For the purpose of this post, I am assuming that you already believe in budgeting. Meaning, I intend to review Mint.com as a budgeting software solution and not attempt to persuade you that you should be budgeting (though you should be).

Before detailing my experiences, let me start by saying that I love Mint.com. I had been a hardcore Microsoft Money user for years and was devastated to find out that they were discontinuing the product. Looking for a cheap, straightforward alternative, I decided to attempt Mint.com.

Here’s a brief outline of what I like and don’t like.

Likes

1. Free – If you are just starting to budget, then Mint is a good way to get your feet wet with a strong tool that is user friendly and free.
2. Auto-updates my accounts – This feature is fairly standard to most budgeting software but still worth mentioning. You use an obscure bank or credit union, then auto-updating may not be possible.
3. Offers – Mint.com makes money through third party offers such as credit card companies and brokerage firms. First, the “advertising” is not obtrusive to the user experience and you usually have to go looking for the offers (“Ways to Save” tab). Second, although I am opposed to credit cards and the like, I believe that consumers with credit card debt may benefit from lower interest rates or better terms. So I believe there is value in helping compare offers.

Dislikes

1. Only simple reports – Having used Microsoft Money for years, I had fallen in love with being able to quickly and easily create custom reports to analyze just about any part of my financial house. With Mint, you are restricted to a small set of non-customizable reports.
2. No debt management tool – Ok, so that statement is a little misleading. Until the recent addition of Goals, Mint offered no way to systematically eliminate your debt using techniques such as the debt snowball. Though, I outline my experience with the tool below.
3. Does not take into account savings – I really like the Budgeting feature. It is straightforward and easily accommodates custom budgets and helps you save for non-monthly expenditures (i.e. it tells me how much to save each month in order to pay for my wife’s salon trip every 4 months that always costs more than she says it will). However, I tried to add a budget for what I stick into my Roth IRA account, which is tracked by Mint, and the budget disappeared. Meaning, that investment amount isn’t subtracted from my spending and it appears that I have more money to spend than I actually do (see image to the right). I tried adding a ‘dummy’ Savings budget so I’d know not to spend the money, but then the investment isn’t tracked correctly.

The new Goals feature

Let me start by saying that it’s about time!

I’m honestly a little surprised that it has taken the team at Mint.com this long to add a goals feature. Either way, we have it now. When you click on the Goals tab, you are presented with a number of “off the shelf” options or a create your own goal option.

“Get out of Debt” goal

Excited to see how the debt elimination feature worked, I decided to see how I could payoff my mortgage sooner. To my surprise, the only debt I was allowed to eliminate was my one credit card (which has a balance of $176). Dismayed, I selected my credit card and hit Next. Mint then analyzed my discretionary income (or extra income after expenses), the minimum due on my credit card, and the interest rate. Mint’s advice was to pay the minimum, only $15, for one year despite sufficient discretionary income to pay it off much sooner. Like now. Simply put – Mint’s debt management program failed.

“Take a Trip” goal

Though, I believe everyone deserves a fair chance. So I attempted to create a different goal. My little family will be headed out to Washington D.C. next Spring to see her family. Below is what I entered. This time, I felt everything worked very well. We were able to give the goal our own name and upload a pic to motivate ourselves – very cool.

Despite the drawbacks of the debt reduction goal, I definitely give the Goals feature two thumbs up.

Last question, is it safe?

Let’s be honest. If I am sharing my account information with a site, I want to know that it’s safe. In a video posted to YouTube, Mint’s CEO Aaron Patzer explains how Mint approaches security. I’m pretty paranoid about my identity being stolen and take a good number of precautions. So far though, I have felt completely safe using Mint.

My recommendation is that if you are not currently using any budget software or if you are unsatisfied with the one you are using (this includes Microsoft Excel), then check out Mint.com.

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A few years ago, my wife and I had the opportunity to invest in a company that we hoped would go public. We were young, just married, and broke. So we took out a personal loan from a family member (for a fairly small amount) to make the investment.

Within months, the company went belly up. Since we weren’t able to recoup a single penny from our investment, we were left to work off the debt. This experience taught us several valuable lessons. Among those lessons was that one should be extremely cautious when using leverage to make an investment or increase the expected return on an investment.

Let me give you four reasons not to use debt to invest

First, you may not  have the right experience to manage the use of debt, such as borrowing from a margin account, when investing. Without the aid of an experienced advisor, avoid using financial instruments such as margin accounts.

Second, for the average Joe, slow and steady will win the race. We all have goals and dreams and it would be wonderful to achieve them today. However, our dreams can become nightmares if we try to run to them too quickly. Realize that if you follow tried and true investing techniques, you will arrive at your goals and have had peace of mind along the way.

Third, your mama was right – don’t spend money you don’t have. This is the foundation for any solid financial house. I read an article several months ago that referred to credit card arbitrage, which is borrowing money from a credit card with a very low promotional rate and then investing the borrowed money. The idea is that you’ll pay off the credit card before the interest charges hit and you’ll have made more money from investing the money than any fees associated with borrowing the money (e.g. cash advance charge).

The problem is that you are building a house of cards. What if you can’t liquidate the investment in time to pay off the credit card? Even though the nice marketing pitch says you pay no interest, it is actually accruing. So if you don’t pay off the credit card within the promotional period, then wham! You’ll be hit with all of the interest charges.

Fourth, we become too emotionally involved. For many people, investment decisions are based on emotions. We see the market begin to fall or rise and we sell or buy accordingly. So if we know that getting out of a bad investment now means we are left owing the debt, then we may choose to not sell hoping that the investment will come back. We may get lucky and the investment rebounds, or the investment will decrease in value even further leaving us with even more debt to repay.

So why would anyone use debt or leverage when investing?

Leverage acts as an accelerant. Just like adding gasoline to a fire, leverage can allow you to gain larger returns than you would otherwise be able to obtain.

Also, leverage increases the percentage return on an investment. Ever heard of OPM? Other People’s Money. Here’s a specific example.

• Scenario 1: I invest $100,000 and gain a return of $10,000. My percentage return is 10%.
• Scenario 2: I invest $10,000 of my own money and $90,000 of borrowed money (or OPM). If the return is still $10,000, then my percentage return is %100. This of course assumes no fees or interest associated with borrowing the $90,000, which is never the case.

Scenario 2 sounds nice because my return is %100 and I only had to tie up $10,000 of my own money. Though, at the end of the day, I’m $10,000 richer in either scenario. And I’m not financially committed to someone else in Scenario 1 if the investment begins to sour.

What are your experiences with using debt to invest? Good or bad. Also, sign-up for our RSS Feed for timely updates on other financial topics.

To celebrate the birth of our nation and the freedoms that we are afforded, I am writing three posts this week with a twist. Each post is based on an influential document which has given us rights.

On Monday, I outlined the Financial Declaration of Independence. Today’s post, based on the United States’ Bill of Rights, is the Financial Bill of Rights.

1. First Amendment – Freedom from debt, credit cards, and HELOCs
   We shall take out no unnecessary debt living beyond our means, which prohibits free exercise of other rights; or overspend through the use of credit cards; or enslave ourselves through the use of HELOCs; rather save the necessary sum to pay cash for wants and needs.
2. Second Amendment – Right to keep and have savings
   A well regulated Automatic Savings Plan, being necessary to the security of a financially free Family, the right to an Emergency Fund, shall not be infringed.
3. Third Amendment – Protection from bank failure through FDIC insurance
   No Investor shall, in time of peace place cash savings in any bank, without FDIC insurance, nor in time of war, but use multiple banks as necessary.
4. Fourth Amendment – Refusal of Interest Only and Adjustable Rate Mortgages
   The right of the people to be secure in their houses, condos, and town houses, against needless foreclosures and bankruptcies, shall not be violated, and no Interest Only or ARMs shall be issued, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
5. Fifth Amendment – Health, life, AD&D and LTD insurance
   No person shall be without Health insurance, or adequate Life insurance, sufficient for final expenses and income replacement, except in cases when no financial means to purchase insurance exists, while actively seeking new employment or other income source; nor shall any income producing person be without Accidental Death and Dismemberment insurance; nor shall any income producing person be without Long Term Disability, sufficient to replace 60% of the normal wage.
6. Sixth Amendment – Right to steady, growing mutual fund returns
   In all mutual fund investments, the investor shall enjoy the expectation of steady, growing returns, by careful fund selection based on principles of positive alpha, fair management fees, consistent performance, and passive management where appropriate; each fund consistent with a target asset allocation plan; to have compulsory purchases avoided and decisions based on sound investing principles.
7. Seventh Amendment – Consistent asset allocation by rebalancing
   In accordance with a predetermined asset allocation plan, where the values are determined through evaluation of your risk and investing objectives, the right of rebalancing, or realigning investments which have deviated from their allocation, shall be exercised, and no given investment, shall be allowed to overwhelm the returns of other investments, which may result in large, unexpected losses.
8. Eighth Amendment – Abolishment of excessive management fees
   Excessive management fees shall be avoided, nor 12b-1 fees paid, nor front end or back end loads paid.
9. Ninth Amendment – Protection of rights not specifically enumerated in credit card agreements
   Where credit cards are used, the enumeration in the Agreement, of certain rights, shall not be construed to deny or disparage others retained by the credit card account holder.
10. Tenth Amendment – Powers of spouses and family councils
    The powers delegated to the Head of Household by the Family, are reserved to the Spouses respectively, and decisions discussed in family council.

Signed this 30th day of June, 2010,

Adam Williams and the Rabbit Funds team

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As I reflected on the freedoms that I enjoy as a citizen of the United States, I realized that our forefathers would be sadden by the economic hardship which is self-imposed by overspending and enslaving ourselves through debt.

I therefore decided to alter the beginning of the Declaration of Independence, one of the most lasting and influential pieces of literature, to create a Financial Declaration of Independence.

Financial Declaration of Independence

When in the Course of our life’s events it becomes necessary to dissolve the bands of debt which have enslaved us and to assume among the powers of the earth, the financially free and secure station to which the Laws of Nature and of Nature’s God entitle us, an earnest and whole-hearted effort require that we should declare the causes which impel us to liberation.

We hold these truths to be self-evident, that all men are able to obtain financial freedom, that we are endowed by our Creator with certain unalienable Rights, that among these are Investments, Planning and the pursuit of Financial Security. “” That to secure these rights, Budgets are instituted among families, deriving their power from the mutually agreed upon savings and expenditures, “” That whenever any Form of Overspending becomes destructive of these ends, it is the Responsibility of the Family to alter or to abolish said overspending habits, and to institute new Attitudes and Habits, laying a foundation on such principles as Emergency Funds, Retirement Accounts, and Debt Reduction Plans and organizing its powers in such form, as to them shall seem most likely to effect their Financial Safety and Marital Happiness.

Prudence, indeed, will dictate that Budgets long established and effective should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to overspend, yet unsufferable evils that we ourselves must abolish are credit cards to which we are accustomed. And when a long train of abuses and indulgences, pursuing invariably an end design to reduce us under absolute Financial Slavery, it is our right, it is our duty, to throw off such Indulgences, and to provide new Guards such as Credit Card Destruction for our future financial security.

Signed on this 28th day of June, 2010,

Adam Williams and the Rabbit Funds Team

Join the Revolution

Join us in our revolution and sign this Financial Declaration of Indepence in the comments below!

Any American who pays even the slightest bit of attention to television commercials or newspaper advertisements – not to mention the many direct mail inserts that seem to daily flutter through the mailbox – has likely seen his or her share of debt relief offers that seem to good to be true.

Certainly, the demands of the marketplace mean that the majority of the nationally renowned debt relief companies are legitimate without question. Of course, simply because the debt relief agencies (and the agency representatives) are not willfully fraudulent does not mean that the very nature of their approach to debt relief won’t end up rather different than the client originally thought.

It’s so very important that you ask questions from the moment you begin talking to a debt relief counselor about the smallest guidelines of their debt relief philosophy so that you’re not accidentally misled. Even though the debt relief professionals genuinely believe in the effectiveness of their own company’s system, that still doesn’t guarantee it’ll be the right fit for your particular circumstance.

Traditionally, when it comes to debt relief scams, most of the consumers who’ve previously fallen for one of the less than trustworthy efforts have one of three common complaints that absolutely must be avoided:

1. The supposed debt relief strategy actually created more unsecured debt than had formerly existed
2. Despite sky high monetary expenses, the debt relief firm did less than nothing to aid the situation.
3. Whether or not the debt relief agency did an effective job reducing the financial burdens, the client’s credit scores were seriously damaged

Now, to an extent, the criticisms of specific debt relief methods could just come down to the customer’s faulty recognition of what the debt relief programs represent. It should seem obvious to any adult that a debt relief plan seeking to lower the monthly payments, the interest rates, the amount of unsecured debt-loads, or all of the above will feature some comparatively less favorable consequences for the borrower alongside. However, since so many of the debt relief counselors (even the ones that work for technically non profit organizations) are paid primarily by the amount of business that they bring in to the company, they’re hardly going to stress the disadvantages of their program.

Also, remember, most of these debt relief professionals truly think their approach would be the best bet for erasing credit card balances regardless of the surrounding household circumstances. As a result, even if they know that the mandatory minimum monthly payments required under one strategy may be a bit of a stretch for one consumer’s income, they might push forward the debt relief payment schedule anyway in the hope that a bit of budgetary discipline’s what needed. Similarly, although they realize that their method of debt relief will wreak havoc upon FICO scores for up to a decade while closing accounts as a part of the process, some specialists might well believe that their clients could do with less capacity for thoughtless spending.

You could hardly accuse these debt relief professionals of scamming their customers, but neither did they take the needs and interests of their clientele seriously. For this reason, even if the company seems thoroughly above board, it’s always a good idea to ask a particular debt relief agent for recent recommendations so that you’ll make sure the debt relief offered will be just what you wish.

Credit card debt is wrecking people’s lives as we speak. The lure of the “easy money” ruins a lot of families because credit card holders are too weak to refrain from buying yet another thing they really don’t need. So what can you do if you are staring in the face of debt – debt that could result in a bankruptcy claim or a divorce because money issues are so bad in your family no one can handle them?

The answer is: use the snowball method

Before I go into explaining how this works, let me clear up an important fact that seems to cycle through people’s minds. Contrary to popular belief, it isn’t easiest to get out of debt by paying off your highest interest rate debt first. This is what many debt-ridden consumers tend to believe, but they are wrong (at least partially because the math proves us otherwise).

The problem with the “math supported scenario” is that people end up giving up along the way because they don’t see instant results. If you are stuck with thousands of dollars of debt and all you do is skimp money, the last thing you want is to wait for several months until you see your debt twiddle.

Instead, pay off your smallest debt first (this is what is referred to as the snowball method).

How to establish a debt snowball method

With the debt snowball method, you put everything on hold financially except the minimum payments and of course your utility bills and essential living expenses (and no, that does not include a subscription to cable TV). Scrape together everything you can.

However, before you start minimizing your financial expenditure, try and save money for an emergency fund. Speed is of the essence here since the interest clock is ticking.

Assemble all of your debts and create a spreadsheet listing them in order of size. Start with the smallest debt first and work your way toward the biggest (most likely your mortgage). This is not the time, nor the place to worry about interest rates as the idea is to start paying down your smallest debt as soon as possible, then move on to the next, and so on.

The snowball starts rolling…

Begin by paying the minimum on all of your debts except for the first one. Pay as much towards that each month as you can. The moment your first debt is paid off – which shouldn’t take too long if you are dedicated – apply that same payment amount to the next debt on your list. Once you’ve paid that off, apply that whole sum to the next one. So, $25 becomes $75, which becomes $125 and so forth.

In a short period of time, your snowball will gather pace and you will feel a massive sense of achievement. This will drive you to keep going.

Seeing results is psychologically important. It helps us to stay focused and result-driven.

…can you feel the rush of wind in your hair?

As you pay off more and more small debts your snowball will gather massive momentum. You will feel elated and actually start believing that is is possible to be debt free.

But it gets even better than that. If the exhilaration of the wind in your hair isn’t enough, how about the fact that you will start to compound your remaining payments as you pay off more of your debts. Money is funny that way!

Every single dollar you pay off your existing debt will help to compound the remaining amount. The more you pay off, the quicker your debt will shrink until there is…

… nothing left to pay, finding yourself debt free.

As long as you keep adding the amount you paid to the prior debt to the next debt, you will see results with the snowball method very quickly. It will be the start of the rest of your life and hopefully re-educate you on money management forever.

This guest post is written by Timothy, a personal finance writer for Credit Card Finder, which specialises in providing credit card comparisons and information to help consumers get into a better financial situation. For more information on ways to reduce your debt, visit the Credit Card Finder website or subscribe to their RSS feed for additional practical articles.

Louise Tillotson writes for a number of websites, including moneysupermarket.com, on debt management, household budgets, savings and other personal finance topics.

If you have debts, then chances are you’ve got less than healthy spending habits. If you constantly find yourself thinking things like “If only I hadn’t bought that, then I could have this” or running short of cash a fortnight before payday, then you could do with taking action, kicking a few bad habits, and tackling some debts before they take over your life completely.

I won’t go into ways of cutting down your expenditure as there is tons of information out there on how to do that, and much of it is common sense anyway. Suffice it to say, if you have outstanding debts, then you need to put yourself in a position where you have enough disposable income to cut a sizeable chunk off of the balances.

Determining your financial situation

In order to do this, you need to know exactly what your financial situation is in. Getting copies of your credit report and score is the best way to understand your finances since trying to remember each debt, income and expenditure means you could easily forget about crucial ones. The goal is to find out how much you have coming in, how much is being paid out, and how much is left over.

Understand your debt obligations and make a plan

As well as knowing what debts you have, you also need to know how much the total amount owed is, the term left on each one, and what the interest rate on each one is. The idea is to pay off the most expensive debts first and get them out of the way as soon as you can. Debt that is taken out over a long period of time and has a high rate of interest is going to end up costing you more than a short-term loan with the same or a lower interest rate.

If you have a few small debts that you think you could pay off in one go, contact the creditors and ask about a settlement amount. They may be reluctant at first; some like to keep you paying interest for as long as possible; but don’t take no for an answer. Ask to speak to a supervisor or manager, and negotiate a lower amount with them.

What about your mortgage?

As for the rest of your debts, commit yourself to paying off a percentage of each one every time you get paid. Structure these payments depending on the interest, term and priority of the debt. For example, a mortgage will technically be the biggest debt you have, but clearing it isn’t really a high priority compared to one which may have some late payments. Any debts which you’re consistently up to date with payments on won’t be harming your credit score, so concentrate on those debts which you may have fallen behind on, and get these up to date.

This form of debt management is slow, but steady. Keeping up with payments is actually easier than trying to play catch up if you get behind. When you’ve had to do it once, you’ll do your utmost not to have to do it again!

April 15th is near and taxes are due. 2009 paperwork is being rummaged through, and Americans are working hard to get their taxes ready.

Paying taxes can put a big dent in our collective wallets, but a small percentage of people are going to come out owing more than they can actually afford (ouch!). So what happens if you truly cannot pay your tax debt?

This is a tough situation for anyone to be in. But like any difficult problem, there is always a solution. One thing you need to remember is that you should never just ignore your tax problems. A small or medium size debt could snowball into a huge problem that could even land you in jail. Also, the penalties for not paying your taxes and not filing your taxes are completely different! You will owe MUCH more for not filing, than if you simply can’t pay what you owe. Whatever you do, ALWAYS file your taxes.

A new trend among people that are having tax problems is to turn to their trusty credit cards. But, this might not be the smartest thing for someone who already has a debt problem. It depends on your history with credit cards and your current income. If you have a habit of not paying your bills on time, you might want to reconsider. Creating a credit card debt problem to replace a tax problem might just be digging yourself into an even deeper hole. But, if you have a steady income and the cash flow problem is just temporary, it might be worth it (only if you can pay it off quickly). Just make sure that you have repayment plan in place. You don’t want to let that interest grow into something you can’t afford.

What are your options if you don’t have the cash?

If you a facing financial problems, you might be able to negotiate a payment plan with the government. If you have less than $10,000 in tax debt you can fill out Form 9465 to set up an installment plan. The government may or may not agree to this. After you send in this form an IRS agent will evaluate your finances. If they believe you are truly having financial trouble, then they will most likely approve you for this installment plan. But keep in mind interest and penalties will still apply.

Now if you are really in financial hardship and an installment plan is still too much, the government may accept a reduced payment. This is called an “Offer in Compromise”.

To qualify for an Offer in Compromise you need to complete Form 656 and Form 433A. You will need to send complete records of your finances and an agent will decide if they will accept a reduced rate. The criteria for you to qualify for this compromise depends on the financial records you submit. If they believe you cannot pay the full amount, the amount due is incorrect, or that there are other special circumstances they might grant an “Offer in Compromise”. But keep in mind the IRS is tough, and they only offer OIC’s to people whose finances are in very bad shape. When you apply for an OIC, you admit liability of the tax debt. This will make it very difficult if you want to protest it later on.

Hire a CPA or Tax Attorney

There will be extra fees if you get outside help, but its possible that they may save you more money in the long run. A CPA or attorney will have much better knowledge of the tax laws, and may be able to work the system better than you could by yourself. But like with anything else, you need to shop around for the right company or you could get burned. Just like other areas of the debt settlement industry, these companies tack on fees that can add up quickly if you choose the wrong company. Make sure you read the terms of your agreement very carefully before you sign.

If your tax debt is greater than your income can afford, you need to handle it quickly. Remember that interest on your debt is always adding up. You can take the “do it yourself” route or hire a professional to help. There is also a lot of information on the Internet to get you started. Begin your research at home, then make some calls. It doesn’t hurt to call a tax professional just to pick his or her brain and get you moving in the right direction. The more you learn about the process, the better your outcome will be, and hopefully you’ll pay less in the long run.

About the author: This is a guest post by Garrett Driscoll from Debt Eagle. Visit his site if you are having debt problems or need information about bankruptcy, bad credit, or collector issues.

A neighbor, who is currently in college, had an assignment in her journalism class to create a investigative report on financial planning and students at her college. I happily offered some thoughts and suggestions on the piece.

After chatting for awhile, she asked if I would “officially” answer some questions as an expert (I think that term was used liberally). One of her questions was, “Can you give 5 tips or suggestions I can include in my article?”

I started jotting down thoughts beginning with a budget and so on. After a minute or so, I realized the gravity of what I was writing. Here I was limited to five ways a college student could improve his or her financial situation. Thoughts of my college experience started coming back (I’m sorry to everyone that was involved in that duck incident).

So here is my list of the top 5 suggestions for college students

No. 1 – Take responsibility for your money by creating and living by a budget. Sites like Mint.com or MoneyDesktop.com make it very easy to do. Also, remove or reduce as many fixed payments (subscriptions, cable bills, car payments, etc) as possible.

No. 2 – Pay off debt using techniques such as the debt snowball.

No. 3 – Have an emergency fund of at least $1000 and preferably enough to cover 3-6 months worth of expenses.

No. 4 – Start saving for retirement with the goal to save 20% of all your pre-tax income.

No. 5 – Give generously. You will probably receive more dividends from your generosity than any other investment. Also, if you can give when you are poor, it will be easier to give when you are rich.

All of the ideas listed above are widely talked about, but…

I’m not sure many college students fully grasp the fundamental nature of each one.

Let me give you an example. I have a coworker who is a pretty sharp guy. He graduated with a minor in Economics and worked at Goldman Sachs. He can explain credit default swaps and have in-depth macro-economics discussions with you. But he is lost when it comes to simple personal financial planning.

Maybe that’s why Wall Street is having so many problems.

So if you are a college student, take some time to understand how to create and use a budget. Stay out of debt and learn how to put together a portfolio of index funds in a 401k or Roth IRA. If your college offers a financial planning course, take it. I’ll bet you a shiny nickel that you will use that course more than the capstone course in your major.

So what advice would you offer college students?

I wrote a mock letter to Dave Ramsey several months ago lamenting the need to sell my car. Well, the deed is done. My baby is gone. And here’s why I’m better for it.

First, we were able to drastically reduce our monthly car payment.

Our car payment is 40.9% of what it was before. The extra money is going to pay off medical debt and the remaining car debt.

I love sleeping at night again.

Second, our car insurance went down.

But not for the reasons you think. We purchased an older car that is actually more expensive to insure at the same coverage level. However, since I didn’t like the prospect of higher insurance premiums (which reduced our cost savings), I spoke with a lot of insurers.

I had decided on American Family as it had the lowest rate, though still more expensive. Fortunately before signing up though, I remembered that Bear River Mutual (a local insurance company) supposedly had highly competitive rates. Come to find out, by switching my car and home owner’s insurance to Bear River, I saved about $20 a month over what I had before.

So if you haven’t checked in awhile, I recommend running some price comparisons on your auto and home owner’s insurance.

Third, we developed a bit more self-discipline through sacrifice.

I’ll be honest. I miss my SUV. I mean I really miss my SUV.

My lip trembles when other ones drive by.

But we made the responsible decision to forgo a car we really like for a less expensive car that we like, but still meets our needs. Making financially responsible decisions is difficult at times, but the rewards, both financially and emotionally, are tremendous.

Each time you make the “right” decision, the next time is easier. So what’s holding you back?

So Dave, what now?

Dave Ramsey teaches that to get out of debt you should sell so much stuff that the kids and dog think they are next. Here’s the list of items we’ve sold so far:

1. Hyundai Santa Fe
2. 32 inch LCD TV
3. Hard wood TV stand
4. DVD player
5. Printer
6. Palm Pilot

We’ve also donated a fair amount of clothing and other items that we didn’t want to sell but still let us de-clutter. Here’s a few more items on our list of things to sell:

1. Desktop computer (don’t worry, I still have a laptop)
2. Computer desk
3. Mini love sac
4. Possibly the house

To my wife’s chagrin, my golf clubs are not on the “to sell” list.

So what have you sold to get of debt or are not willing to sell? Let me know in the comments.

I had the opportunity to interview Jane White, author of America, Welcome to the Poorhouse. In this post, I intend to offer my review of the book as well as analyze her arguments and statements made in the interview.

Analysis of White’s Argument

Although White does an excellent job of raising the right red flags, there are several flaws in the changes proposed in her book. For the most part, I found that her argument lacks a strong understanding of economics as well as a false sense of entitlement.

For example, White proposes that companies be required to match 9% of an individual’s annual salary into a 401(k) plan. However, she fails to calculate the economic impact on companies. Further, she believes that any company with slim margins should layoff part of the staff in order to pay the 9% to others. Effectively, White will have slowed corporate growth and increased the unemployment rate.

Further, White strongly believes in the social contract or that the wealthy are responsible if not obligated to subsidize expenses such as college education for lower income tax payers. Why am I entitled to a part of the earnings of another individual? Now don’t get me wrong. It is my personal belief that individuals with excess income should seek out good opportunities to help others. However, I do not believe that the government has the right to dictate how that excess income is spent especially when you consider the inefficiencies in our government.

Further, White asserts that primary and secondary schools are free so college should be too. That comment is wholly unfounded in truth. For example, I paid my property taxes this past November. Approximately 90% of the bill went to the local primary and secondary schools. In fact, I will more than pay for the expenses associated with my children (especially since they are both under two).

White also asserts that corporations deceive Americans. She repeatedly refers to credit card promo offers and loans such as ARMs as bait and switch tactics by banks. Bait and switch assumes that an individual believes that he or she is receiving Good X when in fact Good Y is delivered. A credit card promo offer does not satisfy that condition. A promo offer is just that, a temporary promotional offer. There is no false representation. I do agree that too many individuals fail to fully appreciate the cost of the interest after the promo period, but that is the fault of the individual. Besides, the larger issue is why someone is using a credit card to begin with. If you do not use them, then a promo period is not really an issue.

Last, though certainly not least, White fails to estimate the financial and economic impact of the large tax burdens that she is proposing. In fact, she fails to recognize in several instances that a tax burden will even result from her proposed legislation. Case in point: She suggests that the government fund the 9% match for small companies. However, she denies that tax payers will have to fund the match. If that is not the case, then the government will have to simply print more money and cause inflation.

My Conclusion

I agree with White that change is greatly needed in America. We must change our spending and saving habits. White does a fine job laying out how we arrived at the situation in which we find ourselves. I also agree that there are bills that Congress should pass. However, I do not agree with what White is proposing. I believe that there are too many unresolved issues surrounding her suggestions that could be potentially detrimental to our economy and society.

I do not believe that the government is responsible for my or anyone else’s retirement. I believe that we as individuals need to make the necessary changes in our homes and not blame corporations or require the government (i.e. other tax payers) to bail us out.

Further, White suggests that we should expect the government and other tax payers to pay for our college education. Yet, she never suggests that families adequately save by using 529(b) accounts for example. As I mentioned at the beginning, White believes that the government, wealthy citizens, and corporations are responsible for our financial well-being and that we are mere victims without any power to prepare and pay for identifiable financial events ourselves.

In summary, this book speaks as if Americans are incapable of making good decisions and that we are constantly being lied to by corporations and politicians. While I am not so naive to think that either group always has my interest at heart, I do firmly believe that I am responsible for my own decisions. If I decide to use financial instruments such as credit cards or ARMs, then I am responsible for understanding the terms. If I do not understand, then I’m the fool for not asking more questions. I do not need the government to coddle me as White suggests.

But maybe you’ll disagree. I recommend reading White’s America, Welcome to the Poorhouse for yourself and arriving at your own opinion and conclusions. To purchase the book, visit Amazon.com.

Disclosure: I received a free issue of this book in order to write a review. I was in no other way compensated nor was I given any instructions per my review.

I have a real treat today. Seth Risenmay, the founder of MoneyDesktop.com, answered some questions from me and also graciously offered a promo code for a free 3 month trial of his product.

About MoneyDesktop

For anyone unfamiliar with MoneyDesktop, it’s an online tool to track your finances, plan for the future, and most importantly get out of debt. What’s unique about MoneyDesktop in a world of sites like Mint.com of PocketSmith.com is that the software auto-generates a plan using a variety of methods to help you get out of debt the most efficient way.

So for example, the ever-popular debt snowball is built in. Also, the less well known mortgage checking account method is also available. You the user are able to select the method that you are comfortable with, tie it into your overall budgeting and finances, and get out of debt faster.

Essentially, it’s a one stop financial wizard.

The Interview

RabbitFunds: Why did you decide to start MoneyDesktop?

Seth Risenmay: I started MD because I wanted to get America out of debt. We look at debt as THE greatest threat to the future of our country. When you think about it, our country has been able to defeat Nazism, Communism etc… and the one enemy that actually has a shot at bringing down our country is debt.

RF: Where did you come up with the idea for the feature set included in MoneyDesktop?

Seth: We had a database of 39,000 customers that gave us feedback on our product. We asked all of them this question; “What does this product need to be to give you the best chance of success?” From this market research we learned that America needed a product that did not then exist and so we set out to build it. It took 4 years and about $5 million to build but we feel confident that MD is the greatest debt and personal financial management tool in existence.

RF: What is different about MoneyDesktop as compared to Mint or PocketSmith?

Seth: The greatest difference between MoneyDesktop and any of our competitors is that it is first and foremost a debt tool. Other PFM’s are typically tools that help you track where your money went, but if that is all you do that would be like driving your car down the road backwards, you’ve only seen where you’ve been, not where you’re going. Some products and companies help you project the future and your debt payoff but since they don’t track where your money is going the projections are inaccurate. MoneyDesktop is the only company that looks to the past by tracking your spending, to help you project an accurate future for debt elimination, with real time in the present instructions in the form of text messages and emails. We also have systems to help people make decisions with financial intelligence, which no one else has. We also help people increase their discretionary income to help them get out of debt even faster. We do this by actually increasing their cash flow while lowering their bills and payments. All of this is unheard of to most PFM’s. I would say that we are one of, if not the only DPFM (debt and personal financial management).

RF: Are there any plans to make the service free like Mint?

Seth: We have thought a lot about offering our services for free like Mint. The problem is that we have found that if a person is not paying for a service they do not value it enough to actually implement it into their life and become successful. We wanted people to actually commit to their financial wellness. However, we also understand that there are a lot of people who desperately need MoneyDesktop who may need our services for free. Because of this, we have created a promotion called 3 for Free. If a user of MoneyDesktop is willing to help us in our mission to get America out of debt then we feel they have shown the commitment necessary to succeed and deserve to receive our services for free. If they refer 3 other people to MoneyDesktop our system will automatically track that and when 3 others have signed up the referrer will receive MoneyDesktop free for life!

As mentioned above, Seth was kind enough to offer a free 3 month trial to any RabbitFunds readers with a special reduced price of $14.95 afterwards. Just use the promo code “Rabbit” when you sign-up.

RF: What do you hope that users will achieve by using your site?

Seth: Total financial wellness. We want our users to become debt free, achieve financial freedom, gain financial intelligence, and become wise stewards of their money and wealth. And hopefully by using the 3 for Free feature they can help start a community of people committed to getting out of debt which will help strengthen our country and in a lot of preserve what we know as America for generations to come.

RF: How has using the software helped your own family?

Seth: I know where every penny goes, I know when every debt will be eliminated and I have piece of mind knowing that I am being a wise steward of the things I’ve been blessed with. It has helped me eliminate all of my debt with a little left on my home still to go.

RF: What upgrades or changes can users expect to see in the coming 6-12 months?

Seth: With tax season upon us we are adding features that will allow a person to easily organize their finances for tax season with their CPA. We are also adding added benefits of ID protection and Credit Monitoring. Other companies like LifeLock will charge you upwards of $10 per month for each of those services, we are close to having those services provided to our subscribers at no additional fee as an added benefit of using MoneyDesktop. We are also redoing the set up wizard for a more simple and effective setup to get people using it more efficiently.

For More Info

Thank you Seth for your time. If you have any questions or would like to see more then visit MoneyDesktop.com or follow them on Twitter at @MoneyDesktop.