The end of Bing Cashback

(Bumped — with an update)

It's too bad really, I was a big fan of Bing Cashback. I first started using Bing Cashback late last year, when, in an effort to diversify the free internet services I frequent (i.e. I don't like relying too much on any one provider, be it Yahoo, Google, or Microsoft), I switched to Bing Search. Since that time, I've saved nearly $250.

But according to their site, that's all changing:

We are writing to notify you that the Bing cashback program will be discontinued, and the last day to earn cash back on your Bing Shopping purchases will be July 30, 2010.

So why did it close down? Usually, these things just boil down to profitability. But here's NPR's take:

Note that Microsoft themselves said, "We did not see the broad adoption we had hoped for." That could mean not enough users of the program or not enough increased search engine market share or... But who knows?

So what if you're a Bing Cashback user and you have rebate money you haven't redeemed? No worries, you have until July 30, 2011.

But what if you're such a Bing devotee that you aren't interested in other rebate programs? There may be hope for you after all. Did you notice that at the end of their announcement, they say, "...and we are currently working on an exciting new program which you will hear more about from us later this summer."

Hmmmm... I'm intrigued.

Update: Rumors are flying around that Bing Cashback might team up with Amazon. Whether or not that is true is anyone's guess. Until we know for sure, you can use this handy list of other rebate sites from Comparerewards.com for your online shopping.

Is pet insurance worth it?

I'm torn. I can't decide if my love for our dog outweighs my distaste for feeling duped into buying yet another kind of insurance: pet insurance. Yes, it's real with actual revenue numbers to back it up. Opinions vary regarding its merits: this piece acknowledges the value, while this piece does not. Then there's this information about calculating the worth of your pet.

If you ask me, it's impossible to put a price on a face like Gertie's. But I think I'm in the "factor it into your budget" camp. In other words, instead of paying premiums to a pet insurance company, open a pet savings account and "pay yourself" instead. If we put money aside now, not only will it be there if we need it but we'll get the benefit of compounding interest.

But that's only half the story, the money-saving, budget-conscience half.

Isn't there a stewardship issue here? Don't think so? Maybe this piece will change your mind. It willl certainly incense the hard core pets-aren't-people-they're-possessions crowd. Even a big-time pet lover like myself was taken back. Listen to this:

APPMA reports that 42% of dogs now sleep in the same bed as their owners. I'm not judging anyone... yet.

Half of all dog owners say they consider their pet's comfort when buying a car. I barely consider my kids' comfort.

With annual growth nearing 50%, the pooper scooper industry is now experiencing a lot of consolidation...There's a "pooper scooper industry"?

I'm not going to say that some of these crazy things people do for their pets are morally or even financially wrong because I don't know their heart or their giving. But it's hard not to have questions when you learn that Fido could be put on a cocktail of Slentrol and Reconcile; one for the unwanted pounds he put on while being depressed and the other for the depression from all the canine separation anxiety. My question in particular: Why medicate when he could just have liposuction and go everywhere with you in your canine-cozy Caddy? ;-)

Is it just me or is there a financial stewardship issue banging around in here somewhere? I think so, or at least there certainly can be without proper balance. You see, I want my giving to reflect how much I love the God and love other people. So it's more about my love for Him and less about my lack of love for Gertie.

Besides, when pet cloning comes down in price, Gertie will know how much we love her for the rest of her lives.

(This piece originally appeared in a July 2007 blog post (membership required) of The Sound Mind Investing Weblog.)

A review of Swaptree.com

Last summer, we wrote about Swaptree, a website that allows you to list and trade books, music, DVDs, and video games for free (and soon you'll able to trade Blu-ray discs and audio books). Since then, I've had a chance to use it in real life.

Here's how it works in general. Lots of individuals create lists of items they want, as well as items they have to trade. For the most part, you're saying that you're willing to trade any item on your "have" list for any item on your "want" list. (You always have the opportunity to reject a trade, but if you do this too often, Swaptree will evidently get cranky.) This is important, because in most cases Swaptree arranges deals among three parties, rather than two. In other words, you're sending an item to person A while getting an item from person B.

Here's the detailed version of how this works:

After you sign up for a free account, you are prompted to list items you have to trade and those you'd like to have. Listing items you have is quite easy. You either search for it or, better yet, simply enter in the UPC or ISBN in the "Have" list box and click "Add". From there, you select the item's condition and give a description if you'd like, then submit. Very quick and easy.

To add items to your Want List, type in the name of the item in the search box, then click the "Want It" link when it pops up. It's really that easy.

Next, you can view potential trades by clicking on your "Want List" and then sort the selections by "View Only Get Now Items." If there are any trades available to you, they will show up here. Next you can initiate a trade, assuming you are okay with the exchange. But not all items are equal. You may not want to trade a popular movie for an old paperback. But if you are good with the terms, you can initiate the trade and wait for the other party to accept (they are given roughly 2 days). If it's accepted, you'll get an email (or you can check back on the status by clicking the "My Trades").

Assuming it's accepted, you have a couple days to mail the item. Swaptree will give you the person's mailing address. You can either have Swaptree calculate and print the postage/mailing label for you right then (you'll need a credit card to pay for the postage if you select this option and they charge a small fee for this service - but it's extremely convenient and the prices are quite reasonable), or you can calculate your own postage.

After you mail it, you can "Contact the user" to notify them of your ship date and/or ask them questions/make comments. Once you've received your item, you can come back to "Rate the User". This rating might make a difference with whom you trade in the future. Since other users also likely take notice, it's advisable to solicit positive feedback if they haven't already rated you.

And that's Swaptree in a nutshell. We recently moved and came across some old movies and video games that I had intended to sell on eBay. But since I didn't want to hassle with auctions, and there were some DVDs we wanted, I thought I'd give Swaptree a try. And it works as advertised. I'm notified when someone initiates a trade and I check back once a week to see if there any available trades I may have missed or if I want to add some items to our Want List. So far, I've made 4 trades (traded movies for movies and traded video games for movies) and haven't had any issues. The only fees I've paid were the shipping costs. Again, Swaptree makes a small profit when you buy and print postage but you don't have to use their postage generator.

If there's a downside to Swaptree, it's that pending the size of your Want and Have Lists, a trade could take a while. So if you're in a rush, this probably isn't your best option. But it will likely be on my pre-eBay checklist if there's an book, movie, CD, or video game I'm interested in getting. And it sure beats paying retail because as is often the case, patience pays dividends for the frugal.

UPDATE: Swaptree has acquired Swap.com. Besides an eventual name change and a bigger user base, the changes brought about by this acquisition will take some time to manifest. In the meantime, it's free trading as usual.

An "easy" way to reduce your mortgage

Wanna get out of debt? Start by looking at your biggest expenses and find ways to reduce or eliminate them. For many of us, that biggest expense is our mortgage.

But not for 45-year-old Jay Shafer of Sebastopol, California. Why? Cause Jay has taken downsizing to a whole other level. Jay lives in an 89-square-foot house he designed and named "Tumbleweed." Jay, a former grocery store clerk, now designs these houses for a living. And not only has his mortgage disappeared, his utilities are now under $100 a year. Here's his story:

To be honest, this lifestyle appeals a great deal to me. Not only because of vastly reduced expenses, but also because of the burden of choosing, maintaining, replacing, cleaning, and storing our "stuff."

That said, I wouldn't go near this lifestyle till we're empty nesters because of the following equation:

And even once the kids leave home, really, let's be honest, what's the likelihood?

Do you need it — or just want it? [UPDATE]

[NOTE: Do not attempt without the express approval of a supportive, loving spouse who is willing to go along with your tech-loving cost-cutting split personality!]

Back in February, I challenged myself (and hopefully you as well) to question needs vs. wants, especially keeping in mind technology and digital services. With companies constantly releasing "must-have" devices and services, both the upfront costs and the monthly fees that accompany such products can make living within your budget especially challenging.

First up, our cell phone. More specifically, texting. I had said:

Unfortunately, there's only one family plan and the individual plans wouldn't cover our average monthly texting. However, I'm experimenting with apps like textPlus which allows free texting to other textPlus users.

My first impression of textplus was less than favorable. Now admittedly, I haven't played around with it enough to give a comprehensive review, but to date, we haven't switched over. So no money saved there.

Next up, if you'll recall, was getting a credit for incorrect cable billing.

... Secondly, there was a package I NEVER signed up for (and never use) but was being charged $8/month for. I promptly canceled that one too and asked for a refund... The rep was friendly but said she couldn't do that... So I called back the next day, spoke with [another] rep, and then that rep's supervisor. I'm still waiting for a call from the supervisor's supervisor.

Well, after some kind-but-forceful persistence, the supervisor's supervisor did indeed issue us a credit of a couple hundred dollars. Just goes to show the importance of checking your bills and keeping companies accountable for their mistakes.

Third item — our home phone. I wrote:

With our home phone getting used less and less, I've been wanting to get rid of it (and its $26/month fee) for quite a while. I nagged my wife to death and she finally relented. So I ordered an Ooma. In a nutshell, Ooma is a device that connects to your high-speed Internet and your home phone and allows you to make calls at no charge...

We recently moved, so I figured I'd wait and set up the Ooma at the new house. So last week I did just that. I'm VERY happy to report that we now have a "free" home phone service. Setup took a little longer than advertised, but otherwise, it does everything it says it does and does them well.

We could add the extra features of Ooma Premier if we wanted to pay $10 a month, but we're going to pass. But I might pair it with my wife's cell phone/Google Voice so that whenever someone calls her, our home phone rings as well and she won't use her cell phone minutes. But in the meantime, we're content with saving the $26/month we were spending on a home phone.

But we weren't finished quite yet. You know that move I mentioned? We decided that would be an ideal time to cut cable TV altogether. Yeah, I said it... no TV. Not only does it save money ($50/month), it saves time. Admittedly, this may not stick as we like college basketball and football. So we'll see how it goes. If we get desperate, we could resort to watching TV on the computer. And we could always get a digital antenna and pickup signals the old fashioned way. Until then, we will keep our bare bones Netflix plan and/or use the nearby Redbox for our moving watching endeavors.

The point of all this is to get you evaluating true needs from wants. For the record, I'm not opposed to satisfying some wants if they're within your budget. Just be honest with yourself about the motivation for the product or service. You might be surprised at how few needs there really are.

Do you need it — or just want it?

As we become a more and more data-centric society, all that information consumption not only eats up our time but also our money. And if you're anything like me (and for your sake I hope you're not), it's easy to fool yourself into categorizing a "want" as a "need."

Take, for instance the cell phone. Until January 2009, I was an anti-cellphone-ite, a breed on the doom of extinction. My wife, my son, my nephews — even my mom — had a cell phone. I didn't want the extra expense, the extra interruptions, and the extra cargo to lug around (I had trouble enough not forgetting my wallet and keys).

But I eventually caved, in part because my wife wanted me to have a cell phone, and in part because of the convenience factor. And if I was going to schlep one of these around everywhere, I wanted a good one... so I got an iPhone.

With all the things it can do, it's closer to 1-part convenience, 3-parts entertainment. There's nothing wrong with that, as long as I'm honest about it when factoring it into our budget: this is 75% an entertainment-budget item.

This leads me to a New York Times' piece on the cost of home entertainment. There are some interesting figures to consider:

It used to be that a basic $25-a-month phone bill was your main telecommunications expense. But by 2004, the average American spent $770.95 annually on services like cable television, Internet connectivity and video games, according to data from the Census Bureau.

By 2008, that number rose to $903, outstripping inflation. By the end of this year, it is expected to have grown to $997.07. Add another $1,000 or more for cellphone service and the average family is spending as much on entertainment over devices as they are on dining out or buying gasoline.

And those government figures do not take into account movies, music and television shows bought through iTunes, or the data plans that are increasingly mandatory for more sophisticated smartphones.

Incredible really. All this got me wondering 1) how bad the damage was at the Pryor household and 2) where could we cut costs on digital services yet still keep most of the functionality?

I started with our cell-phone plan. I went to the website, downloaded our usage, and checked our monthly average of minutes and text messages used. We use about 450 minutes a month, but had a 750-minute plan. Unfortunately, that's the lowest family plan listed on the site. But I called anyway hoping there were other unlisted options. Sure enough, there's a 550-minute plan that's $10 less. Then I asked about texting (which I use way more than I talk). Unfortunately, there's only one family plan and the individual plans wouldn't cover our average monthly texting. However, I'm experimenting with apps like textPlus which allows free texting to other textPlus users. This could reduce our phone bill by $20/month if we're diligent about using it.

My next call was to our cable company, which provides our home phone, internet, and TV. I started off by kindly letting them know I wasn't happy with my 15% bill increase over the past year and wondered what they could do to help me. In seconds, the rep offered to knock off $13 from the internet portion of my bill, but said that was all he could do. I took him up on his offer, thanked him, and hung up.

I then immediately called back to talk to someone about the TV packages we have. Turns out, we were paying for a package that has only two channels that we ever watch (and not with much frequency). Dumping that tier of service shaved off $10/month. Secondly, there was a package I NEVER signed up for (and never use) but was being charged $8/month for. I promptly canceled that one too and asked for a refund.

The rep was friendly but said she couldn't do that. Now in their defense, I understand: any yahoo could call up months after the fact and say they didn't ask for it and demand a refund. And had I diligently been studying my cable bill every month and comparing it to the ever changing TV package line-up options, I suppose I could have caught the error. But on principle, I couldn't let it go. I had been overcharged. And had they not made the error to begin with, I wouldn't be in this mess. So I called back the next day, spoke with a rep, and then that rep's supervisor. I'm still waiting for a call from the supervisor's supervisor.

Let's re-cap: to that point, I'd knocked off $10 + $13 + $10 + $8 = $41/month (not to mention all those convoluted taxes and fees). And this doesn't include a potential $20/month if textPlus meets our needs. But I wasn't done yet.

With our home phone getting used less and less, I've been wanting to get rid of it (and its $26/month fee) for quite a while. I nagged my wife to death and she finally relented. So I ordered an Ooma. In a nutshell, Ooma is a device that connects to your high-speed Internet and your home phone and allows you to make calls at no charge. It does other things as well, but we're getting it primarily so we can cut the $26/month phone bill. It will take about 10 months to pay for itself, but should be worth it (I'll do an article or post once we've been using it for a while).

So put all these things together and by the end of the year, I will have shaved $67-87/month off our monthly expenses, while not sacrificing a great deal in these luxury/entertainment categories. Notice I said "shaved" and not "saved" because as our good friend Mary Hunt says, "You don't save money buying things on sale unless you stop at the bank to deposit the money you saved."

Bottom line: Be honest about your budget categories and your "needs" vs. your "wants." Technology is nice, but all those 0's and 1's really add up.

The Olympics... cheapskate style

In her never-ending quest to get/keep us debt-free, Mary Hunt posts rules for the Debt-Proof Living Winter Olympics. I haven't entered yet, but I'm considering the No Eating Out event. I'm sure I've qualified many times over.

What about you? What spending area needs the most discipline and training? And certainly, if you enter, let us know on our Facebook Page. And then together, Team SMI will cheer you on to fiscal excellence!

A law with unintended consequences

"It wasn't supposed to turn out this way." So we wrote in our November 2009 article (subscribers only) about the unintended consequences of the Credit Card Accountability Responsibility and Disclosure (CARD) Act, signed into law last year by President Obama. The law takes full effect today.

AP Personal Finance writer Eileen AJ Connelly picks up the theme:

During the past nine months [since the bill passed and before it took full effect], credit card companies jacked up interest rates, created new fees and cut credit lines. They also closed down millions of accounts. So a law hailed as the most sweeping piece of consumer legislation in decades has helped make it more difficult for millions of Americans to get credit, and made that credit more expensive.

It wasn't supposed to be this way....

[The new law is expected to sharply] cut into future profits [for credit card issuers]. FICO Inc., the company best known for its credit scores, projects the average card will generate less than $100 a month in revenue within three years, down from $200 a month before the law.

That helps explain why the industry reacted so aggressively to the legislation.

No kidding.

"It's unprecedented that the government will come in and restrict the ability of [a company] to price the product the way they want to," Ben Woolsey, director of consumer research for CreditCards.com told the Atlanta Journal-Constitution. "But the fact that credit cards touch so many American households, the political pressure was so great that something had to be done," he said.

(Now that the precedent has been set, President Obama wants the federal government to have the authority to block insurers from making premium rate increases. Story here from today's Wall Street Journal.)

Going forward, the CARD law does offer new protections for consumers. Here is a list from the Journal-Constitution:

1. 45-day notice: Card issuers must give a 45-day notice to cardholders in advance of an interest rate change.
2. If you opt out of card changes, you have five years to pay off your balance at the existing rate.
3. Monthly statements must be mailed or delivered 21 days prior to the due date. Card issuers can no longer set a deadline before 5 p.m., cannot charge for online, phone or mailed payments unless it is made on the due date or the day before.
4. Card issuers cannot issue cards to anyone under age 21 unless they have a co-signor [sic] or can prove they are able to repay debt.
5. The pay-off period when making a minimum payment must be disclosed, along with how much would need to be paid per month to pay off the balance in 36 months.
6. Card issuers can no longer employ double-[cycle] billing.
7. Cardholders must opt-in to be able to exceed their credit limit.

CreditCards.com has additional details on how the new law is likely to affect card users.

Buying coupons can be a big money saver

Are you aware that you can buy coupons? If that isn't the perfect marriage of the Internet and the American capitalist spirit, I'm not sure what is!

I found out about this one day when I Googled "Lowes promotional code" for an online purchase. Next thing I know, I'm on eBay where there's an entire Coupons on eBay section.

Hmmm. I hadn't done this before, but I thought, "Why not? I'll give it a try." I needed to buy siding for a shed I'm building and there were lots of Lowe's and Home Depot coupons on the auction block. Sounded like an easy way to save some cabbage. So I bid on eBay and won an auction — $24 for a 20%-off-your-entire-purchase-at-Home Depot coupon.

Lowe's honors competitor's coupons, so after the coupon I arrived, I headed to Lowe's for the moment of truth — and was a little nervous for a couple reasons: 1) The Home Depot fine print specifically excluded vinyl siding. Since I was there primarily to buy siding for the shed I've built, I knew this would present a problem if Lowe's terms were the same; 2) Lowe's didn't stock the color I wanted, so I was going to have to place a special order.

I had been burned by Lowe's before when I bought several garage storage chests online (because they didn't have them in stock in the store) and then wasn't eligible for the promised rebate because it wasn't an "in-store" purchase. I wasn't sure if this special-order siding would somehow fall into that same category.

Anyway, I placed the special order for the siding, got my paperwork, and started to head to the cashier's desk up front. But wait. I decided to use the coupon on something else, as well. After all the coupon was for an entire purchase, not a single item. So, being the good steward that I am (and the good husband that I am), I decided to go ahead and get a new dishwasher for my wife (she was in a daily struggle with the old one). I knew which washer I wanted, so I told the guy, signed some papers, and I was ready to check out.

I went up front to pay for everything at the customer-service desk. I explained I had two orders in the computer and that I wanted to apply a Home Depot coupon against my overall purchase.

The customer-service rep looked up the orders and started reading over the coupon. I started wondering if I blew 24 bucks.

One minute turned into two, then five, then ten. At this point, I'm thinking I'm toast and my shed will forever remain vinyl-less. But I was wrong. She told me that the hangup was that they couldn't invoice the orders on the same ticket and that I would have to pay for them separately. No problem-o. She also told me that the labor charges to install the dishwasher wouldn't get the 20% off. I wasn't counting on that anyway.

So a couple of card swipes later and I scurried out the door before they could tell me they messed up and couldn't honor the coupon. Whew!

Bottom line: $132 (siding discount) + $70 (dishwasher discount) - $24 (cost of coupon) = $178 savings.

So, the next time I build a shed, buy an appliance, or know that I'm going to spend enough money to more than recoup the cost of the coupon, I'm heading to eBay first to buy some cheap money.

Sniff sniff, sniff sniff. Hey! I think I smell the next great work-at-home-in-your-jammies business model! Or maybe not...

On Presidents' Day, financial wisdom from past presidents

Below are several quotes about money management from late U.S. presidents. Some quotes relate to personal financial management, others to the management of the government's finances. Some touch on both areas.

First, from Kiplinger.com:

George Washington: "As a very important source of strength and security, cherish public credit. One method of preserving it is, to use it as sparingly as possible… but remembering also that timely disbursements to prepare for danger frequently prevent much greater disbursements to repel it" (Farewell Address, 1796).

Thomas Jefferson: "Never buy what you do not want because it is cheap" (from "A Decalogue of Canons for Observation in Practical Life," 1825).

Abraham Lincoln: "That some should be rich, shows that others may become rich, and hence is just encouragement to industry and enterprise. Let not him who is houseless pull down the house of another; but let him labor diligently and build one for himself" (from an address to the New York Workingmen's Democratic Republican Association, 1864).

Now, a few more from other sources:

Grover Cleveland: "I feel obliged to withhold my approval of the plan to indulge in benevolent and charitable sentiment through the appropriation of public funds.... I find no warrant for such an appropriation in the Constitution" (from an 1887 veto message, when vetoing an appropriation to help drought-stricken counties in Texas).

Calvin Coolidge: "I favor the policy of economy, not because I wish to save money, but because I wish to save people. The men and women of this country who toil are the ones who bear the cost of the Government. Every dollar that we carelessly waste means that their life will be so much the more meager. Every dollar that we prudently save means that their life will be so much the more abundant. Economy is idealism in its most practical form" (Inaugural Address, 1925).

Franklin D. Roosevelt: "Any government, like any family, can for a year spend a little more than it earns. But you and I know that a continuation of that habit means the poorhouse" (from address made as a presidential candidate in 1932).

And here's a personal favorite, specifically about government, but apply it to your household finances as well — and take warning:

Ronald Reagan: "Government always finds a need for whatever money it gets."

Big Brother is watching... and compiling... and selling

The Information Age seems to have taken us full circle back to the days of hunters and gatherers — only now they're digital hunters and gatherers. Massive bureaucracies and corporate entities are all too happy to hunt down the details of our lives, scoop 'em up, and sell 'em to a willing bidder. And it's only going to get worse.

Don't believe me? Read this piece from Consumer Reports and you'll be enlightened. It outlines eight ways Big Brother is behind the scenes, quietly rummaging through life's daily transactions. Sure, some of these are supposed to be for our protection, but mostly they're for Big Brother's.

Remember that ill-fated sweater you bought for your wife last year, the one that she returned to Kohls? Big Brother remembers it:

Your purchase returns
The Retail Equation maintains information on merchandise returns made to an undisclosed number of national retailers...

What’s here?
It can include a record of your past returns at participating stores, the purchase prices, and whether or not you had receipts.

How is the information used?
Retailers are on the lookout for certain fraudulent and abusive practices.... If your pattern of returns at a particular store raises red flags, you might not be able to get your money back the next time you try. (emphasis added)

Yikes! Makes me a little nervous about my next home improvement project when I'll inevitably buy the wrong thingamajig — many times. Will I have to kowtow at every trip to the return register, praying I don't hear the dreaded, "No return for you!"?

If there's an upside, perhaps it's a potential business opportunity. I'm not sure how it would work, but there's a mint to be made for a company that can sell anonymity. If you have any ideas on how to make this happen let me know, I would love to go into business with you. But first I'd need to access your credit report, run a criminal background check, examine your insurance-claim history...

It's not how much you earn...

While searching for something else, I stumbled across this ABC News story from October: "Latest Celeb Money Meltdown: Nicolas Cage." The article recounts the financial trials of various celebrities and semi-celebrities who have seen the the financial rewards that accompanied professional success somehow slip away.

Among those on the list:

• photographer Annie Leibovitz ("has struggled to stay out of debt");
• actor Stephen Baldwin (he and his wife "defaulted on over $824,000 in payments to their mortgage");
• baseball great Lenny Dykstra ("foreclosure sale of [his] $18 million California mansion");
• mob-boss daughter Victoria Gotti ("apparently owes $650,000 to JP Morgan Chase Bank");
• actor Willie Aames, former star of 1970s and '80s hit shows Eight is Enough and Charles in Charge ("filed for bankruptcy last year, and his home is in foreclosure");
• actress Jodie Sweetin of Full House fame ("house is in foreclosure...water has been shut off twice").

As for Nicholas Cage, one of Hollywood's highest-paid stars, the ABC report says he "owes the IRS more than $6.6 million in income taxes." A CNN story quotes the actor's former attorney (against whom Cage has filed a lawsuit) as saying Cage needed to earn $30 million a year "just to maintain his lavish lifestyle."

In a court filing, the attorney noted that in 2007 Cage went on a "shopping spree" that included "the purchase of three additional residences at a total cost of more than $33 million; the purchase of 22 automobiles (including nine Rolls Royces); 12 purchases of expensive jewelry; and 47 purchases of artwork and exotic items." Cage also reportedly bought two castles, one in England, one in Germany.

Nicholas Cage may earn millions of dollars a year, but I'm reminded of a line from Dickens:

Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.

The numbers, of course, are relative. Annual income $20 million, annual expenditure $20,600,000 (or more), result misery.

Financial security/stability is far less about how much you earn than it is about how much you spend — and, of course, how you choose to invest any surplus.

House ≠ Happiness

I recently read Stop Acting Rich...and Start Living Like a Real Millionaire, the latest book by Thomas Stanley, author of the 90's best-seller The Millionaire Next Door. There was one specific part that jumped out as something to share here.

First, let me point out an underlying truth, that hopefully most SMI readers will immediately recognize: there's a lot more to true happiness than incomes, spending habits, and such. Without Jesus, the rest isn't worth anything, whether a person thinks they are "happy" or not.

With that said, though, it's important to also point out that Christians are not immune to the correlations between money usage and happiness. So don't be too quick to discount the way you handle money as a strong influence on the degree of happiness you feel. The great news in this regard is it's the way you carry out your stewardship duties (my choice of wording) that is found to be predictive of happiness in study after study, not the absolute level of wealth or income you possess.

Back to Stanley's book. Throughout it he illustrates the contrast in spending habits between two groups: those with high incomes but low net-worth (big earners but big spenders), versus those with high net-worth who may or may not also have high incomes.

In his chapter on housing, Stanley goes into some detail about the degree of happiness these groups (and some subsets within those groups) report. Most happiness studies find that factors such as health, loving families, and enjoyable jobs are the most important ingredients to overall happiness. But in his studies, even when these other factors were present, there was still a noticeable split in happiness among the high-income group.

Stanley explains:

Much of their dissatisfaction is found in certain choices the have made. Two key choices are neighborhood and house. Both of these elements influence consumption patterns. What if you earn $200,000 a year but spend like neighbors who earn $300,000? You are likely living above your means. As my surveys and studies have found, those who live above their means tend to be dissatisfied with their lives. Conversely, those who live below their means are significantly more likely to report that they are happy.

He goes on to develop the point that the price of the home is only the beginning. When you live in a more expensive neighborhood, the cost of everything seems to creep up, if for no other reason than the spending habits of your neighbors tend to pull yours upward. Few are immune to that tug (and those who are probably are less likely to buy into the more expensive neighborhood in the first place!).

Stanley is hitting on a theme here that we've mentioned before in this blog, namely that absolute income is not as good a predictor of happiness as relative income. To illustrate this simply, someone making $100,000 is statistically more likely to report they are happy if they live in a neighborhood where most of the neighbors make $75,000. In fact, it's quite likely that person could make more money, say $150,000, and wind up reporting they are less happy — if they live in a neighborhood where most of the neighbors make $200,000.

In case you're tempted to think you would be happy in any of those scenarios, given the high incomes I'm talking about, guess again. The same pattern holds whether you cut all the numbers in the prior paragraph in half or double them.

Stanley has this advice for those caught in this trap, or possibly inching towards it without even realizing what they're about to do:

How can these Smiths [those with relatively lower incomes than their neighbors] find happiness? Get out of Jonesville [i.e., neighborhoods with houses that are a struggle for them to afford]! This is an especially urgent message now with real estate prices plummeting and some tempted to grab a so-called bargain in or around an exclusive neighborhood. Never forget that that nice house in the prestigious community will cost you considerably more than the price of the mortgage, real estate taxes and insurance.

Your ego may take a bit of a bruising by admitting that you don't have the income to live among the glittering, but bruises fade with time, and it's almost guaranteed that your satisfaction with life will increase once you are no longer fighting to keep up with those who can simply run faster.

The Ghost of Christmas Budgets Future

By now you've worn it, played with it, smelled it, ate it, listened to it, watched it, cut with it, mixed in it, served on it (or in my case, because I didn't really know what to ask for, broke something on purpose and then Mighty Puttied it), or some combination of the above. Some of you have already returned it for whatever it was you really wanted.

But my question is this, "How'd your budget do? Does it need a little Mighty Putty of its own, or did it hold up pretty well?" Or perhaps a better question is, "What, if anything, will you do differently next year?"

As for me, next year I'll do a better job of looking at sites like dealnews.com (slogan: "Where every day is Black Friday") before I go out shopping. But I have to say, using these online saving tips paid off, especially Bing Cashback.

I'll also continue to use cell phone apps like have ShopSavvy which kept me from overpaying on more than one occasion. With ShopSavvy, you simply take a picture of a product bar code with your phone's camera, and within a few seconds you're shown a list of the best local and internet prices for that item.

And perhaps next year, I'll focus our September-November shopping on the non-toy presents. According to Dan de Grandpre, founder and chief executive of dealnews, the best time to buy toys is at least two weeks after Black Friday (or about two weeks before Christmas) when retailers, such as Toys 'R' Us, Wal-Mart and Amazon.com, slash prices to clear out unsold inventory.

I'm also going to push for drawing names on my wife's side of the family. It's so much more enjoyable (and quite a bit less expensive) to worry about buying gifts only for one or two people. Plus, they get better presents 'cause we can afford a little bit more.

The downside is if you draw you-know-who's name (a.k.a. MrOrMrsImpossibleToBuyFor - because they either don't like anything or they're just going to take it back, or they're taking it back because they don't like anything), you're up a creek for a bigger present.

But all and all, if we keep to the same intentional and pro-active strategy next year, will we let our budget scare us? Not a ghost of a chance.

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