Along with the downsizing in the economy, downsizing is occurring in many aspects of our lives. Real estate is no exception. Average new home sizes have been increasing for as long as most of us can remember, but finally saw a significant decline in the last quarter.

According to USA Today’s article New Homes Being Built Smaller, new homes started in the third quarter of 2008 averaged 2,438 square feet, compared to 2,629 the quarter before. Slight decreases had occurred in the past, but none as great as this latest reduction. As consumers retreat to more frugal lifestyles it’s only natural that they would look to reduce the cost of one of their largest expenses, their home.

Smaller homes are obviously less expensive to build, but they are also less expensive to maintain. This goes beyond just the lower property taxes and mortgage interest paid as a result of the lower cost, though those savings can be significant. Other costs that are lower include heating and cooling, decorating, cleaning, and general maintenance. Even homeowners staying in their existing homes are looking to downsize by living in less of their space. In homes with multi-zone heating, living in only those areas within one zone may lower heating bills. Similarly, by not using extra space regularly, you can reduce the cleaning and maintenance required.

Having extra space is great, but too much extra space facilitates waste. Having a spare bedroom or two may allow you to stay in your current home longer as your family grows, but once you’re done having more kids, extra bedrooms are really just wasted space. With home prices faltering of late, buying a larger home in the hopes of making a larger return on investment in the future also seems less wise. Having a smaller home allows you to focus on making the space you do have as nice as possible and may result in a nicer home.

When money is tight, waste is the enemy. For many reasons, a larger home is now seen as a negative. As the economy improves, we may eventually see larger homes coming back in vogue, but due to the long-term nature of real estate investments, it may take a while before that occurs. In the meantime, living in smaller homes will be a constant reminder to focus on necessities and live as efficiently as possible.

How large a home do you live in? How many people share that space?

When I moved from the east coast to the Midwest, I found it strange to learn that recycling wasn’t mandatory. To make matters worse, anyone wanting to recycle had to pay extra each month. That’s why I was so pleased to hear that my waste collector would be expanding its recycling program through a partnership with RecycleBank.

The new recycling bin, provided by RecycleBank, is coded with an RFID tag to link my bin to my account. By placing an expanded number of recyclables in the bin each week (no sorting needed) participants in the RecycleBank program earn rewards that can be redeemed at a variety of merchants.

Along with local merchants, national partners include Bed, Bath, and Beyond, Dick’s Sporting Goods, Kraft, Target, and many more. Currently, each pound of recyclables earn participants 2.5 RecycleBank points. Offers vary, but one example was $2 off a purchase of $5 or more for 20 RecycleBank points. Saving $2 for 8 pounds of recycling may not sound like much, but I suspect that points quickly add up. For people like me who recycle anyway, the rewards are like free money. The financial incentive will also help motivate me to recycle even more. Households that recycle as much as possible and compost organic materials hardly generate any “trash” at all. If you live in an area where you pay per bag of garbage collected, recycling more can also help reduce your garbage bill.

As I’ve said in previous posts, there are many different motivating factors to inspire a particular behavior. Recycling wasn’t very popular in my town when it was done strictly for environmental reasons. By adding a financial incentive, the number of participants is sure to increase.

Have you used RecycleBank or a similar program? What are your impressions?

We often trade price for convenience, such as when we visit the nearest gas station versus the cheapest one, but there are other tradeoffs that can be made in the name of convenience. One of those is security.

For a simple example of this, consider the passwords you use for various online accounts. The most convenient thing to do would be to use the same simple password for all accounts. As you transition from this case to using different simple passwords for each account to finally using different complicated passwords for each account, convenience goes down as security goes up. The best option for you is highly subjective and may have a lot to do with the value of the information contained within the account itself. A poor college student might prefer having his or her bank account hacked than his or her Facebook account. For others, the opposite could hold true.

Looking around for the most useful apps I could find for my new iPhone, I came across Pageonce. This service is available through the company’s website as well as a dedicated app for the top smart phones. By entering all of your account information on the Pageonce site, you can access everything from one central location. Beyond just financial institutions, everything from frequent flyer and movie rental accounts are available. Obviously this site is hugely convenient, but the first concern that comes to mind is security. This is especially true for users who access the site through a smartphone app and who may fear the consequences of a lost or stolen phone. Pageonce has extensive security measures in place, from encrypted data streams, wireless access disabling, certification by top security firms, and many more features to keep your information safe. Even so, many people may think twice about using the service given the fact that Pageonce’s terms of use agreement specifically limits the company’s liability to a maximum of $500 (though some state laws may trump this limit).

My point is not to persuade you to modify your password habits or say whether Pageonce or a similar service is or is not worth using. Different readers would certainly come to different conclusions. Rather, I hope to raise your awareness of the tradeoffs you make and ensure that you carefully weigh what you give and what you get. Whenever you add or subtract convenience from your life, you are probably making a compromise of some sort. Often it’s a question of money, but security is one of many other common tradeoffs.

Did security concerns influence your decision to use (or not use) Pageonce or a similar service that aggregates your personal information?

I recently started watching the CNBC series American Greed and have really been enjoying it. In each episode, a couple of high-profile cases of greed-driven fraud are profiled. While greed drives the perpetrators, it also seems to drive many of the victims.

The series covers many different types of fraudulent activities, but a recurring theme is how willingly victims agree to deal with the criminals. The promise of extraordinary returns on investments with little or no risk should raise a huge red flag. Instead, investors seem to flock to these opportunities in record numbers.

Don’t get me wrong. Amazing investment opportunities certainly do exist. Fortunes have been made in real estate, new businesses, the stock market, and many other types of investments. It’s just that those super-sized returns on investment likely came with much higher risk than less profitable alternatives. High-risk investments can be hugely successful, but also have a greater chance of being huge failures. The fear of missing out on the next big thing may also play into investors’ decision-making processes.

The risk-reward tradeoff between different investments generally holds true, but there are cases where anomalies exist. In such cases, higher returns may be possible with similar (or even less) risk. These discrepancies only go so far, though. The best returns occurring with the least risk is an outcome that likely never occurs.

Before making any investment, ask yourself if it seems too good to be true. If it does, you don’t need to dismiss the investment automatically, but you should approach it with extreme caution. If things still look positive after you’ve done your due diligence, then it might be worth considering. More often than not, digging a little deeper into the promise of low-risk, high-return investments reveals the truth that they really are too good to be true.

Have you ever invested on the promise of low-risk, high-reward returns?

TodayShow.com had a particularly interesting take on The Princeton Review and USA Today’s report, The Best Value Colleges for 2009. More than just an application of the old adage that “you get what you pay for,” many prestigious schools ranked high on value because they significantly offset students’ costs with grants and scholarships.

Value can be hard to quantify, but the cost of education certainly comes into play. What the report seemed to indicate was that many of the top value schools were meeting a significant portion (up to 100% in many cases) of a student’s financial needs through grants and scholarships. Unlike student loans, these types of aid do not need to be paid back. Regardless of the stated cost of a school, if grants and scholarships cover a significant portion of that cost, value will surely increase. Given a choice between a mediocre school with a low cost and a top-notch school whose high cost is offset by grants and scholarships, the top-notch school can often come out ahead.

To help illustrate this idea, the following information was presented: The cost for tuition, room and board for a single year at Harvard is $47,100. Clearly that is a number that few students would be able to afford without taking out student loans. But when you consider that the average grant aid package at Harvard is $35,000, the actual cost is much more reasonable. That’s not to say that Harvard is necessarily the most cost-effective option (someone eligible for a partial scholarship at Harvard may be able to get a full scholarship elsewhere), but it certainly helps you realize that Harvard and other schools with high average financial aid packages are not nearly as expensive as they first appear.

The conclusion I draw from the report and analysis is that students should not dismiss schools solely based on their sticker price. Like so many other types of purchases, it’s not the price they advertise, but the price you actually pay that matters.

Were your (or your children’s) college costs offset by grants and scholarships?