Be sure to visit My Two Dollars for a chance to win 1-year subscription to eFinPLAN online financial planning software (a $98 value).

Spotlight: Jeremy at Generation X Finance breaks down the pros and cons of investing in ETFs and Mutual Funds and helps determine which is right for you.

Being Frugal:
10 Frugal Hobbies at Blueprint to Financial Prosperity
Does Your Wallet Have a Leak at The Wisdom Journal
Find The Best Jobs To Ride Out A Recession at The Digerati Life

Recession Proof Your Life:
Budget for the Recession Now at Gather Little by Little
75 Tips to Survive a Down Economy at Frugal Dad
How Are Gas Prices Determined? at Single Guy Money
Advice That Might Have Turned My Financial Life Around…Or Not at beingfrugal.net

Credit and Debt:
What is Credit Card Arbitrage? at My Dollar Plan
Think Twice Before Canceling Credit Cards at Cash Money Life
A Year Of Debt Reduction at Paid Twice

Personal Finance Carnivals:
Carnival of Personal Finance
Money Hacks Carnival
Carnival of Debt Reduction

Millionaire Money Habit: To learn how to become a millionaire, you need to perpetually improve your financial literacy. Digest as much information as possible and stick to a plan that works for you. Be sure to subscribe to this site’s RSS feed or by email to be notified of new articles posted here.

Mint.com has quickly become the hippest personal finance management website. In some ways Mint competes with Mvelopes, the online budgeting program that helps you to allocate your money before you spend it, but Mint does a bit more. It makes managing your money fun while taking almost all of the work out of it. In five minutes you can open an account, enter your bank and credit card info, and you are done. Mint will pull all of your balance and transaction information and provides great graphic detail of your financial life.

Not only does Mint break down your spending behavior, it will alert you when your balance is low, when a bill is due or when you have overspent your budget. But wait, there’s more! Mint.com also give you personalized money savings tips based on how you are spending your money.

But is Mint Secure?

Mint consolidates all your accounts, creates pretty pictures and offers great advice based on all of the financial data it has pulled from your accounts. That’s great, except you have to give them your bank account numbers and passwords to all your financial accounts. All it takes is one smart hacker to get access to your Mint account to see all your personal finance data. Are you comfortable with that?

You can feel confident that your data with Mint.com is safe. After you enter your banking information in your account, your user names and passwords cannot be viewed in any way. Your data is not stored in any way, and financial transactions cannot be made with Mint. That means Mint employees and Mint hackers will never have access to this information.

Mint.com also uses Yodlee, the same online banking service provider that is used by leading US financial institutions. You can feel confident your account is safe and sound with Yodlee, as they are audited by the FDIC and the Federal Reserve, among others.

If you have multiple bank and credit card accounts, which most people do, Mint.com can actually provide an extra level of security. Since it is unlikely for you to check all of your accounts on a daily basis for unusual transactions, Mint can provide a one-stop-shop to view all accounts. You can even create alerts for Mint to inform you of suspicious activity and changes in account balances.

For more information on Mint.com’s security, visit the Is Mint Really Secure forums. Otherwise, another popular option is to test drive Mvelopes program for free.

Millionaire Money Habits: It is tough to build wealth if you can’t keep your money. While the many personal finance software programs that exist can simplify your life and help you achieve your financial goals, make sure your identity and account information is safe and secure.

Short selling, or shorting stocks, is a strategy stock traders use to make money in the stock market when they think things are going to be going south. Shorting stocks is kind of the opposite of “buy low, sell high.” When a trader is a short seller, they profit when a stock they are shorting declines.

When you short a stock, you are actually borrowing shares today, and then buying the same stocks back on a later date to “cover” your position. Assuming you purchase the shares when the stock price has declined since you borrowed them, you’ve made a profit. Otherwise, you have to buy them back at a higher price and you lose money. All of those who predicted a decline in the stock market at the beginning of 2008 and shorted the market are sitting fat and happy right now.

To illustrate the concept, look at the example given by Investopedia:

Suppose that, after hours of painstaking research and analysis, you decide that company XYZ is dead in the water. The stock is currently trading at $65, but you predict it will trade much lower in the coming months. You decide to take the plunge and short 100 shares. The transaction is straightforward - most online brokerages will have a check box that says “short sale” and “buy to cover.”

One of two things can happen in the coming months:

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The short selling strategy is a bit more complicated and often more confusing than simply buying stocks that you think will go up in value (or going long). Shorting stocks also comes with its risks.

• Since you are borrowing the shares, you do not earn any dividends. In fact you technically owe the owner of the shares any dividend payments.
• If the stock splits while you are shorting them, you now owe twice the shares at half the price.
• Profits are considered short-term capital gains, which can be taxed as much as 35%.

Why Short Selling is Not a Typical Strategy for Investors

Notice that I mentioned that stock traders short stocks, not investors. That is because investors do not play the short selling game for a number of reasons:

• Short selling is a high risk game that resembles gambling.
• Shorting a stock requires buying on margin, and the risks entailed when borrowing on margin constitutes a whole other topic.
• Investors are in the business of buying companies that have long-term shareholder value. Short selling requires speculation that the share price is going to decline in the short term.
• Investors find ways to minimize fees and taxes in order to obtain the greatest return on investment. Paying short term capital gains tax rates requires a much great return on the investment to actually experience a gain after paying taxes. This, in turn, increases risk.
• Investors are in for the long-term, and historically stocks trend up and appreciate over time.
• When you short a stock, there is no cap on how much you can lose. There technically is no limit on how high a stock’s price can go, and stock shorters owe money as values increase. On the other hand, when you “go long” on a stock, the maximum amount you are risking is the money you invested to purchase your shares.
• Even if you are right about the direction the stock will go, there is no telling how long that could take, and holding a shorted stock is a risk in itself because the broker can call it back if needed.

Why Would and Investor Short Stocks?

There is one circumstance that shorting a stock could be a wise move for an investor, and that is when used as insurance. In other words, an investor may short a stock in order to protect from losses. For example, if an investor owns a long position in MSFT and is afraid that it may go down in the short term, they can add a short MSFT position to their portfolio so they offset any loses. This is known as hedging your investment.

The bottom line is short selling is an advanced stock trading strategy that should not be experimented with by the inexperienced investor. Predicting the short-term direction of a stock and timing the market is not an easy task, if consistently possible at all. Betting against the historic uptrend of the market is also a loser’s game.

Millionaire Money Habit: Investors put their money on things that are as close to a sure thing as possible in order to limit their risk and increase their earnings potential. Shorting stocks is a speculative move that is too dangerous for the prudent investor that wants to build long-term wealth.

To learn more about making money in the stock market, get the Market Master Trading Course.