Just because your company is on the verge of bankruptcy— well, that's no reason not to arrive in style. Right?

From ABC:

All three CEOs - Rick Wagoner of GM, Alan Mulally of Ford, and Robert Nardelli of Chrysler - exercised their perks Tuesday by flying in corporate jets to DC. Wagoner flew in GM's $36 million luxury aircraft to tell members of Congress that the company is burning through cash, asking for $10-12 billion for GM alone.

"We want to continue the vital role we've played for Americans for the past 100 years, but we can't do it alone," Wagoner told the Senate Banking Committee.

While Wagoner testified, his G4 private jet was parked at Dulles airport. It is one of eight luxury jets in the GM fleet that continues to ferry executives around the world despite the company's dire financial straits.

ABC estimated that the trip cost GM $20,000, as opposed to a first class ticket on Northwest Airlines flight 2364 from Detroit to Washington — which would have cost about $800.

Amazingly, private jets are a luxury that even free-spending AIG is reconsidering.

AIG, despite the $150 billion bailout, still operates a fleet of corporate jets. The company says it has put two out of its seven jets up for sale and is reviewing the use of others. Though there are no such plans by GM or Ford.

Big Three CEOs Flew Private Jets to Plead for Public Funds [ABC]
(Photo: Bonita Sarita )

Santa bookings have dropped so steeply that the Amalgamated Order of Real Bearded Santas, which represents 700 jolly souls in red velvet, held a series of meetings to discuss their economic survival. Among the tips: If clients can't afford an extended Santa visit at $125 an hour, offer them a quickie drop-in. "Have him read a story to the group instead of having everyone come sit on Santa's lap," suggests Nicholas Trolli, who says bookings are down 50% for the 20 Santas he represents along the East Coast.

This trend of skimping on civic cheer comes as a blow to many families. Their holidays at home will be more modest this year. Office parties will also be subdued. Now they can't even count on cherished holiday traditions in the town square.

This is tragic, because as everyone knows, if Santa is broke he'll have to cut back on health care for the elves and that's just going to place an undue burden on the taxpayer. Or worse yet, he'll have to outsource his toy making contracts to gnomes.

Glum Tidings: Santa Gets Sacked as Cities, Companies Look to Save [WSJ via Buzzfeed]
(Photo: silent (e) )

This, of course, assumes that you're not already using these tips, some of which Ramit admits will come from Consumerist. (Aw, shucks, he likes us.)

Anyway, if you've got an hour a day and want to save some money, why not join Ramit's challenge? What's the worst that could happen? You save money?

Announcing the Save $1,000 in 30 Days Challenge [I Will Teach You To Be Rich]
(Photo: donbuciak )

"Consumers have thrown in the towel,'' said Nariman Behravesh, chief economist at IHS Global Insight in Lexington, Massachusetts, who correctly forecast the drop in spending. ``They have no choice but to cut back on spending in a very big way. This is going to be a fairly deep, long recession.''

American Express is feeling the pain, as consumers stop spending — and stop paying their credit card bills.

American Express Co., the largest U.S. credit-card company by purchases, said yesterday it'll slash 7,000 jobs as consumers spend less and defaults rise. Cardholders failed to repay loans in the third quarter at almost twice the rate of a year earlier, and the company set aside $1.4 billion for loan losses.

U.S. Consumer Spending Declined 0.3% in September (Update1) [Bloomberg]
(Photo: mirnanda )

Help!!!!

I can't stop spending! I've tried the whole "control your spending" thing, but it just isn't working. I'm $10 trillion in debt and I only make $2.5 trillion per year, and now this Bernanke jerk put me on the hook another $1.5 trillion! My boss is breathing down my neck and China is threatening to repossess all my stuff.

Please, what can I do?

Calm down, Jim. You too can escape from debt by following a few basic budgeting principles. Let's take at look the government's budget and see if can't benefit from some personal finance wisdom.

Take the scale down a couple thousand notches and the United States Government is like a divorced father working to make ends meet. The poor guy makes about $30,000 per year and grapples with a seemingly inescapable debt of $90,000. Instead of paying down the debt's principle, he spends slightly beyond his means, about $32,880 each year, ensuring that that his coffers won't overflow anytime soon.

Each year, he sits down and writes out a detailed five-year budget that always puts him in the black towards the end. He promises to start paying down the debt then, but in practice, the extra cash never materializes. It's not that he doesn't have good intentions. His spending is just too unwieldy.

He has two types of expenditures: personal and court mandated. His personal expenses are the basics. He pays for rent and food, and the occasional beer at the neighborhood bar. Nothing too extravagant. It's becoming tougher to justify those little luxuries as his other expenses have grown. By order of the court, he must pay his ex-wife significant alimony, plus child-support for their growing kid. He could save money by eating out less or watching the game from home instead of heading to the bar for a pint, but those unpopular choices wouldn't make anybody happy.

These are the pretty much the choices facing the U.S. government, but on a drastically larger scale.

How Much Do We Owe?

The U.S. debt is huge. The interest payments alone cost more than $400 billion. China is our Master Card and Japan is our Visa. As a society, we owe them $2 trillion, plus interest. And every single day, we borrow another $1.5 billion.

What's All This I Hear About A Deficit? Is That The Debt?

No. The deficit is our yearly contribution to the debt. When politicians talk about slashing the deficit, they mean that *this year* we will still add to the national debt, but maybe not as much as we thought. Presidents habitually propose "balanced" budgets that slash deficits year after year, ending with a balanced budget after five years. Ignoring the fact that Presidential terms are four years, those proposals mean that the government will continue to add to the debt for every year except the last, when we will contribute nothing to debt, but won't do anything to reduce it either.

When the government spends less than it receives, we have a surplus. This is rare. Surpluses come with the same choices as holiday bonuses. You can blow them on iPods (or F-22 Raptors,) or pay off your student loans and credit card bills (or Social Security.)

Why Is The Planet's Wealthiest Nation In Debt?

Just like our hypothetical divorced father, the U.S. has two types of expenses: discretionary and mandatory. Discretionary spending accounts for one third of our budget and funds all the those nice little things that we want, but aren't required to fund. This encompasses most agencies you know about, like the Pentagon and the Departments of Agriculture, Education, State, Labor, Justice, Transportation, Commerce, and Homeland Security. All of it is nice, but if Congress wanted, it could quickly swing the legislative mace and kill off the FBI and the Navy.

Discretionary spending is also the source of those pork barrel projects that get Senator McCain in such a huff. Technically, pork barrel projects benefit the residents of one Congressional district—think of that spiffy new park down the street—rather than further any national aim. In a budget of nearly $3 trillion, they cost around $18 billion.

The vast majority of the federal budget is eaten up by the mandatory spending that funds our social safety net. The big entitlements are Social Security, Medicare, and Medicaid. The cost of entitlements is driven by the number of eligible citizens, rather than the annual Congressional appropriations process. To our divorced father, they are the court-ordered child support payments.

Congress has the ability to tweak entitlement program eligibility, or scrap them altogether, but politicians don't like futzing with our entitlements because it's one of the easiest ways to get fired.

Don't Mention The War!

You may have noticed, we're at war. The wars in Iraq and Afghanistan add to our national debt, but not to our deficit. How? Emergency spending. Congress doesn't have a rainy day fund like most responsible families. When the United States' car breaks or we have an unexpected health scare, Congress waives its few existing budget rules and appropriates emergency funds, adding to the debt like any normal expense. For those keeping track, the wars have added almost half a trillion dollars to the debt.

Even in peacetime the Pentagon guzzles nearly half a trillion dollars annually for its operating budget. The defense budget is so large that it was one of the only points of reference for the recent $700 billion bailout.

Ok, Debt Is Bad. How Do We Reduce It?

If our hypothetical divorced father can reduce his debt, so can the government.

Keep A Budget: Well at least this one is covered. We have a budget and we know exactly where our money goes. See, here's the President posing with his newfangled "E-Budget." To make your own slightly less fangled version, read our post on How To Build Your Own Budget .

Acknowledge The Problem: Hmm, well, we kinda have this one covered. Maybe you remember that Perot fellow, the one with the ears and the oil who loved talking about our debt? He got it. Some of our politicians get it, but Oh! New Program! WANT!

-sigh-

Stop Digging: This means balanced budgets. The government won't ever pay off its massive debt unless it stops sending more than it takes in year after year. Balanced budgets are only the first step. We really need more money.

Make Small Cutbacks: Um, yeah. Whole think tanks devote their time to finding "small cutbacks" that might save a little cash. If the government really was a divorced father, we'd point him to our post: 5 Expenses You Can't Afford If You Have Credit Card Debt.

Start An Emergency Fund: Lockbox, anyone? This was one of the original ideas behind Social Security and Medicare: start a separate fund with a separate funding stream, and keep the big bad mess away from our annual operating budget. It didn't take Congress long, those naughty little rascals, to figure out that the big box labeled "COOKIES - DO NOT TOUCH" was filled with yummy, yummy cookies, on which they've been feasting ever since. Now the trust funds, as the President likes to point out, are filled with IOUs. Whoops! You, however, are more disciplined than Congress, and have no excuse for failing to fund a rainy day fund.

Snowball: You have an edge over the government in that you can start a debt snowball, paying off your smallest balances first and then applying your newfound cash to payoff the larger balances. The government doesn't have "small" and "large" balances. They simply owe tons and tons of money. Revel in your superiority by reading our post: Use Snowball Method Spreadsheet To Pay Off Debts

Make More Money: This means raising taxes, the government's nearly exclusive source of income. Everyone, even people who want more government programs, hates paying taxes. There's nothing pleasant about it. But it's the only way the government can raise cash. We need to pay for all those nifty services like the Do Not Call List and the Pentagon.

Spend Less: This means cutting services, like that Do Not Call List and Pentagon thing we like so much. Rarely can we agree on what to fund, let alone what to cut. In a budget of $3 trillion, canceling the government's cable service doesn't amount to much. The big dollar savings come from staunching the future cost of entitlements or scaling back defense spending, but good luck getting the needed votes in Congress.

But Isn't Some Debt Ok?

Some debt is the natural byproduct of a healthy society that reinvests in its future. Just as student loans are investments to boost future earnings potential, the government funds projects that can improve society and the economy. We can all agree that the interstate system is rather spiffy.

Economists bicker over how much debt relative to income is healthy for the economy, but most everyone accepts that a reasonable amount of debt—however much that may be—is alright, much in the same way that carrying a mortgage isn't fundamentally bad.

Public policy is the constant, painfully entertaining struggle to provide the right services at the right tax levels. When you realize that cutting spending means fewer police officers or raising the retirement age, and that making more money means raising your taxes, you begin to understand why we have a $10 trillion debt.

What Can You Do To Reduce The Debt?

The most important thing you can do is to keep paying your taxes. If you are feeling especially charitable, you can make a donation directly to the treasury. Make your check payable to the Bureau of the Public Debt, and in the memo section, write: "Gift to reduce the Debt Held by the Public." Mail your check to:

Attn: Dept G
Bureau Of the Public Debt
P. O. Box 2188
Parkersburg, WV 26106-2188

Budget of the United States Government [Government Printing Office]
(Photo: Matt McGee)

2. Plan for home ownership. Save for a down payment, then buy what you can afford — not what you love.

3. Have skills. "Everyone's really self-employed. If you work for a company, you just have one client," says Gregg Fisher, 35, founder of Gerstein Fisher, a New York financial-planning firm.. "If they fire you, you're out of business."

4. Give to charity. If you buy things to make yourself feel good, why not donate some money to charity instead. Won't that make you feel good?

5. Know thyself. "Having a firm grasp on your priorities and values is one critical component of a healthy financial life."

6. Know smart people. "Knowing a good tax preparer, financial adviser, attorney and insurance agent can save you untold amounts of money and stress."

You can read the full article here.

We'd also suggest a few more specific steps, like start investing in your retirement and build up an emergency fund that's liquid — 6 months of living expenses in a high interest savings account is great. What else should people do before they're 30?

6 financial milestones before 30 [MSNMoney]
(Photo: AdamOndi )

If you find yourself in one of those moods where you just “have to have it”, and end up in the store staring at it, talk to yourself about it. List all the reasons you want it (want, not need), and all the reasons you don’t want or need it...

Too pricey, have to dust it, won’t use it that often, no place to put it, don’t have the money, don’t want to use credit card, anything to talk yourself down and get out of there without whatever it was you thought you wanted.

I have done this many times, and it really works. I even sometimes talk myself out of things I thought I really needed, but didn’t, I had something at home that would work, or I just needed it ONE time, or something like that. Try it You’ll Like IT.

Nothing like a little dose of rationality to chase the spendthrifties away. What mind games do you find yourself playing to keep yourself from spending?

(Photo: Getty)

From the NYT:

In response to the falling value of their homes and high gasoline prices, Americans have become more frugal all year. But in recent weeks, as the financial crisis reverberated from Wall Street to Washington, consumers appear to have cut back sharply. Even with the government beginning a giant bailout of the financial system, their confidence may have been too shaken for them to resume their free-spending ways any time soon.

Recent figures from companies, and interviews across the country, show that automobile sales are plummeting, airline traffic is dropping, restaurant chains are struggling to fill tables, customers are sparse in stores.

When the final tally is in, consumer spending for the quarter just ended will almost certainly shrink, the first quarterly decline in nearly two decades.

The Times says that when the government releases the numbers this month, they are expected to show that consumer spending shrank by 3%, which would be the steepest decline since 1981 and the only decline since 1990.

Consumers are apparently buying more groceries, enjoying fewer meals out, and spending less on clothes, school supplies, and air travel. Nintendo Wiis, however, are still flying off shelves.

“My view is that when consumers get concerned about their nest egg, or their country, they need entertainment,” said Bo Andersen, president and chief executive of the Entertainment Merchants Association, which represents distributors and retailers of home entertainment products.

Full of Doubts, U.S. Shoppers Cut Spending [NYT]
(Photo: robinryan )

Budget Calculator [CNBC]

"One more drink per flight = $4 million a year" [Airline Biz Blog | Dallas Morning News] (Thanks to Paul!)
(Photo: skyfaller)

After you think you've got it all worked out, the game will tell you if you met your goals and what your budgeting style is. I'm apparently a "down-sizer," which is somewhat unsurprising considering the fact that I'm cheap. Watch out all you big government types. I'm coming for you.

Budget Hero [APM]

From Reuters:

"This a staggeringly bad number," said pollster John Zogby, referring to the number of people who said they would spend the same amount on gifts this year. He noted that with inflation, even flat sales means retailers won't be making as much.

"You're still going to have people standing in line at three in the morning at Wal-Mart, but the lines may be thinner this year" on Black Friday, he said, referring to the day after Thanksgiving in late November that kicks off the holiday sales season with a barrage of promotions.

Oh well. You'd have shot your eye out anyway.

Shoppers to cut back holiday gifts [Reuters]

1. Authorizing transactions via debit card even if it triggers an overdraft fee
"Debit card use triggers 46% of all overdrafts, according to the Center for Responsible Lending," writes SmartMoney. Keep an eye on your spending and never trust the bank to let you know if you've spent more than you have. As a "courtesy," they'll approve your transaction, then apply a fee.

SmartMoney suggests you ask your bank to set your debit overdraw amount to zero, so that any transaction that would be rejected in the real world will also be rejected by your bank.

2. Reordering transactions to maximize the number of them that can be considered overdrafts
"Banks justify the practice as a way to ensure the most important debits get processed first (say, so a mortgage payment doesn't bounce)." This is utter bullshit. Banks do this for one reason—to generate more revenue in overdraft fees from customers who screw up. Here's an example:

Say you start the day with $100 in your account. You buy a latte ($5), fill up on gas ($50), buy groceries ($35), swing by the drugstore ($8) and then the dry cleaner's ($25). Processed chronologically, only the last transaction triggers an overdraft. Reordered from high to low, however, three purchases do.

SmartMoney suggests two things to protect against this:

• Keep an extra $100 or so as "buffer money" in your account, and never plan on using it.
• Always make sure any deposits have shown up as available funds before you rely on them.

3. Extended overdraft fees
If you take too long to pay an overdraft fee, your bank may attach a second penalty fee. One suggestion is to attach a line of credit or savings account to automatically pay overdaft fees—but don't use the line of credit for anything other than overdraft protection.

4. High daily maximums
Many banks will allow you to generate multiple overdraft transactions in a single day—Chase, for exammple, sets no limit on the number of times they can charge you, and they increase the charges after the first transaction. SmartMoney suggests you negotiate these fees away by pointing out that the trouble stemmed from a single incident, and that the entire unpleasant affair is a rare occurrence for you. (It is rare, isn't it? Otherwise you're just giving money away to the bank.)

5. Taking a day or more to release funds on hold
This last one is triggered by merchants—hotels, gas stations—who place holds on your account before you complete the transaction. Banks, however, apparently have no technology available to release those holds in a timely manner, despite the fact that they're initially placed in mere seconds. If you conduct any business that generates holds on your funds, assume that money is spent until you can confirm it's been released again.

SmartMoney suggests you use a credit card to pay for things that trigger holds—"While it still counts against your available credit, it's more likely that account can withstand a tighter balance for the 24 hours or so it takes for the hold to clear."

Notice a trend here? Most of the suggestions SmartMoney makes to protect yourself amount to little more than socking more money away at the offending bank, or setting up more potential ways for something bad to happen in the form of unexpected fees. If your bank is practicing more than one or two of these bad habits, your best bet is to start looking for another bank or credit union, one that doesn't view you as its own personal ATM machine.

"5 Sneaky Overdraft Traps" [SmartMoney]
(Photo: Getty)

Only twice since 1965, despite half a dozen recessions, have Americans spent less in a year than the previous one. Indeed, it often seems that we have defined ourselves by our ability to buy supersized everything, from McMansions to tricked-out SUVs to 60-inch flat-screen televisions—all enabled by decades of cheap credit.

Now that the credit party is over, how are consumers reacting?

"The process of bringing our wants and our needs into realignment," says Merrill Lynch economist David Rosenberg, "is going to involve years of savings and frugality." Or, to put more it more simply, "there is an anti-bling thing going on," says Marian Salzman, chief marketing officer of Porter Novelli.

Of course, if you're broke and have no access to credit you don't have much choice but to be frugal, but is that all that's going on here? Or are consumers tired of being pressured to take on massive debt in order to "super size" and "bling" everything? What do you think? Is credit card consumerism over?

Is Starbucks' "free refills" offer the new "super size it"?

(Full disclosure: I'm quoted in the article, and yes... yes my first car was a Geo Metro. It's true. Despite what "FreeCreditReport.com" would have you believe, some people do choose to drive them. And they also get their credit reports from www.annualcreditreport.com.)

The End of Credit Card Consumerism [US News & World Report]
(Photo: tokyohanna )

1. Shop With A Timer: Avoid wasteful and expensive browsing by marching into stores with firm deadlines. Looking for a single item? Remind yourself it's time to leave by setting your cellphone to ring after five minutes.

2. Reward Your Effort: Need a little extra motivation to research that insurance you should have bought months ago? "Just like diet and exercise, slogging through the details of dreaded, uninteresting purchase decisions is hard work and requires some investment of time and energy. Set up the amount of time as well as the actual time, such as 2:30-3:00 p.m. on Sunday, that you will solely use to focus on evaluating the purchase details. Note this in your calendar along with a "treat" for sticking to the details and honoring your time commitment. Knowing that you have a reward for a job "well done" (or at least, "done") will help motivate you through the nitty-gritty of this kind of shopping situation."

3. Enlist An Expert: Alpha Consumer recommends enlisting an expert before making a large purchase, paying for outside help if necessary. Most of the "expert advice" available for sale is already hiding on the internet. Don't open your wallet without first training to become an armchair expert.

3 Ways to Be a Smarter Shopper [Alpha Consumer]
(Photo: goodrob13)

The New York-based research group Conference Board said Tuesday that its Consumer Confidence Index dropped to 50.4 from a revised 58.1 in May. The reading was the lowest since February 1992, when it was 47.3.

Economists had expected the index to decline to 56, according to Briefing.com.

Because I accidentally and stupidly made this political by mentioning that dreaded "B" word, here's what your two presumptive presidential candidates (well, actually it was just their campaigns) had to say about the numbers. We'll leave it up to you to guess whose campaign said what (or you could just read the CNN article):

Potential President X: "We know that the public has been concerned and regardless of whether the geeks in the world think there's a recession or not, the public feels like that."

Potential President Y: "The disappointing consumer confidence numbers are yet more evidence that we need a change in our economic policy."

Consumer confidence tumbles to 16-year low [CNNMoney]

Consumer Reports offers a lot of valuable advice in their recent piece, Spend Less on Everything. Some suggestions: Use shopping bots and online coupon sites to find the best deals, consider using VoIP, and check Consumer Reports's website for advice on insurance, electronics, and cars before purchasing them.

Some broader, common sense tips come from Survive a Recession: making sure you don't get fired, having or building an emergency fund, trying to eliminate debt, living frugally, and pursuing additional means of income.

The Simple Dollar lists Forty Ways to Reduce Your Monthly Spending, including insulating your hot water heater, reviewing and reducing your subscriptions, and starting a garden.

Although we wrote about this in 2006, it's just as valuable today: Free Money Finance gathers 301 of its money-saving tips, including guidance on choosing car insurance, cutting your own hair, and saving money on babysitting, into one cornucopia of frugality here.

For even more useful advice, check out Consumer Reports's comprehensive recession guide: Smart Moves for Tight Times

Lastly, we would advise against just throwing away bones with plenty of meat still on them. Instead, take them home, throw them in a pot, add some broth, a potato—baby, you've got a stew going!

The starting point for comparison is 1996, when Congress deregulated the telecom industry, ostensibly to spur competition. Startups and cable companies quickly trammelled the telecoms' ability to dictate prices, but nobody emerged to take on cable.

Kevin J. Martin, chairman of the F.C.C., said in an interview that since 1996, when Congress increased competition in telecommunications, prices have dropped for many other services.

“We’ve seen the opposite occur in the cable industry,” he said. “The dramatic increases in pricing we’ve seen are one of the most troubling issues from a consumer point of view.”

In 2007, average monthly revenue for each Cablevision subscriber was $75, up from $65 in 2005, according to SNL Kagan, a research company. At Time Warner it was $64, up from $54.50.

The industry isn't changing its prices or practices because consumers aren't changing their habits.

“I work eight hours a day facing a computer. When I come home, the last thing I want to do is mess with another computer,” said Eric Yu, 24, a college student in San Francisco who pays around $80 a month for cable.

Mr. Yu said he watches only a handful of channels, including some in high definition like National Geographic. But to get them, he has to pay for a premium package. “I just pay the bill and try to forget about it,” he said. “It lessens the pain.”

Well, some are...

Evelyn Tan, 22, a friend of Mr. Yu, takes a different approach. She pays Comcast $33 a month for Internet access and does not get cable television — but she does watch TV programming.

In fact, she watches ABC shows like “Desperate Housewives” and “Gray’s Anatomy,” which are free on the Web. When she wants to watch shows or movies that are not readily available online, she says she easily pirates them. “I would not pay for cable TV at all,” she said.

A la carte programming isn't coming anytime soon, but the monopolistic anti-consumer juggernaut Verizon might provide some relief as it elbows its way into the television business. While Verizon is no better than its cable competitors, its arrival opens a brief window for competition by allowing consumers play one giant against the other to eek out slight savings on cable programming.

Of course, those slight savings might only bring your rates closer to what you were paying two or three years ago. Neither the Times nor the FCC think cable is worth the cost. What do you think?

Cable Prices Keep Rising; Customers Keep Paying [NYT]
(Photo: Getty)

Here's the gist of her argument:

I'm reasonably sure that many people do not make the same purchases when they pay with plastic. This isn't just a feeling or anecdotal evidence. Researchers have found that people's willingness to purchase more products or services increases with the use of plastic.

In their groundbreaking research, Drazen Prelec and Duncan Simester of the Sloan School of Management at MIT found that study subjects paid more when instructed to use a credit card rather than cash. In fact, they found people were willing to pay up to 100 percent more with plastic.

Credit cards empower us to spend more on the same junk we would normally buy with cash. According to science, this has many causes:

• The delayed payment makes us treat credit differently from cash.
• Charging several items to a card doesn't help you identify overspending on any single item.
• Forking out cash provides a strong visual clue that your wallet is getting lighter.

Singletary ultimately argues that credit may be fine, so long as you realize that it may exacerbate spending. She challenges all non-believers to put down their cards for a month and pay only with cash, and then compare their spending to previous months.

What do you think?

Gawker Media polls require Javascript; if you're viewing this in an RSS reader, click through to view in your Javascript-enabled web browser.

Like it or not, it's unwise to use credit [Seattle PI]
(Photo: Getty)

• Simplify Your Investments: Let day traders slave over charts and dodge heart attacks. Stash your cash in an index fund and watch your money grow effortlessly.
• Occasionally Pay For Help: Investing is one thing, but taxes and other potentially complex arrangements sometimes call for professional help:
  

  Perhaps the best thing a versatile professional — whether it is a financial planner, accountant, stockbroker or lawyer — does is provide discipline. It is difficult to get most of this stuff right. And to get it done at the right time. Professionals help make sure it all happens on schedule.

• Read Consumerist More Often: Especially to research companies before making large purchases. Use this guide to see how editors research topics we've already covered.

  And take a bow, commenters: "both the blog posts and the comments" are a valuable source of information.

• Automate Everything: Auto bill bay is an adorable skunk, cute until it stinks. Auto bill pay makes paying your bills oh-so easy, but any errors are immediately charged to your account. For those who want the convenience of auto bill pay without remaining liable for someone else's mistake, consider directing all your bills to your credit card. You'll pick up rewards and build your credit history, while retaining the power to fight errors with chargebacks.
• Talk!: Talk openly about your finances with your family. "If we do not know what is coming, we cannot help them plan for it." Ask your parents about their retirement plans and adjust your savings accordingly. Likewise, imbue your children with an understanding of finances so they can catch you if you slip-up down the road.

What principles guide your financial decisions? Share your pillars in the comments.

Five Basics for Building a Solid Financial Future [NYT]
(Photo: Dr. Hemmert)

1. Spend less time feeling poor.
Flipping through catalogs and going to the mall will make you feel like you need things, Ms. Gurney notes. Sure, you can afford some of that stuff, but the main message is: Most of this is out of your reach. Instead, do things that offer a sense of well-being. Invite friends over. Walk in the park.

2. Retrain your brain.
Depriving ourselves of current pleasure is nigh impossible if we're not driven by a sense that the future will be more fulfilling, says Ms. Gurney. When you start to feel that "I'm deserving so I'm buying" feeling, visualize a smaller credit-card bill or higher savings-account balance.

3. Look around you.
Are you happy with what your hard-earned dollars bought? If not, shift your spending to those things that bring greater long-term satisfaction, including retirement savings.

4. Choose your extravagances.
Here's mine: I eat out about once a week. An extravagance I do without: Cable television.

5. Assess weaknesses.
"If you were thrifty, how would you look different?" says Gary Buffone, a financial psychologist in Jacksonville, Fla. Identify what you want to change; then shoot for specific targets, such as a six-month hold on buying new tech gadgets.

6. Make trade-offs.
Substitute small, free pleasures for those that cost. Have a movie night at home with friends — you'd be surprised how many people are equally eager to cut costs.

7. Set goals.
Meet weekly with family to discuss the spending plan (don't call it a budget) for the months and years ahead. This may involve tough choices, such as forsaking a family vacation. But think of the guilt-free trip you can take after saving the necessary cash. Good memories last longer, Ms. Gurney notes, when not trammeled by large credit-card bills.

8. Resist your children.
They're going to find it hard to change their expectations. How can you help? Stand firm. The next time they clamor for the latest videogame, remind them of the bigger prize (that family vacation), and tell them their choices here and now are, say, a picnic or a movie rental. Offer options, but don't give in to their push for more consumer goods.

9. Enlist other people.
Many people are reticent to talk about money worries, but almost everyone has them, so open up and tap your allies. Hold a contest with friends to see who can save the most in a month, or agree with your spouse to talk before spending more than $100, Mr. Buffone suggests.

10. Post it.
Remind yourself by putting post-it notes on your wallet, mirror or steering wheel with the mantra of your choosing: "I want to go to Hawaii in January." "I want to pay off credit-card debt."

11. Automate it.
Divert money monthly from your checking account to savings. It will force you to budget, based on what's left in your checking account.

12. Rethink rewards.
What are some of your happiest memories? Those are the true rewards. Next time you're about to buy something because you deserve it, ask yourself whether there isn't something you deserve more, such as time at home cooking with your teenager, or a stroll with your husband or best friend.

If this advice is too effete or ethereal to slow your spendthrift ways, consider these ten tips that can directly impact your monthly bank statement.

Ways to Make Saving a Habit [WSJ]
(Photo: Getty)

Prof Wolfers said he and Prof Stevenson had reached their dissenting conclusion partly owing to improved international statistics, covering more countries - poor as well as rich - and a greater number of happiness surveys that had been conducted over the past three decades.

The paper will be discussed next week at the spring economic conference of Brookings, the think-tank, and is likely to provoke lively debate.

Prof Easterlin, who has seen a draft of the paper, said he believed that as far as he was concerned his paradox still stood.

While commending his younger critics for "serious research", he said they needed to focus more on what was happening within specific countries, rather than "throwing all of these countries together".

Money can buy you happiness, say researchers [Financial Times]
List of countries by GDP [Wikipedia]

Vigeland: What are the traditional definitions of a recession first and also a depression? How are they different?

Reich: Well, a recession is now officially defined as two quarters — that is six months — where the economy suffers negative economic growth, where the economy actually shrinks. Now, a depression... there is no official definition of a depression. I think one reason is that economists and other policy makers just don't like to use the word — it's such a bummer — but in common parlance it means a very, very severe recession: high unemployment, businesses pulling way, way back from investing and all of the other things that happen during a recession, just more so.

Vigeland: Do those definitions still hold in what we call the new economy? I mean, you mentioned these two consecutive quarters of negative growth. We have not seen that yet, but so many people are saying we are in a recession.

Reich: Yes, I think people are assuming we're in this recession because all of the indicators are trending in that direction: unemployment seems to be moving upward and then businesses are pulling back. You know, if you're somebody like me who looks at the economic data that come in over the transom, it's just bad news.

Vigeland: It certainly feels like that, but how deep and long would the current recession, assuming we're in one, have to be to turn into a depression?

Reich: Well, again, because there's no fixed definition of a depression, nobody really knows. I would say that unemployment would probably have to reach 8 or 9 percent — we haven't seen that kind of unemployment in a long time. Businesses would have to contract considerably in terms of their economic activity before people would start using the "D" word. You know, here's the problem Tess: some of this is psychological. Undoubtedly, the tendency people have to go to the stores and buy things has a lot to do with how much money they have in their pocketbooks and how much they can get access to credit, how easily they can, but it also has to do with their expectations of the future. When consumer expectations drop to the cellar as they are now dropping, the economy has a tendency to follow, so there's a kind of a downward cycle that sets in.

Reich: Well, let's put it this way: it's new to the extent that the extend to which Americans are dependant on credit is new. I mean, Americans are deep in debt; we've never had this much indebetedness and as a result, when they pull back from being in debt, that is new simply because we've never been this deeply in debt. Here we get into a paradox, because what's right and proper and appropriate for an individual — spending less money — if everybody start's being very fiscally responsible together, then we are in a very severe recession.

Vigeland: What's the best thing then that consumers — our listeners — can do to avoid really panicking over the current financial situation when they hear that things really are quite bad.

Reich: Well, the first thing is not to panic. Don't take money out of your savings accounts, our of your 401(k)s — that will just make the situation worse. But I would say if you are earning some more money and you want to save a little bit, probably don't put them into stocks right now. I'd also say that it does make sense for the individual consumer to get out of deep debt, to just be a little more prudent.

You can listen to the full interview here.

Recessions and depressions 101 [Marketplace]
(Photo:Library of Congress)

Card & Payments writes, "The report, dated this month and drafted by a lab hired by U.S.-based mobile phone maker Mobicom Corp., clearly shows the Citi logo on the front of the tiny handset." They say Citigroup tested a similar technology last year in partnership with AT&T, and that the report indicates the phone is for the U.S. market.
 
We can't think of a single way this could be used to steal money from a Citibank account. Oh wait, yes we can.
 
"Citigroup Developing A Citi-Branded NFC Mobile Phone" [CardForum] (registration required)
(Photo elements: Getty and Mobicom)

Hmm. [Ars Technica]

So tonight I went to my local Best Buy, planning on surprising the wife with a new bigscreen TV.

We get there and, believe it or not, the Best Buy people are helpful, friendly, informative and DON'T try to push Monster cables on me. (I know - I nearly fainted too).

Having done my homework, I picked out a receiver, speaker system, wall mount, some blue ray movies , and a 58" plasma TV. Total cost : $5870.69

So I head to the register to pay for my newly acquired goodies and my card - despite having a few grand more than the total in my "available funds" is declined.

Puzzled - I call Bank of America , wait on hold about ten minutes, go through countless adverts for bank services, double authorizations etc and FINALLY I get to a human. Of course in spite of all of this the woman wants my information all over again even though I just typed it in. She wont even help me til I provide it and so I do.

I explain that I am in the store, at the register, and that I know I have available funds.

She puts me on hold about 5 minutes , then comes back and says "Im sorry - that's over your daily limit. There's nothing I can do. Was there anything else I can help you with?"

Remembering to keep a cool head, I ask about a supervisor giving me an override on the limit. She says "let me transfer you to the ATM department." And before I can explain that this isn't an ATM problem, she disconnects me.

Frustrated - I dial again, more menus, get a human, get transferred, get another human, get transferred, (every time re-verifying my ID)finally I get to the FOURTH person who apologizes 10 times and says "don't worry sir - I can help you!"

I think I'm getting somewhere but then a supervisor comes on and explains to me that "Everyone in the United States that uses Bank of America has a daily spending limit of 5000.00 no matter what."

Stunned, I ask for an exception and in a parent-giving-me-a-cookie tone he says "well, I suppose we can up that to 6000.00 just this once."

At this point I am over an hour on the phone but we try the transaction again. Declined.

More hold time. He comes back and says that he is sorry but 6000. is the limit and buying gasoline and dinner earlier in the day is going to put me at more than 6 grand for the day and so I can come back tomorrow and buy the TV or I can go to my branch and get a money order.

Fuming, and doing my best to remain calm, the conversation goes like this:

"Let me get this straight - I have an "available" balance of nearly 10 grand in my account?"

"yes sir"

"And its not pending or a deposit waiting to clear, that's my money, confirmed and in your bank?"

"yes sir"

"And you have kept me on the phone for over an hour, asked me multiple times to verify my identity and are satisfied that I am who I say I am?"

"yes sir"

"And you are going to deny me access to MY money?!?!"

"No sir - we are not denying you your money, your're just over your daily limit."

"My daily limit? This isn't a credit card. It's a PLATINUM Visa checkcard. I understand that you have to put limits in for my protection but I need to make this purchase"

"Im sorry theres nothing I can do"

At this point, after nearly an hour an twenty minutes on the phone, I lose my cool. I am embarrassed, have essentially shut down a register lane on a Friday night at Best Buy and am obviously the talk of the store both from employees and customers.

I ask to speak to a supervisor and am told that I am speaking to one. I ask to speak to HIS supervisor and am told that's not possible.

Out of desperation I ask again and he says "wait just a moment"

More hold. Ten more minutes. I am fuming. He comes back and excitedly tells me "try it now."

So for the umpteenth time I swipe my card. This time it comes up "authorization code needed"

I relay this to the BoA guy and he says "well, we are making progress"

A few more minutes of hold time later and he comes back with the code and makes my purchase go through.

I have NEVER experienced such shoddy customer service ever. Im sure Im preaching to the choir when I say this, but Monday morning I am cancelling my BoA account, and fellow consumerists - Stay the heck away from Bank of America!

As a side note, after the transaction was completed I said to the supervisor, "So, what if I was say, Donald Trump and wanted to spend 30 grand on something?"

His response, " Well , for Mr Trump we would have made an accommodation ahead of time."

I said "And if I'd decided tonight to buy the $14,999.99 71" plasma TV in here this evening?"

"You wouldn't not have been allowed to do that."

At that point I hung up.

Sheesh!

(Photo: Getty)

The Reuters/University of Michigan Surveys of Consumers index of consumer sentiment dropped to 69.6, the lowest reading since February 1992, and below analysts' median forecast for a preliminary reading of 76.3.

The index was at 78.4 at the end of January.

"The sentiment index has only been this low during the recessions of the mid 1970s, the early 1980s and the early 1990s," survey director Richard Curtin said in a statement.

Consumer confidence plunges [Reuters]
(Photo:Meghann Marco)

For example, one experiment had participants consider a trip to Europe (the experiment was conducted one month before the end of summer). Some were asked to consider a last-minute summer vacation, while others were asked to consider a vacation over winter break, several months away. They were then presented with ads from a fictitious Web site, PriceAlerts.com. Some ads were framed positively: "Give yourself a memorable vacation!" and "Get the best deal!" Others were framed negatively: "Don't get stuck at home!" and "Don't get ripped off."

Consumers who were planning a last minute trip were willing to pay $178 more for a vacation, on average, when presented with a "negative" ad as opposed to a "positive" ad. Conversely, those who were planning a trip that was still a ways off responded to the positive ads and were willing to pay $165 more for a promotion-framed vacation than a prevention-framed vacation.

Faced with an imminent purchase, consumers are confronted with the possibility that they may not fulfill their purchasing goal. Prevention frames note this possibility of a negative outcome and offer the product as a means to avoid it. Thus, under a time constraint, consumers are more motivated to purchase a product that helps achieve the minimal goal of preventing a negative outcome than they are to purchase a product that helps achieve the maximal goal of promoting a positive outcome. When a purchase is temporally proximal, a product that is "not bad" might, therefore, appeal more than a product that is "good."

Valentine's Day: At the last minute we buy not for pleasure, but to avoid pain [SciGuy]
Time Will Tell: The Distant Appeal of Promotion and Imminent Appeal of Prevention [The Journal of Consumer Research via SSRN]
(Photo: Sister72)

ABI Executive Director Samuel J. Gerdano said the situation is likely to worsen in 2008. "The roughly 40% spike in consumer bankruptcies during 2007 presages even higher filings this year, as the heavy consumer debt load is made worse by the home mortgage crisis," Mr. Gerdano said.

"Consumer Bankruptcy Filings Rose 40% in '07" [Wall Street Journal]
(Photo: Getty)

... what's the interest rate on the credit cards you're carrying? How about the default rate? Do you know what constitutes an event of default? What will trigger a penalty fee or surcharge? How much are those fees? If you're like most Americans, you probably cannot answer many or all of these questions.

The absence of this vital information has indebted millions of Americans and nourished the subprime meltdown. The professor concludes that under our current system, it is "virtually impossible to determine the potential costs of carrying a balance."

Credit cards' complex, non-transparent pricing structure also invites abusive fees and billing practices like late fees that do not correlate with either the balance or time a payment is late, universal cross-default and two-cycle billing. If you are among the nearly two-thirds of Americans who do not consistently pay off your card bills in full and on time, then you've probably been hit with some combination of these fees.

The complexity of credit card pricing helps explain the soaring growth of American credit card debt, now approaching $1 trillion. Credit card debt has strong correlations with consumer bankruptcy filings, and contributes to inflation and decreased savings rates and purchasing power for new goods and services. Dollar for dollar, as Ronald Mann of Columbia Law School has shown, people with credit card debt are more likely to file for bankruptcy than people with any other types of debt. Society as a whole ends up holding the bag for the widespread costs of skyrocketing credit card debt.

The Byzantine complexity of credit card pricing structures makes it impossible for people to possibly use credit cards intelligently and responsibly. No amount of increased Truth-in-Lending disclosure or consumer financial literacy education will change this. I qualify as a savvy and dedicated reader of financial contracts, but frequently I cannot calculate with certainty the costs of carrying a credit card balance, and my calls to card issuers' 800-number servicing lines have done nothing to clarify matters. The lack of straightforward, easily comparable and understandable pricing is a major factor in the growth of credit card debt.

Complex pricing of credit cards should be simplified [Chicago Tribune]
(Photo: Maulleigh)

I ran through the numbers again with my husband, and he reached the same conclusion: approximately $10,000 was missing in action. That was the vacation we didn't take, part of the new roof we might need, some terrific wine we didn't drink. Now we really wanted to know where that money went.

It wasn't long before it showed up. After sitting there for a while at the kitchen table, stunned, my husband said, "Thirty dollars."

He explained his theory. One day, we were about to visit friends and had offered to pick up dessert and wine — which came to about $30 . The next day we had a birthday to attend and a prescription to pick up, and we spent about $30. We took out the calculator: $10,000 divided by 365 is about $27.

It wasn't that we spent $30 mindlessly every day, but once we started digging for the "we're not really spending any money" money — a trip to Lowe's, new shoes for my son, iTunes downloads for my husband, a new work outfit for me — all the little things fell into place.

A Little Here, a Little There and It's Gone [NYT]

"Delinquencies on these mortgages are likely to rise further in coming quarters as a sizable number of recent-vintage subprime loans experience their first interest rate resets," Bernanke testified.

"Weakness in the housing market will keep construction in a down trend," he said.

He also had some advice for those of you in mortgage meltdown land: "Get in touch with your lender because experience shows the earlier you do so you'll be able to resolve the matter."

Retailers should worry, too: "Indicators of overall consumer sentiment suggested that household spending would grow more slowly, a reading consistent with the expected effects of higher energy prices, tighter credit and continuing weakness in housing," Bernanke said.

He's a cheerful guy, isn't he? We like that about him. Maybe he didn't hear that everything is going to be ok because broke people shop at Walmart.

Fed Chair Warns Congress of Economic Slowdown [NPR]

Financial windfall coupled with reckless buying and no concept of money almost always leads to trouble. This is especially true for people who decide to use their winnings to create a new business, said Birke, a psychologist on retainer with Lexington Wealth Management.

"If a person is not business savvy, they don't know what it takes to run a business — $300,000 could disappear very quickly," Birke said.

"You have to really understand the true cost of things. If you make a purchase (on your credit card) that costs $50 and it takes you two years to pay it off, you spent a lot more than $50. Sometimes people just don't compute the numbers."

The best thing to do is to hire someone with expertise handling money, said Robert Glovsky, director of Boston University's Program for Financial Planners and president at Mintz Levin Financial Advisors.

"On the positive side, the lottery allows winners to do things they could never do before, whether it's consumption or charity," Glovsky said. "But what happens when the money runs out? Do they return to their old lifestyle? I would think that would be very difficult."

Cash windfall can lead to downfall [Eagle Tibune via Fark]
(Photo:Lisa Pisa)

Life without plastic requires a few components:

• Budget: Every month, NCN writes out a comprehensive budget: "I divide my salary into three major categories - Give, Save, Spend - and then I break those categories into smaller sub-categories. For example: Give - Tithes, Offering, Charity. I then allocate, on paper, all of the funds that I receive for the month into those sub-categories. I spend every dollar, every month, on paper, before the month begins."
• Payments and Spending: NCN makes payments either through his online account or with plain checks. For internet purchases, he uses a debit card.
• Transfers: NCN dips into his high-interest savings account once per month. We do the same, and enjoy the financial discipline imposed by limited trips to the cookie jar.

How I Live Without Using Credit Cards - My Simple System For Living On A Budget [No Credit Needed]
(Photo: danesparza)

The idea is simple enough, but has the potential to drastically change how you look at the money you spend while still giving you room to make discretionary purchases if you really want to:

Anytime I am gripped by a strong and legitimate desire to buy non-essential crap of any sort, I will transfer the full cost of the item including tax and shipping from my primary checking account into my Emigrant Direct personal savings account with a memo in Microsoft Money to remind me what item the money is for and let it sit there for one month. If I STILL want the crap a month later, I can, if I desire, transfer the money to my Electric Orange checking account to buy it. However, if the burning need for the piece of crap in question has subsided, I simply leave the transferred funds in my savings account to accrue more interest.

" My Impulse Buy Savings Plan" [Caustic Musings]
(Photo: Getty)

(Paraphrased by us to save space:)

1. Understand the phenomenon. Read up on compulsive spending, so you know what you're up against (and that you're not the first one to fall into this pattern).

2. Know thyself. Get to the root of why you love to shop—especially if there are unhealthy feelings buried somewhere in there.

3. Reflect on how you feel when you shop. Yes, we know how new-agey this sounds—but the whole point of compulsive spending is that you shop for the wrong reasons, for emotional reasons. Track your feelings and look for patterns and triggers.

4. Think about the time involved. Add up the total amount of time you spend on shopping activities and ask yourself whether you'd like to use that time for other more beneficial pursuits.

5. Take control of the situation. No more unsecured debt. Only one emergency credit card that you leave at home. Pay for everything with cash or a debit card.

6. Start writing things down. Not just what you spend, but what you're feeling when you spend it. Also write down financial goals.

7. Steer clear of unnecessary temptations. Avoid catalogues, warehouse sales, shopping channels, etc.

8. Find healthy alternatives. Try some form of physical activity whenever you feel the urge to shop.

9. Expand your possibilities. Fill up your time with volunteering, family activities, a work-out regimen, etc.

10. Know when to get help. It's the problem is bigger than you, consider meeting with a professional or contacting Debtor's Anonymous.

Another thing you can do: take MSNBC's "Are you an over-spender?" quiz, or the one at Debtors Anonymous.

"When shopping and spending go too far" [MSNBC]

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Debtors Anonymous
Quiz: Are you an over-spender?
(Photo: milesgehm)