. For my regular readers, consider this a long, long version of my morning roundup.

Below, I picked out ten articles from all the submissions that I enjoyed the best, labeling them Editor’s Choice. From these, I picked out one sentence and included it in this post, so you can get a flavor of the writing style before you click!

After the ten Editor’s Choice picks, you’ll find a long list of entrants from various personal finance blogs. I strongly encourage you to visit articles that interest you!

Editor’s Choice

Sometimes I get really mad when I think about the 13 years that I have been working and not saving because I was financially ignorant. I have a 17 year old brother that is looking for his first job and, knowing my parents, is just as clueless as I was.
Saving A Sibling In Debt (@ one snarky chica with issues)

I’ve compiled a comprehensive collection, organized by category, of 110 personal finance calculators and helpful tools. They’re free, found online and designed to help you find fast answers to your financial questions.
110 Personal Finance Calculators (@ millionaire mommy next door)

Small companies, like small ships, carry a high risk in the stock market and are more volatile. While investing in small company stocks, or small caps, can double your money, a single bad news can tank the stock. Big companies, like big ships, do not move as fast in the stock market but they are generally less responsive to the daily market fluctuations.
Understanding Stock Market Risk Tolerance: Big Ships vs. Small Ships (@ growing money)

You have a cellphone that works? Great, you are better off than most people in most other countries. You know what those newer ones do that yours still does? Make calls.
Want What You Have, Not What They Have (@ my two dollars)

In Silicon Valley, a lot of people have been fortunate enough to do quite well financially. And having worked as an engineer around here for almost two decades, I witnessed both some highs and lows in the technical and financial front.
Top 10 Wealth Building Ways Of Ordinary People (@ the digerati life)

The media feeds the frenzy that the sky is falling because that’s what the media does. But the hyped-up fear of the unknown is usually worse than reality. And the market is currently reflecting the full force of the (unknown) bad news.
Going Against The Flow (@ free money finance)

I had lunch with a friend who likes to talk money with me. She has financial savvy, but her partner mismanages almost every cent he earns. During lunch she howled, “Why doesn’t he just burn his money in a pile right in front of me? It would be the same thing as what he does with his money!”
Sleeping With Money: Navigating “You Did What With Our Money?” Moments (@ queercents)

Since both my and my wife’s parents live in Ukraine (as well as many relatives) the topic of international phone calls to Ukraine has never been off the table and we have probably tried every possible way to save on international calling. Here are a few tips that will help you call Ukraine (and other ex-Soviet countries) without braking the bank.
Calling To Russia And Ukraine – Money Saving Tips (@ pro bargain hunter)

The recent mine disaster in Huntington, Utah, in which 6 miners are still missing, has again brought national attention to the dangers of mining and other hazardous jobs. While there have been several mining disasters in the United States over the last 2 years, according to the United States Department Labor, Bureau of Labor Statistics, mining is not actually considered the most dangerous job in the US. In fact, it is not even in the top 10.
Is A Job Worth Your Life? (@ cash money life)

There are some burdens in life you carry forever. These are memories of things you wish you hadn’t done, but did nevertheless. Here is one such burden that I have been carrying for years.
The Weight Of Stolen Money (@ money, matter, and more musings)

Other Entries

5 Key Strategies For Getting Out Of Debt (@ the happy rock)

Current Mortgage Rates for Mortgage Refinance and Purchase Loans in US. (@ Mortgage Rates)

5 Signs You Might Be A Rate Chaser (@ online savings blog)

5 Things I Will Spend My Dimes On (@ lazy man and money)

7 Costly Retirement Savings Mistakes To Avoid (@ moolanomy)

7 Ways To Improve Your (Golf) Game On A Budget (@ life in the rough)

37 Tips, Facts, and Rules For Trading Stocks In A Bear Market (@ falk investing)

Attention Costco Shoppers (@ insureblog)

Best Cash Back Credit Card List On Gas, Groceries, Restaurants, Etc. (@ hustler money blog)

Blogging About Personal Finance Changes The Way We Think And Use Money (@ money ning)

Budgeting for Dummies, Part 1: Creating A Budget (@ i’ve paid for this twice already)

Car Dealer’s Worst Nightmare: Cash Or Pre-Arranged Loans (@ saving with me)

Car Purchase: Confessions & Justification (Cont.) (@ grad money matters)

Caveat Lector! PF Blogs Are For Fun And Entertainment (@ mapgirl’s fiscal challenge)

Classifying Your Debt: The Good, The Bad, and The Ugly (@ clever dude)

Debt Reduction Is For Everyone (@ living real)

Do You Have an Emergency Fund? – If Cash is King, Then Don’t Neglect His Good Looking Brother, the Prince of Credit! (@ teaspoon finance)

Emergency Funds: How Much Is Enough? (@ million dollar journey)

Envelope System Video Tutorial (Step By Step Guide To Using The Envelope System To Manage Your Cash) (@ no credit needed)

Features That Add Resale Value To A Home (@ everything finance)

Financial Cliché VI: Leveraging Is (NOT!) Only for Rich Individuals (@ the financial blogger)

Financial Decisions With The Right Information (@ to one million and beyond)

Flying On The Cheap (For The Airlines, Not For You) (@ brip blap)

FNBO Blunder: Due Diligence 2nd Request Email (@ home finance freedom)

FNBO Direct Is Scary (@ the sun’s financial diary)

GOYB Challenge: Help Your Husband Make More Money (@ sahmmy says)

How Do You Manage Your Financial Life? (@ quest for a million)

How I Keep My Sanity When The Equity Markets Are Volatile (@ ask mr. credit card)

How Real Returns Get In The Way Of A Good Plan (@ advanced personal finance)

How To Know Instantly You’re Being Conned (@ dough roller)

How The Subprime Problems Heare Affected Retirement Funds In Japan (@ journey 2 retirement)

How To Make Your Money Greener (@ gather little by little)

How To (Not) Ask For A Raise (@ money and such)

I Will Never Be Wealthy If I Am Not Already Rich (@ family finance blog)

It’s Not All About The Money – The Baglady On Evaluating Job Offers (@ the baglady)

It’s Okay To Spend Money (@ five cent nickel)

Job Search (@ college of cash)

Keeping The Right Balance Between Money And Leisure (@ mortgage blog)

LendingTree Review: Do You Really Win? (@ blueprint for financial prosperity)

Make Money From Credit Cards: 0% Balance Transfer Profit Calculator Tool (@ my money blog)

Making A Big Fuss Out Of An Adult Shopping In A Junior Section (@ around the sun)

Married Money (@ my money and my life)

Money and Apartments (@ indebted 2 you)

More On Buying Your Own Health Insurance (@ being frugal)

More On Retirement (@ the amatureist financial journey)

My Personal Experience On Getting Out Of Debts (@ journey to financial freedom)

New Or Used? You Make The Call (@ how i will be rich)

Other People’s Money (@ plonkee money)

Personal Finance Isn’t Rocket Science, It’s Self Motivation (@ saving advice)

Power of Association (@ money monk)

Retailer’s Anger Reveals How You Can Make Money On eBay (@ money smart life)

Shorting Stocks – For Experienced Traders Only (@ my wealth builder)

“Smart” Computers Are Turning The Stock Market Upside Down (@ breaking the shackles of the 9 to 5)

Snooping To Find The Value Of Someone Else’s Home (@ one frugal girl)

Take A Peek Under The Hood Of My Savings (@ saving explained)

Ten Interest-Saving Typs Your Credit Card Company Doesn’t Want You To Know (@ frugal underground)

The Big Idea (@ 1 man’s money)

The Complete Newbie’s Guide to Buying Your First House, Part 3 – Shopping for a Mortgage (@ make your nut)

The Dow Is Falling Through Support Levels – Is The Worst Yet To Come? (@ generation x finance)

The Infrequent Bills Account (@ chief family officer)

Top Business Credit Cards (@ hustlerama)

Top Personal Finance Books: A CompleteKit (@ fire finance)

Volatility and Mr. Market (@ financial reference)

What Do I Need To Retire? (@ financial dominance)

What Happens When Your Mortgage Lender Goes Out Of Business? (@ the finance buff)

What Is A Yen Carry Trade? (@ money relations)

Why You Should Keep Your Money Invested In A Declining Market (@ finance is personal)

When Your Mutual Fund Speaks For You, What Does It Say? (@ money and values)

Wild Week In The Market Causes The Fed To Intervene (@ smart money daily)

You’ve Left Your Job, Should You Rollover Your Retirement Funds? (@ moment on money)

Recently, I downloaded the Consumer Action Handbook, an interesting 178 page document produced by the U.S. government’s General Services Administration. It’s an excellent free resource for basic consumer information of all kinds, including a huge collection of contact information for consumer advocates and customer service departments.

I thought I’d give this free document a walk-through similar to one of my book reviews, but shorter since you can download it and read it for yourself for free.

What’s Inside The Consumer Action Handbook?
The handbook is actually composed of four separate parts, though the first one provided the most interesting reading by far. The actual readable content is only about sixty pages; the last one hundred pages or so is a list of addresses and contact information for various consumer advocates and corporate customer service departments.

Part I – Be A Savvy Consumer
I found this first section to be an enjoyable read. It’s about fifty pages in length and is tightly jammed with basic information on tons of different consumer issues. A brief rundown: general buying tips, banking, cars, credit, education, employment, food and nutrition, health care, housing, insurance, internet, investing, phones, identity protection, privacy protection, home shopping, telemarketing and junk mail, travel, television, utilities, and wills and funerals. Each subject has about three pages or so devoted to it in a highly compressed fashion.

I learned a lot of interesting things from this part of the document – one item in particular saved me money right after I read it. We were about to purchase house insurance at the time I downloaded this and I realized that we were indeed insuring the lot’s value as well. This saved us a nice little bit on our home insurance.

Part II – Filing A Complaint
Many people have little idea how to appropriately handle a bad product or service. There are many techniques and avenues available to consumers who have purchased defective products or been exposed to faulty services and this section effectively summarizes these in just a few pages. This is excellent reference material to read if you purchase a faulty product and don’t know where to go in order to get a replacement or to make others aware of the issue.

Part III – Key Consumer Information Resources and Part IV – Consumer Assistance Directory
The rest of the document is an extremely thorough collection of contact information for consumer assistance of all kinds. The PDF is updated regularly to keep these addresses current, which means that it may be worthwhile to re-download this PDF on occasion. At the very least, once you’ve identified a useful contact from this list, visit the web site of that organization.

Is It Worth Downloading?
It’s an interesting read. For me, some of the information was almost common sense, while other pieces were quite intriguing. I’ve downloaded it and saved it in my reference materials folder on my desktop because I can see myself utilizing the information in the future, if for no other reason than to get a good starting place when seeking out who to contact about a consumer issue. If that’s of interest to you, download it and save it; if it’s not, the document is at least worth a perusal.

Recently, I wrote about the only personal finance sites I visit every day, and I made an offhand mention of having a lot of sites that I peruse daily via Google Reader, even if I don’t visit the site itself daily.

This begged an obvious question that several readers called me on: what do you read in Google Reader? Since I read about 100 blogs and the majority of them aren’t related to personal finance and personal development (think parenting and also the blogs of friends), and I’m constantly giving new blogs a try to see if they stick around for me, it wouldn’t make much sense to post all of the sites I have in Google Reader.

Instead, I went and took my list of feeds from about three months ago from my old feed reader, eliminated all of the ones that weren’t personal finance or personal productivity related, and then compared this list to the ones I read today. I was left with twenty five blogs, so here’s my recommended reading list.

43 Folders (personal productivity)
An English Major’s Money (personal finance with mature student perspective)
Consumerism Commentary (personal finance and consumer info)
D*I*Y Planner (personal development)
Dumb Little Man (a mix of things)
Fat Pitch Financials (personal finance)
Five Cent Nickel (personal finance)
Generation X Finance (personal finance)
Get Rich Slowly (mostly personal finance)
I Will Teach You To Be Rich (personal finance, entrepreneurship)
Lazy Man and Money (personal finance)
Lifehacker (personal productivity)
lifehack.org (personal productivity)
Mighty Bargain Hunter (personal finance)
Money, Matter, and More Musings (personal finance)
My Money Blog (personal finance)
My Open Wallet (personal finance)
Not Made of Money (personal finance)
Open Loops (personal productivity)
Productivity501 (personal productivity)
Queercents (personal finance)
The Digerati Life (personal finance)
What’s The Next Action? (personal productivity)
Wise Bread (personal finance)
Zen Habits (all kinds of stuff)

What about you? What sites (especially blogs) not listed here do you read for personal information and personal finance on the internet? Please post your favorites in the comments.

I hear quite often from readers that they check The Simple Dollar faithfully each day, and recently one of them asked whether I read any personal finance blogs and, if so, which ones do I read every day. The truth is that I subscribe to about ninety blogs of various types using Google Reader. It enables me to keep up with a lot of different goings-on that interest me. About half of those are sites in some way connected to personal finance.

However, there are three sites that I make a special point to visit every day. I suppose I might view them as the competition, but the truth is that I read them because they make me think in different ways. Here they are – I strongly encourage you to visit them and browse through their archives.

Get Rich Slowly
http://www.getrichslowly.org/blog/

If there’s another site out there on the internet that’s similar to The Simple Dollar, it would have to be Get Rich Slowly. There are times where J.D. (the author) writes something and I honestly believe I would have written it the exact same way. He comes from a somewhat different station in life – he’s about ten years older, lives on a coast, and doesn’t have children – but we share many similar interests and a reasonably similar writing style.

Here are five of my favorite posts from Get Rich Slowly:

How To Start A Roth IRA And Where To Do It This is one of the newest entries there and I linked to it in the rather recent past, but it is one of the best personal finance “how to” articles I’ve ever read. If you’ve ever even thought about getting started with a Roth IRA, this article is a must-read.

Extra Weight, Higher Costs A very strong analysis of the financial costs of carrying around too much weight. It’s practically a financial call to arms to start a diet – if you’re overweight and read this, you’ll almost be sickened by the amount of money you’re wasting.

How To Get Out Of Debt This single post combines most of the useful stuff you need to know about personal finance into one place.

Why Frugality Is An Important Part Of Personal Finance When I make a frugality post at The Simple Dollar, I usually get a very sarcastic comment or two from people who basically believe that thinking about frugality is a complete waste of time. “Big deal,” they say, “you saved $0.25 on your laundry load.” My response to them is usually a less-eloquent version of what J.D. says here.

Is Eating Out Cheaper Than Eating In? J.D. addresses another pet issue of mine. I post about food regularly on The Simple Dollar as my little attempt to turn the tide, but J.D. dove in and actually found that not only is it cheaper to eat at home, it takes less time, too.

Bankrate.com’s Calculators
http://www.bankrate.com/brm/rate/calc_home.asp

Almost every day, I find some reason to utilize one of the many useful calculators at Bankrate.com. I use Excel for a lot of the recording and maintenance of my personal finance situation, but for running various scenarios for The Simple Dollar and also looking at different options for my own purchases, the set of calculators available there simply takes care of me.

In particular, I found the mortgage calculator to be incredibly useful, perhaps the most useful tool I’ve found on the web. As we move through the home-buying process, I can’t tell you how many times I’ve used this calculator for evaluating any number of scenarios, from seeing what our payment plans would look like with different houses as we looked for one to different possibilities with the house we chose. I’ve run all sorts of advance payment plans through it to see when it would be paid off, and it’s aided us substantially in figuring out whether it made sense to pay points or not (generally, it was).

I’ve also extensively used and recommended the debt management calculator when I’ve helped people work through some of the more frightening debt issues that they’ve written me about. I’ve found the calculator incredibly useful for estimating how quickly people can be debt free.

Yahoo! Finance’s Columnists
http://finance.yahoo.com/expert/index

I’ve both lauded and railed against various Yahoo! Finance columnists, but every day I read the latest columns posted there. They’re almost always thought-provoking – either they make me think, make me nod my head in agreement, or make me fume at their idiocy (I’m generally referring to different writers here).

I particularly recommend following the essays by Ben Stein. I’ve discussed his essays in the past, but just flipping through the archives again reminds me of why I enjoy his pieces so much. The columns of Harold Maass are also stellar, plus they’re daily – his frequency and quality of writing is something I try to match here at The Simple Dollar, but I don’t believe I quite make the cut.

Who says web surfing can’t directly save you money? First of all, here are five websites I use on a very frequent basis that have directly saved me significant money.

Remember The Milk
http://www.rememberthemilk.com

I wrote ecstatically about this site before, but the same still holds true: I use it to manage my grocery list, among other things. I just add items to Remember the Milk whenever I think of it, then when I’m out at the store, I fire up the mobile version of the site and there’s my shopping list right on my cell phone. This makes it incredibly easy to just follow the grocery list and get out of the store without spending extra money.

Coupons.com
http://www.coupons.com

This is basically the equivalent of printing money. When you have your shopping list ready, just visit this site and scroll through the pile of available coupons. Print the ones that match what’s on your list – most of them won’t, but I usually find one or two that do. I also like to visit the website of the grocery store I’m about to visit to pick up even more coupons. Quite often, five minutes of web surfing in this fashion can save me another $5 on a grocery store visit. No need to worry about clipping coupons at all; just print the ones you actually can use out before you go to the store.

FatWallet
http://www.fatwallet.com/

If you’re about to make a larger purchase, stop by FatWallet before dropping the cash. The site is basically a collection of deals on all kinds of products from various vendors, from computers to housewares. I looked at FatWallet just before buying my laptop and after about three minutes of looking around, I found a Dell code that knocked $300 off of the price. I’ve found other deals there, too, just by looking around a bit before making a planned larger purchase.

PaperBackSwap
http://www.paperbackswap.com/

PaperBackSwap is another site I’ve waxed ecstatic about in the past, but it still holds true: it’s an incredibly cheap way to get books in the mail at home. Basically, for every book you don’t want any more that you’re willing to ship via media mail to someone else who wants it (you’re matched up at the site), you can request any of the million-plus books there to be shipped to you for free.

What about other online sites?
Many people use such sites as Priceline.com and Shopping.com for online comparison shopping, and I agree that you can sometimes find deals by using them. However, I almost always find that the prices are slightly inflated at these types of sites. For example, I was recently able to find a very nice price for an airline ticket online, and it would have been quite easy to just click and order it. However, I just directly called the airline, told them the price that I could get online, and asked them if they could directly beat it. They did almost immediately by about $20.

In short, don’t believe in online comparison shoppers as the be-all-end-all of saving money. Although the prices are better than what you might find off the shelf, quite often a little more legwork can save you a little bit more than that. If you’re going to book a flight, get a hotel room, or other such things online, take an extra minute to call up the airline or hotel. Tell them the price you can get online and ask if they can directly beat it. Quite often, they will; by cutting out the middleman, you save and the airline or hotel might be making an extra dollar or two as well.

The same is true for comparison shopping. I’ve often found that once I locate the best price on a comparison shopping site, if I go to that specific site and enter directly, I can find the same item for the same price – or often cheaper.

Remember, comparison shopping sites are a tool to help you save money; they are rarely the ultimate answer themselves.

One of the best parts of writing a site like The Simple Dollar is that you get the opportunity to find out what problems others are having with their personal finances. I’ve heard some incredible stories, a few of which I’ve had the opportunity to share on here, and I’ve learned a lot – not only about my own issues with money, but about the common financial issues we all share.

Last night, I came across a blog called Confessions of a Stressed-Out Mom. I came across it because I was searching through parental blogs for some advice on a minor issue I’ve been having with my son (he really likes to throw everything he can grab), so I didn’t really expect to find anything profound on the topic of personal finance. What I found was a person drowning in debt and trying very hard to simply keep her head above water. I spent a lot of time just digging backwards through the archives to piece together the story, and what I found was a compelling picture of a real person facing real debt – and trying to find a way out. Let’s walk through the story a bit.

The first entry that really deals with debt is from June 25, 2006, entitled Get Rich Quick Schemes, which contains the following tidbit:

Sorry if this post is sort of a finanical downer but lately I have been feeling like we are drowning in a sea of debt.

This is just a final, throwaway sentence at the end of a lengthy discussion of the dubious nature of most get-rich-quick schemes, but it indicates that somewhere in the back of her mind, there is an awareness of a deepening financial problem. The big clue as to why this is happening comes just a few days later, on June 28:

In the beginning I was the bread winner and I bought him presents left and right so he grew accustomed to getting whatever he wanted whenever he wanted. I’m sure you can see how we ended up in a great deal of debt because of that philosphy and still digging out to this day.

Sound familiar? Perhaps not the “presents” concept specifically, but almost everyone who ends up in debt trouble go through a lengthy period where we become accustomed to simply having whatever we want – or nearly so. The concept of budgeting, saving, and financial practicality are far less important than a need for more stuff.

Unfortunately, the path to a better financial future goes dry for several months, with almost no hint at all of any mounting debt issues. Again, this is fairly typical; I like to look at it as small tremors before an earthquake. And, yes, an earthquake was coming, as debt issues begin to pop up like crazy, starting with this frightening tidbit from December 1:

I have let our finances get grossly out of control to the point that there are more bills than there is money. And this time there have been no lost jobs and the like to blame it on…only me and my inability to manage money better.

This sounds like a financial armageddon to me. The blunt realization that your poor spending decisions has put you in a situation where you literally can no longer afford to pay your bills is often overwhelming, but even this realization didn’t quite do the full trick. By January 8, our heroine and her husband had obtained a copy of Dave Ramsey‘s Financial Peace University program (a multi-CD and workbook set that I hope she borrowed from her local library rather than buying) and they did Dave’s “quickie budget” exercise. The results weren’t pretty:

For this Quickie Budget you are only to budget your life’s necessities — Shelter, Transportion, Food. Credit Card debt isn’t added to this Quickie Budget at all. So here we are going through all of this and after we are finished low and behold we have $25.27 left to our names at the end of that budget. Mind you I said this didn’t include any credit card payments.

Unfortunately, it looks like the problems still aren’t solved. Take a look at the entry from the very next day:

Just tonight I called about local Jazzercise classes and I am pretty sure that I will be joining them if I can make them fit into the budget. It’s unlimited classes for $35/month.

Hmm… something’s not adding up here. $25.27 left after shelter, transportation, and food, without even touching credit card debt, and yet there’s somehow room for $35 for Jazzercise? At least they’re getting an emergency fund together:

We have been able to come up with a way to get our $1000 emergency fund in place and we will be beginning the debt snowball very soon. It’s going to be a long road ahead and we both know that but I feel we are committed to working on it together.

This makes me think that there may be more breathable room in their budget than they originally thought, but they need another wake-up call and one comes courtesy of Dave Ramsey once again, just a few days later:

As sobering as doing the quickie budget was a few days back doing the actual Cash Flow Plan was even more so — if that’s even humanly possible. So when Dave says people don’t do a budget out of fear of what they will find….he’s absolutely right. Don’t get me wrong I knew we were in bad shape but seeing it in black and white and realizing just how bad of shape it really is — well it’s more than a little scary. Let’s just say that after paying our necessities there is almost nothing left to pay off the credit cards and unsecured debt we have. And neither of us knows how to change that.

Thankfully, the couple have started throwing themselves into the Ramsey plan, which is definitely a step in the right direction. The real sign of a positive direction, though, came in this most recent entry:

I can’t tell you what a great experience it was to know what I was going to pay and had the money to pay them. It gave me such great peace.

This story sounds so familiar to me because I went through this very process, though the things I discovered when coming through the other side were somewhat different. I have just these five pieces of advice to give to this stressed-out mother as she and her family come through the other side of a financial armageddon:

Be diligent. Spend as much of your spare time as you can stand absorbing financial information. The archives of this site are a fine place to start (particularly the 31 Days To Fix Your Finances series), but you can’t go wrong with reading financial books by a wide diversity of authors. Try reading titles like Your Money or Your Life, Smart Couples Finish Rich, The Millionaire Next Door, or The Wealthy Barber. Even if you’re not doing this at the same time as your spouse, you can read the material, absorb what’s important, and give the important pieces to your spouse.

Keep refining and eliminating. Look for both big things and small things you can eliminate from your budget. There are almost infinite ways to save money if you really want to get ahead.

Don’t be afraid to live frugally. Many people are convinced that there is shame in living frugally, that they will be seen as “cheap” or “poor.” The fact is that those same people are the ones in debt up to their eyeballs, unable to sleep at night because of all of the unnecessary stuff they’ve bought.

Involve your spouse in everything. If you’re making major changes to your spending, keep your spouse on the same page, no matter what. Let your spouse know everything that you learn and every idea you’re having. Show them every thing you figure out. If they are still doing things financially you don’t agree with, ask your spouse why and listen to the answer. Do everything you can to make sure that all of your goals are in sync, even if it’s not easy to talk about.

Never forget the fear of being in over your head. Any time you’re tempted to take your eye off the ball – you’re tempted to spend a little extra money because you’ve got plenty in the bank – remember the fear you felt when you were drowning in debt. Even as I walk further and further away from those days, not a day, not even an hour goes by where I don’t remember the feeling in my gut when I really realized that I didn’t have enough money to get through the end of the month, and I sat there next to my son’s crib and cried my eyes out.

In a few months, I might peek in again at this stressed-out mother to see whether or not they’ve stayed on the path to financial freedom.