About the author: This is a guest post by Carson Brackney, writer for Personal Finance Analyst. Personal Finance Analyst is an online community of bloggers dedicated to taking the mystery out of money and helping you to live a happier, more successful life with the money you have.

In the wake of 9/11, President Bush encouraged Americans to keep shopping. He was worried that fears associated with the attack would slow the economic engine as concerned citizens might opt to “sit on” their money instead of spending it in a way that would keep the economy chugging along.

Apparently, Americans responded. We spent. We shopped. We felt that changing our behavior in response the tragedy would represent a victory for the enemy. In some weird way, we seemed to have felt a patriotic duty to maintain our spending habits.

Those of us who embrace sound personal financial management concepts never really bought into the “shop until the terrorists drop” line of thinking. Others, however did. And many of those others are actively encouraging the same kind of behavior in the face of current economic problems.

A recent piece of proposed legislation is a perfect example. In a rare show of bipartisanship, Republican Senator Kit Bond and Democratic Senator Barbara Mikulski are proposing a tax rebate to encourage the purchase of new automobiles. Their goal? To get some cash headed in Detroit’s direction.

Those of us who recognize the poor quality (in financial terms) of the decision to buy new cars know that the tax rebate won’t make things any different. We won’t buy that new car, even if it would give Detroit a boost.

Sometimes, it really seems like those of us interested in better personal finance decisions are doing our best to strangle an already-choking larger economy by reducing our own spending and consumption. Although that really isn’t the case (we’ll see why smart money management is a net plus for the economy as we work through this), there is a certain face-value irony in economizing during a time of wider economic turmoil.

As I write this, the heads of America’s three automotive giants are huddling together in Washington, trying to perfect a sales pitch for a multi-billion dollar bridge loan/bailout. Detroit is in trouble. People aren’t buying new cars and Big Auto claims that we’re only months away from an industry collapse that’s going to destroy hundreds of thousands of jobs and lives…

Meanwhile, Mint is telling us that cars are one of the eight things we should never buy new. Dave Ramsey is chastising someone for financing a new car. People are opting to stick with their old beaters in an effort to save money.

The stock market isn’t treading water. It’s sinking. One of the reasons? Consumer spending is in the tank. Browsers outnumber buyers and those who are willing to open a wallet are spending less. Based on those scary consumer confidence numbers, we can expect more of the same and that’s scaring money away from Wall Street. Our 401(k) numbers are bleak and the entire economy is grinding to a halt as we watch the Dow dip.

Meanwhile, personal finance experts are advising everyone to save more. Frugal living is “in” while conspicuous spending seems like a vestige from the days when women wore shoulder pads and guys wanted to be Gordon Gecko.

New housing starts are down and property values are in a freefall. Homes are no longer the safe buy they once were. People are waking up to discover that they’re upside-down on their largest single investment. Contractors are struggling, workers are standing in unemployment lines, vendors are suffering and development projects are suspended.

Meanwhile, advisers are telling people not to try to catch a falling knife. They’re recommending against the purchase of existing properties and are laughing outright at the idea of building a new home. This isn’t the time to spend, this is the time to sit on your money.

Are you seeing a trend here?

We’re actively engaging in the very behavior that encourages a larger financial crisis in order to protect ourselves from that very same financial crisis.

If you don’t buy that car, that makes it harder for GM or Ford to stay afloat. If they flop, your neighbor loses his job on the assembly line. He falls behind on house payments. The home enters foreclosure. Your property value takes a hit in the process.

You’re studying the Economides family’s every move, trying to cut your spending down to the bare minimum. You aren’t dropping big money at the grocery store anymore. That means the store isn’t ordering as much. The company selling those green beans has to let someone go. The cannery employee can’t find another job in her neck of the woods. She has to go on unemployment and then welfare. What’s paying for the food stamps and Section 8 housing? Your tax dollars.

As the economic crisis has advanced, we’ve heard more and more about businesses and industries that are now on the very brink of collapse. We all know that the only way many of these outfits can stay open is if they continue to sell their products. Yet we’re still preaching the gospel of recession-proofing your life.

Is this the irony of economizing? By protecting our own interests with conservative money management are we actually encouraging the economic slowdown? Do our efforts at self-defense empower our enemy?

Don’t worry. You can be a good personal money manager and good for the economy. The apparent tension isn’t quite as significant as it looks at first glance.

First, it’s almost certain that those who look after their money carefully will remain in the minority. Yes, everyone seems to be cutting back these days, but I doubt that a significant percentage of that decreased consumer spending stems from intentional, voluntary “austerity measures.” The economizers and those who are smart about personal finances are the exception to the larger rule. Thus, those efforts to manage money correctly will be swamped on a macro-level by those who will continue to act without much consideration for the protection of their financial interests. That’s just an “accidental” situation, though. What’s more important is that smart money handling actually benefits the economy.

That brings us to the second reason you shouldn’t feel guilty for exercising good decision making. Smart personal financial management and decreased spending has an economic upside. Those who are in control of their money and debt are able to invest their resources while “the rest” stay on an ugly barely-making-it treadmill. Those investments provide needed capital to the most deserving and potentially valuable institutions and businesses. While we might be taking our money out of the loop on one side of the equation, we’re feeding the economy on the other.

Third, “you gotta have it to spend it.” If we’ve learned anything over the years, it’s that wild spending and bad financial management eventually come back to haunt us. Those who do economize and invest wisely are later positioned to contribute to consumer spending in a way that those who are constantly on the brink of personal financial collapse can’t. The current economic crisis is PSA for responsible spending. We’re living through the nasty hangover that comes after a weekend of binge drinking. Foolish credit purchases are the stand-in for the keg.

We didn’t really have a patriotic duty to maintain spending habits in late 2001 and we certainly don’t have a national economic obligation to go out and buy new cars and other unneeded consumer goods today.

Sometimes it seems as if we’re working at cross-purposes with our best interests. We’re watching a struggle born of reduced economic activity while intentionally reducing our own spending. If you look at it on that level, it appears as if we’re intentionally punching ourselves in the gut. If you view it from a broader perspective, however, it’s clear that there is no tension between economization and a stronger economy. If anything, more responsible personal money management is exactly what our economy needs.

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Americans are Digging Deep to Save Money. Frugality is the new trend, with a new USA Today poll that people are spending less money due to the state of the economy. The poll also showed that more than 55% of people surveyed are spending less for the holidays this year. My Twitter poll earlier this month showed that many of my people surveyed will be spending less money, but not necessarily due to the economy.

Gas price observation. I spotted $1.879 per gallon this morning at a location that offers a discount for customers paying with cash.

G20 Launches Ambitious Plan to Restore Confidence. The group of 20 leaders from developed and developing countries met this weekend in Washington and decided to change the rules. You can expect to see more regulations for hedge funds, more stimulus measures across the world, and a larger role for the International Money Fund. The group will reconvene in April 2009 with the new President of the United States.

I mentioned a few days ago that Citi might lay off 10,000 workers in addition to increasing interest rates on credit cards for all customers. Looks like they’ll be laying off 50,000.

Carnival of Personal Finance: Smile Edition. The 179th edition of the Carnival of Personal Finance includes a round-up of some of the best writing about personal finance from this past week. In addition to the Editor’s Choice articles, start browsing through the Carnival with 5 Proven Ways to Find a Job in a Recession, Money is 100 Percent Emotional, and Top 10 Reasons We are Not Frugal.

Christmas Shopping Tips to Keep Your Holiday Spending Under Control. This article is the antithesis of the piece I wrote for PC World in which I described how to find the best bargains on tech items this holiday season. When I originally asked a few colleagues for input, J.D. from Get Rich Slowly suggested I mention Buy Nothing Day. The blurb was eliminated by the editor. Rather than searching for bargains bargains on the “popular” electronics, maybe it’s time to cut back on shopping overall.

For the “News and Blogs” features, which I plan to run almost daily as long as I have additional articles to share, I select some of the most interesting posts from my RSS reader and from pfblogs.org. If you don’t believe you blog is included on my RSS reader, please let me know to so I can add it. Thanks!

If you’ve suddenly come upon $1,000 you didn’t have the day before, you may get the urge to celebrate. $1,000 doesn’t open many new opportunities to you these days, but there are a number of options. Kiplinger has published a special with 37 ways to invest $1,000, but I have a few suggestions of my own.

Savings Options

1. Start or increase your emergency fund. Am emergency fund is there to help you cover expenses when some unplanned event interrupts your income stream, and the best emergency fund is tiered.

2. Open a high-yield savings account. Set aside the $1,000 for a future spending goal, like a vacation or a new car. Keeping this money investing as much as possible while still “liquid” will allow you to access the cash when the time is right.

Debt reduction options

3. Send $1,000 directly to your credit card with the highest interest rate. If you have credit card debt, sending an extra payment of $1,000 will save you lots of interest down the road. This isn’t a very exciting option, because it’s hard to “feel” the benefit of saved expenses over time, but it is worthwhile.

4. Pay off your mortgage faster. If you own a home, it’s likely you also have a mortgage. If your lender doesn’t penalize you, consider sending $1,000 as an extra payment. Many people have goals to be debt-free. A mortgage is debt, so any debt reduction plan must consider the mortgage.

5. Reduce your student loan debt. This month, I again increased my monthly payment to my student loan debt. This student loan is currently the only debt I have, and I no longer qualify for a tax reduction for paying student loan interest. It is in my best interest to get rid of this debt as soon as possible. An extra $1,000 can make a significant dent in my student loan, and it might for you, as well.

Investing options

6. Invest in a Roth IRA. If your income doesn’t disqualify you, you can invest up to $5,000 in a Roth IRA. This type of account allows you to take advantage of low tax rates today. The earnings on the money invested will grow tax-free, and you’ll be able to withdraw your earnings without penalty after you’re 59.5 years old.

7. Invest in the total stock market. Whether or not you have investments, the Vanguard Total Stock Market Index (VTSMX) is a good option for long-term investing. This low-cost index fund tracks the stock market index, which is one of the best possible investments over time. Many people try to beat the performance of this index and most fail. In order to qualify for the investment, you will need to invest a minimum of $3,000, so you may need to use your new $1,000 to help save for your initial investment.

8. Invest in your children’s education. If you have children and you want as many educational opportunities available to them as possible, you may want to consider a 529 college savings plan. 529 plans are run by states and offer some tax incentives when the investments are used for education-related expenses.

Charitable giving

9. Give the $1,000 to a cause with importance and meaning to you. Tax deductions should only be considered an ancillary benefit rather than the primary driver for contributing to a non-profit organization. Finding an unexpected $1,000 creates a perfect opportunity for sharing your good fortune with those who need it more than you.

Treat yourself

10. If you’re in a good shape from a financial perspective, don’t neglect yourself and your family. While buying things might not affect your long-term happiness, deprivation of things that make you happy in the short-term can increase long-term frustration.

The above ten options are probably some of the most popular choices for taking advantage of unexpected income. The above is my list. Kiplinger’s list, which I mentioned above, contains 21 suggestions, many for savvier investors. Here is the magazine’s full set of suggestions, although I can’t agree with every tip. Read the rest of this article »

Rather than firing up the central air conditioning, you can keep it off or lower its power in the heat of the summer by exploring some of these low-cost alternatives.

1. Use fans. While fans don’t change the temperature of the air, they increase air movement, which will make you feel cooler by a few degrees. Look for fans with large blades. In general, the large blades will move more air with less power and less noise.

2. Cool the air naturally. If you hang damp sheets in front of your window, air coming into your house or apartment will lower the temperature of the air as it enters.

3. Wear light colors. Black fabric absorbs heat while light-colored fabric reflects. Light-weight fabric allows your skin to breathe. Fashion aside, proper summer clothing can help keep you cool.

4. Install shades and blinds. By keeping your rooms shielded from the sun, you can avoid direct light and heat. Keep the blinds closed during the day and open the windows during the night. There are window coatings available that let in light while keeping out heat. Try searching Home Depot for heat and glare control window films.

5. Wear a cooling bandana. Here’s a stylish way to keep yourself cool. Cooling bandanas can be soaked in water and are worn around the neck. As the water evaporates your body remains cool. You can find cooling bandanas on Amazon.com.

6. Avoid chores. Forget about using the clothes dryer or the oven; these appliances emit heat, so your cooling system must work harder whenever you’re cooking or drying. While the weather is hot, eliminating strenuous chores will help protect your body from dehydration. Alcohol and caffeine should be avoided as well for the same reason.

7. Spray yourself with water. Never was a wet tee-shirt contest a better idea. Keep yourself wet with sprinklers outdoors or spritzers (water bottles with a spraying handle) indoors.

8. Leave the house. Take advantage of large businesses that must keep their air conditioners running to keep customers comfortable; take a trip to the mall. If you do stay in and run the air conditioner, however, keep the thermostat high and supplement the house cooling with fans.

Where I live, the temperature has been above 90 degrees lately, with the heat index over 100 this past weekend. I don’t have it quite as bad as those in Texas, for example, but heat makes everyone uncomfortable. As someone I knew used to say, you can only remove so many layers of clothing.

Beat the Heat Without Busting the Budget, Rodika Tollefson, LifeWire

Recently, JLP discovered that if he needed to, he could “find” an extra $13,000 per year by cutting back some of his discretionary expenses. By eliminating beer, soda, and a number of other unnecessary but nice expenditures, the savings can add up quickly. (I’m a bit surprised that JLP spends $50 per month on beer. But I’m not a beer drinker, so I’m unfamiliar with those types of expenses.)

My situation is similar. Once I was able to dig myself out of a hole and began earning income outside of my day job, I decided I should allow myself some of the more enjoyable aspects of life rather than wallow in extreme frugality.

But if I had to cut back, could I still do it?

Cable television and movies

I have a Netflix subscription I could cancel if necessary. In fact, I’ve considered getting rid of the service already, as I’m not an optimal user. My subscription was born while I was starting to earn more money but didn’t want to make the jump to another other than 13-channel cable television service. Netflix currently costs $15 per month, or a savings of $180 each year if I cancel.

I’m currently paying about $20 for an extended Comcast cable television service including all the standard channels plus an HBO package, the basic high-definition package, the sports high-definition package, and a digital video recorder. The $20 price includes the high-speed broadband internet connection, as well. I could drop HBO and the HD sports package to reduce this cost to $0, a yearly savings of $240. Even paying $0, I could still have my internet connection, which is important for continuing my extracurricular activities.

Meals and dining out

Based on my progress so far, I expect to spend about $1,400 dining out and ordering delivery from local restaurants. That includes off-campus lunch with my co-workers. I could shave this expense by making smarter choices at the groceries, forcing myself to cook, and motivating myself to bring in homemade lunches to the office. For a full year, I could probably save about $1,500 by cooking more and eating out less.

Communication

After purchasing a BlackBerry 8830 to keep me connected to the world when it’s probably inappropriate to be so, Verizon Wireless suggested the unlimited data plan for a total, including both voice and data, of $80 per month. This saves me from being charged per byte for every email or text message I transmit or receive and every web site I browse. Those charges would add up, but $80 per month isn’t slim, either.

I do not have a land line and I have no intention of getting one. I recently signed up for Skype so that can be used in some cases, but I believe I’ll need to keep a minimum cell phone if driven to extremes. I could choose a prepaid cell phone option and reduce my $80 per month expense to $20 every three months. If so, I could save $880 throughout the year.

Live entertainment

I spent over $200 at the Appel Farm Arts and Music Festival this past weekend, including admission, snacks, gifts, and tee-shirts which functioned well for a change of clothing when we were drenched in sweat. I’ve spent several hundred dollars on Broadway shows so far this year. I intend on seeing more concerts and shows this summer. I’ve also spent close to $200 on the “Goodbye Shea” package of 7 tickets to Mets games during the last season at Shea Stadium, with the first game scheduled for this upcoming Saturday. I expect I’ll spend more this summer on souvenirs and stadium food.

I see perhaps an average of one movie a month with my girlfriend, though that may be overestimating. We aim for matinées but they’re not discounted much.

Let’s just estimate that I could probably save about $2,200 throughout the entire year by cutting out my live entertainment expenses, including related travel.

Vacation

I haven’t purchased my tickets yet, but I plan to visit my family in California for Thanksgiving again this year. The flight will likely cost around $600. My girlfriend and I haven’t solidified details surrounding our summer vacation yet, either, but I would expect what we decide may cost from $600 to $1,000. Add in my spring visit to the west coast, and we can estimate $2,000 spent on vacations per year.

The little things

I buy books, music, and videos (DVDs, Blu-Ray discs, etc.) to enjoy. I also slowly work on a coin collection which involves purchasing new releases from the U.S. Mint and perhaps some coins from shows or eBay. I purchase miscellaneous electronic equipment and gadgets occasionally, such as last year’s TomTom GPS device, last year’s Sharp Aquos HDTV and last year’s now-extinct HD DVD player.

While I haven’t spent as much this year, I could see looking for a new computer by the end of the year. Let’s say I could save about $3,000 a year by cutting all of this out of my life for a while.

$10,000 may not be enough if I’m faced with a crisis. I’m glad I have a healthy emergency fund which can help me recover. I intend on reducing expenses when possible before tapping the emergency savings accounts, however.

What would you do to find an extra $10,000 or more over the course of a year?