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It seems that 2008 will likely be remembered as the year of the bailouts. Such a generalization loses sight of the fact that only big businesses are getting government help. Not only are small businesses not getting bailed out, but their options are also shrinking as credit tightens.

The National Small Business Association recently released its 2008 Small-Business Mid-Year Economic Report, which included the results of an August 2008 survey of small business owners. A full 67% of small business owners surveyed responded that their businesses had been impacted by the credit crunch. As credit tightens, banks generally favor their largest account holders. So while large corporate customers are still able to borrow money to a certain extent, small business funding is drying up.

The survey also discussed the difficulties faced by small business owners as a result of FDIC insurance limits. 68% of small business owners found the $100,000 FDIC insurance limits inadequate to cover their business accounts. By providing inadequate protection of small business deposits and expensive (or unavailable) funding for financing needs, banks continue to hurt small businesses in a number of ways.

Small businesses can’t count on government bailouts to help them when they run into trouble. Small business bailouts are do-it-yourself. Traditional banks are unlikely to help. Fortunately, social lending continues to grow and serve the needs of the small business community at this most critical time. With low operating costs and lenders more than willing to fund exciting small business projects, P2P loans may prove to be a major catalyst in stimulating the economy in a meaningful way.

Is your small business hurting? Have P2P loans come to your rescue? Please share your experiences with the community perfectly suited to serve your small business funding needs.

They say that it takes money to make money, and often times that holds true. But can spending money save you money? In many cases, it can. Monitoring the costs and the savings are a great way to continually ensure that paying to save makes good financial sense.

Paying to save comes in many different forms. One example would be to join a Wholesale Club like Sam’s Club or Costco. For a yearly fee, you are able to purchase products at discounted prices. Another example would be joining Amazon Prime. For a yearly fee, most purchases from Amazon get free 2-day shipping, or reduced price overnight shipping. A final example is joining a movie rental service like Netflix. For a monthly fee, unlimited movie rentals are available.

In all cases, you’re better off paying to save if you pay less than you save. That may sound obvious, but the calculation still needs to be done. When performing your analysis, make sure you compare the costs you would have incurred had you not paid to save instead of comparing how much you actually saved. This may seem counter-intuitive, but once you pay to save you may end up making many more purchases.

As an example, when deciding whether a Netflix subscription is worth it, compare the cost of the subscription to the current amount you spend on movie rentals to see if you’ll save money. If you were to instead compare the subscription cost to what all the movies you borrow from Netflix would have cost to rent, you’ll skew the results. The fact is that you wouldn’t rent as many movies if you had to pay regular rental prices. In a similar way, you may find that once you join a wholesale club, you do get great prices but you start to buy so much more that you end up spending more as well.

If the goal of paying to save is to end up spending less, you’ll need to keep track of your costs and your savings. You can certainly save money through many pay to save programs, but unless you’re careful they can easily end up costing you more.

At times, it can be difficult to save money. All too often we feel that we have enough trouble just staying afloat, let alone trying to get ahead. Seeing others find success can provide the inspiration we need, particularly when they are even worse off financially than we are.

That’s exactly what I took away from reading about low-income families saving nearly 5% of their income as part of a non-profit program based in San Francisco. The program is offered by the non-profit Earn, and it couples financial education with incentive matching towards a specific savings goal. For each dollar saved by participants, up to $2,000, Earn adds another $2. One dollar of the match comes from a government program and another comes from Earn itself. The money is held in an Individual Development Account, which can only be used for the specified savings goal, such as paying off credit card debt.

While programs like this are certainly worth our attention on their own merits, they also show us that anyone can save a significant portion of their own income. You might think that the 2-for-1 matching is the incentive for program participants, but nonetheless you must credit these savers for making do without nearly 5% of their income. With an average household income of about $18,000, every penny counts. Yet they are still able to save.

The financial education aspect of the program is also something that you are capable of achieving. Reading the Lending Club blog, personal finance books from the library and other Internet resources can all go a long way towards advancing your financial education. Setting a specific savings goal will also help your cause. Unless you qualify for such a worthy program like Earn’s, your savings will be just what you yourself are able to save. Nonetheless, seeing low income families saving 5% of their own money hopefully makes you realize that you could probably do the same.

When trying to cut back on spending, we often eliminate activities that bring us joy. The frustration that ensues can cause us to give up and revert to our old ways. A better method is to try to separate our leisure from our spending. That will allow us to still do some of the things we enjoy while eliminating the negative aspect of the activity.

I love going to the bookstore. Spending a few hours at a Barnes and Noble on a Sunday afternoon, sipping a coffee, and immersing myself in a wide array of topics (ok, so I generally wind up in the business and finance section) is my idea of bliss. I love to read, so most trips end with a stack of books that I’d like to buy. Rather than eliminating these enjoyable trips to the store when I wanted to cut my book spending, I simply replaced the final step. Instead of buying the books, I make a note of them (and their prices) and leave without buying any of them.

When I return home, I login to my library account and see which books they have available. Usually they have at least half, if not all, of them. I search for the remainder on Amazon.com and purchase any that are significantly reduced. I occasionally allow myself to purchase a book I am really interested in even if it is only slightly reduced. By using this technique, I still get to do the activity I enjoy and read most of the books I would have purchased. I just spend about 75% less to accomplish it. With the amount I had been spending on books, this was a significant savings. I was able to slash my book budget from about $400 a year to a mere $100.

Any time you can get the same enjoyment from a product or service while spending less money, you’ve found a good deal. By separating the activities you enjoy from the money you spend on them, you may be able to do just that. Before you give up a favorite activity just to save money, or avoid cutting an expense because you enjoy it too much, see if you can separate the part you enjoy from the part that costs you money.

The benefits of building an emergency fund have been covered in depth both on the Lending Club blog and in many other personal finance advice forums. Using that lesson on a smaller scale, particularly when traveling, can afford many of the same benefits.

A few weeks back I took a serious road trip. In the course of two days I drove about 1,600 miles. The good news was that my car averaged almost 35 miles to a gallon and gas prices have receded from their recent highs. I was also fortunate not to run into any roadside troubles, though I was prepared for such an event. You may feel secure knowing that you are traveling with a credit card. Nearly any emergency along the way could be covered, if necessary. Even so, I always like to travel with sufficient cash to last for a night in a hotel and at least a day’s worth of meals.

When dealing with such a short timeframe, the few negatives of holding money in cash really don’t come into play. You probably aren’t worried about the interest you’ll lose on having a few hundred dollars out of your interest-bearing accounts for a week or two. If you try to normally live without using cash, it’s important to deposit the money back into an account once you’ve returned home or reached your final destination. It might be tempting to slowly spend the cash until it’s gone, but if that’s not your normal spending method, you’ll probably end up wasting some of it.

The benefits of having cash when traveling are that cash is almost universally accepted and many fees can be avoided by having sufficient cash on hand. Among these fees are: the interest you would pay on credit card charges if not paid off in full, ATM fees for withdrawing money from different banks, or wire transfer fees to obtain money from a friend in a real emergency. Not all of these fees would apply to everyone or every situation, but all are feasible in certain cases.

The days of cash giving one a sense of security are largely over. In many ways, cash is one of the most insecure forms of money. But for certain circumstances, such as a mini emergency fund when traveling, cash still reigns supreme. So before you have to rely on credit for an unexpected expense on your next trip, think about carrying some cash to handle that situation.