There are many debt reduction strategies out there but the idea is that you should be using your extra money to pay off the debt. I know there are people out there who are making the mistake of opening an Emigrant Direct account, putting in extra money, and not paying off more than the minimum payment on a credit card bill. They want to believe they’re getting that 4% interest and the fact that their credit card is only increasing isn’t something that they consider. So let’s do something very simple, let’s figure out where your next dollar should go: savings or bills?

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A few months ago, I was in Pittsburgh with my girlfriend when both of us succumbed to seasonal allergies and needed some Claritin, badly. The CVS was nearby so I ran in and bought a box of Claritin-D at around $1.20 a pill (a decent drugstore price for Claritin-D). When you’re knocked down by seasonal allergies, $1.20 a day for relief seems like a bargain. What exactly did I buy? Claritin-D is an antihistamine combined with a decongestant into a single fat horse pill (it’s huge!). The antihistamine is 10mg of Loratadine and the decongestant is 240mg of Pseudoephedrine Sulfate. Did you know you could buy 60 pills of 10mg Loratadine, generic, for only $17 from Drugstore.com (30 cents a piece)? The Pseudoephedrine is just Sudafed and a mere fifty cents a pop practically anywhere. Add that together and it’s still only 80 cents total. Therefore, you’re paying a 50% premium for the Claritin-D name!

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For those of you interested in getting an MBA or in the process of getting an MBA, like me, then this ChangeThis manifesto is right up your alley. ChangeThis, originally conceived by Seth Godin and put into play by a team of very talented individuals, is about changing the way ideas are spread using “manifestos.”

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The American Bankers Association reported that the percentage of credit card accounts overdue by more than thirty days reached 4.81% for April-to-June, beating the 4.76% reached in January-to-March this year. This doesn’t even take into account the number of accounts that will go 30 days late because of Hurricane Katrina and Rita so they anticipate the percentage to increase even more. When you couple this with a savings rate that’s negative (-0.6% to be exact) in July and you can do the math… we’re in some serious trouble. Not only are we spending more than we make, we’re dipping into savings, and we’re not paying our bills - this is not a good situation.

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Like rent vs. buy, the classic question of whether to pay off your mortgage or invest the money has been debated ad infinitum. What is funny is most of the time the financial advisers are suggesting you should invest (especially with low interest rates) while normal folks (like me) usually opt to pay off a little more and avoid the interest. Morningstar writer Christine Benz suggests that aggressively paying off your debt may not be a bad idea, considering “lower return projections [on potential investment alternatives to paying down your mortgage] make it hard to argue that any debt can reasonably be considered good debt.” There was a discussion in the comments section of a previous article where we went over these same exact points.

The article lists six questions you have to ask yourself before you decide:

I have a longer time horizon, which is a point for not paying down my mortgage because I can pick riskier investments. I’m also taking advantage of my tax-sheltered options and so that’s a point for paying down the mortgage faster (if I wasn’t, I’d put that money in a Roth IRA). My interest deduction is not significant but not high enough to give me a reason not to feel pressure about paying all this interest. I have no PMI, so no rush to get to a debt-to-value ratio to a point where I can cancel it. Finally, my interest rate is fixed so I have no rush to pay down the principal before it is adjusted.

Overall, according to those questions, I have actual reason to pay it off sooner but not a lot of reasons not to pay it off. I’ll be sticking with my previous strategy of paying off the higher second fixed mortgage and then reassessing my options after it’s been paid in full.

I’m all for redesigning bills to prevent counterfeiting but the $10 bill was redesigned five years ago, in 2000, and two to five years ahead of their schedule of currency updates (according to the Treasury, they want to update it every 7-10 years). I don’t want to say there are better ways to spend taxpayer’s dollars but I just did and there probably are. That being said, I like the way the new one looks and the added colors make it a lot more fun to see. For images of the new bill as well as the new versions of the $20 and $50, click below.

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I mentioned yesterday that Yahoo! Finance added eight new columnists and one of them was Laura Rowley, author of Money & Happiness: A Guide to Living the Good Life. I finally got around to reading her column, titled “Money and Happiness” because that’s what we’re all after, just not in that order (many would prefer to be poor and happy than rich and miserable). In her column, she talks about the concept of The Hedonic Treadmill - the idea that we adapt to the improvements in our lives and demand more. In addition, when we don’t realize those demands, we become unhappy. She goes on to explain that happiness increases quickly until we reach the point where our basic needs are satisfied, then the increase in happiness isn’t proportional to the increase in wealth. Overcoming this hedonic treadmill is one of the keys to happiness. So how do you fight against the treadmill?

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