The value of the dollar in comparison to other countries around the world is falling. Meanwhile, my net worth is increasing, so naturally I began thinking. Is it possible that although I’m earning income, saving, and investing, I’m not actually gaining ground from a global perspective? Furthermore, does a global perspective matter to me? I haven’t been outside the country in years.

From January 31, 2007 to January 31, 2008, my net worth increased from $75,121 to $125,770, an increase of of 67%. During that time, the dollar has decreased in value compared to other currencies and commodities. I ran some calculations.

I would have done better if I had been earning my salary in euros. With a strict currency conversion using rates from OANDA, my net worth was valued at EUR 57,964 at the beginning of the period and EUR 85,083 at the end. My former 67% increase in dollars translates to a less impressive 47%.

What about gold? I’ve heard people claim that the economy would be better if we never left the “gold standard.” I’m not quite sure it would make a difference. All value is arbitrary, whether it’s a metal or paper. Anyhow, converting my net worth in dollars to ounces of gold would result in a starting point of 114.61 ounces ending with 135.92 ounces. Thanks to the dollar’s decline and gold’s rise, my value in gold increased only 18% in the last year.

Does any of this matter? I don’t use either euros or gold for the exchange of goods and services. Yet, I still can’t overcome the feeling that I’m not getting ahead as much as the USD numbers claim.

New Day, New Low for Dollar [AP]

Haven’t you heard? This week is America Saves Week. From February 24 through March 2, a coalition of non-profit, corporate, and government groups are pushing a media campaign to encourage savings in various forms, from increasing money deposited into bank accounts to finding bargains and saving money on purchases. It’s a noble goal.

Building wealth starts when you set a goal and make a plan to reach that goal. Whatever goal you choose—whether it’s buying a car, buying a house, or getting out from under your debts—learn about proven savings strategies and get simple tips on the best ways to save.

The organization is targeting certain minorities or special interest groups with special sub-campaigns, too, such as Black America Saves, Hispanic America Saves, Military Saves, and Youth Saves.

For the rest of us, the main America Saves website offers suggestions for increasing savings and decreasing expenses.

Get Out of Debt

The first step in getting out of debt is to stop borrowing. To do that, you have to stop spending more than you earn. So, make a budget and cut out any expenses you can. It may help to cut up your credit cards or lock them away in a safe place… If your debts are too large, you may want to consider bankruptcy. Bankruptcy can give you a fresh start, but it is a serious step that can make it harder to get credit for years after you declare bankruptcy.

Savings and Investments

• Cut spending painlessly by finding small savings that add up to big savings over time, like The ECRD Factor.
• Comparison shop for necessary purchases.
• Restrain spending for birthdays and holidays.
• Automate your savings.
• Put your loose change into a high-yield savings account.
• Take advantage of employer-matching retirement plans if available.

• Build an emergency fund.

  My bonus was deposited into my bank account this morning. I plan on celebrating America Saves Week by putting a large portion of the newly-found cash towards paying down my student loan.

A few weeks ago, I mentioned that 100,000 unique visitors browsed Consumerism Commentary during the month of January, the highest monthly count in this website’s history, 106,492 to be exact. There’s a good chance that February’s count will double that. I hope some of this month’s new readers plan to stick around for a while.

The following blogs and websites sent the most visitors here during the month of February. This doesn’t count visitors coming from search engines, RSS readers, or social media websites like StumbleUpon and Digg.

1. Lifehacker
2. Get Rich Slowly
3. The Consumerist
4. The Simple Dollar
5. CBS 8 San Diego
6. MoneyBlogNetwork
7. KSPR (CBS Affiliate)
8. AllFinancialMatters
9. Fabulous Financials

1. Free Money Finance

   Here are the top 10 visited articles from the past month, including the last few days of January. This only counts web visitors to each page; I don’t have any way of knowing how many people have read these articles via RSS. Only articles published within the last month are included.

2. Economic Stimulus Tax Rebate Calculator
3. How Will the Economic Stimulus Tax Rebate Affect 2008 Tax Returns?
4. Tax Rebate Calculator Updated and Blog Roundup
5. The New Emergency Fund: Five Components of an Emergency Plan
6. Living Paycheck to Paycheck (On Purpose)
7. How to Save a Million Dollars at Any Age: 25 Years Old
8. How to Save a Million Dollars at Any Age: 35 Years Old
9. Smart Women Marry for Money, and Here’s Why
10. How to Save a Million Dollars at Any Age: 45 Years Old

1. Personal Balance Sheet, January 2008 ($125,770, +2.3%)

If you’re new to Consumerism Commentary, these articles from the archives will be new to you.

From the Second Half of February 2007

The Case Against a Life Without Debt
Tips for Purchasing a Musical Instrument for the Non-Professional
How Much Do You Pay in Taxes?
Survey Says: More Money Leads to Better Sex
Advice Needed: Newly Found Debt and Debt Collectors
12 Steps for the Paycheck Type to Become a Millionaire
Extreme Frugality: Living Out of Your Car
Is This a Buying Opportunity?
New Jersey Property Tax Rebate Increasing for Renters

From the Second Half of February 2006

This doesn’t sound like good news.

[FDIC] is planning to beef up its staff—including temporarily hiring up to 25 retired FDIC employees who worked in the agency’s more than 200-person division that handles failed banks—to handle an anticipated increase in bank failures.

If you keep funds in some of the smaller online banks, you might want to reconsider your saving strategy. While the FDIC insures deposit accounts up to $100,000 per depositor, you might be exposed to delays when withdrawing your money if your bank disappears. Last year, NetBank failed and its accounts were absorbed by ING Direct. Individuals and companies had trouble getting money out. This could become more common in the next year or so.

To help stave off bank failure, the government is bailing out American banks. However, it is not the United States government; foreign investors are investing heavily in domestic banks through sovereign wealth funds, which basically means that banks in this country are increasingly owned by overseas governments.

Singapore recently paid $4.4 billion for an ownership stake in Merrill Lynch. The Chinese bought a $5 billion piece of Morgan Stanley… Middle Eastern and East-Asian “sovereign wealth funds” are in the process of owning a larger and larger portion of the global banking system.

The foreign governments aren’t investing enough to gain control of the companies or seats on the Board of Directors, but there is some chatter about requiring more disclosure from soverign wealth funds.

Bank profits plunge 84 percent in 4Q [AP]
Foreign investments are just bailouts [Marketplace]
Foreign investments in US banks draw scrutiny [Boston Globe]

The most effective emergency fund, for use in the event of a job loss or unexpected major expense, is actually a combination of several types of investments. You should be prepared with a small amount of physical cash to hold you over until you can get money from a bank, highly liquid investments like a high-yield savings account, a Roth IRA (if you qualify) in which your contributions can be withdrawn penalty-free and tax-free, and possibly credit access.

NZbird wrote to suggest an interesting addition to an emergency food: a stocked pantry. By stocking up on non-perishable food items, you will leave more of your money available for use in the event of an emergency.

Keep your food pantry WELL STOCKED. I mean food is an essential right. And if you have kids you don’t want them stressing out because the basics like food aren’t there. So stock up your pantry real good with all the ingredients for meals. I try to keep around 6 months supply on hand. My husband use to laugh at me when I started doing it, but you know it introduced a discipline into our grocery shopping that wasn’t there before… The kids always knew the ingredients were in the cupboard for lunches, breakfast, and any snacks they wanted to make. I believe it’s that feeling of security and hope for the future that must be maintained for the sake of the children in times of job loss.

At first, the thought of stocking up on food seemed more like preparation for a pandemic, but the main point is that if your income is suddenly grounded, you won’t have to worry about spending your emergency fund for food and will have more available for rent or mortgage payments and electricity bills.

Thanks for the suggestion, NZbird!

Are you concerned about your ability to maintain your current financial position? I am. Sure, I have an emergency fund, a significant cash cushion beyond the emergency fund, and steady income.

But I have taken on risk. My long term investments are invested in the stock market which has proven to be more than a little volatile lately. If I needed to access those funds, a market downturn and early withdrawal fees would be damaging.

My income is constantly at risk; at the office, my employer might decide our entire department can be outsourced. My side business income is almost entirely dependent (directly and indirectly) upon the good graces of a certain search engine to provide income-producing visitors.

Thus, I’m not surprised that 78% of working-class millionaires, individuals with steady jobs to earn a living and a net worth between $1 million and $10 million, are also nervous about maintaining their wealth. The main differences between myself and the “working rich” besides my significantly lower net worth are purchasing habits. Though followers of The Millionaire Next Door might disagree, multi-millionaires are consumers of luxury products. I am not. I’m prone to a few luxury items once in a while, but even when doing so, I look for reasonable deals and I’m not swayed by luxury brands.

21% of working-class millionaires have started to cut back their luxury spending, although they will continue to give to charity and provide the best education for their children.

But few are trading down to Target. They’re just buying fewer expensive items than they used to. Middle-class millionaires won’t stop shopping anytime soon. They’ll still be grabbing the tech gadgets they love so much, like BlackBerrys, iPhones, GPS systems, computer accessories and software. Why? Those products, in addition to exuding status, also serve practical needs. They will also go ahead and get nice things for the home, like that big-screen television set or top-grade appliance. And they won’t pinch pennies on education and health care, things they consider to be of prime importance.

Are you concerned that you won’t be able to retain the level of wealth to which you’ve become accustomed?

The Working Rich Are Nervous [Yahoo Finance/Forbes]

Should you get a variable annuity when you retire? The company I work for hopes you will, but many financial advisers, gurus, and authors steer people away. The reason is simple—the benefits in the form of gains don’t outweigh the fees and diligent investors can manage their retirement money in the form of index mutual funds, at least with a long-term time horizon.

Ben Stein holds a differing opinion. He is a fan of variable annuities in moderation. He admits that only a portion of a portfolio should be invested in annuities in order to ensure a modicum of guaranteed income. Here are his reasons:

• Variable annuities allowed his parents, both economists but not great investors, to retire comfortably.
• Some annuities will “lock in” your stock market gains to guarantee you won’t lose your money. Of course, the stronger the guarantee, the higher the fee.

• Old people get Alzheimer’s. Even skillful investors can lose their ability to control their portfolios and can benefit from a regular check.

  Ben admits that individuals who are successful at investing and continue to be through retirement can manage to perform better investing on their own. He is thoroughly convinced that most people should consider putting at least a portion of their savings into annuity products when they retire.

  I’ve generally been strongly against variable annuity products, especially after hearing story after story of elderly people being encouraged to enroll their life savings into products from which they would be unlikely to receive a benefit worth the fees. I do see Ben Stein’s perspective and perhaps annuities would be worthwhile for some individuals in varying degrees.

  Why Ben Stein Loves Annuities [Money Magazine video]