Just how miserable are you? If you don't know, then perhaps an excursion to The US Misery Index might help you to establish one dimension for your despair. Chicago economist Robert Barro, author of the book, Nothing is Sacred: Economic Ideas for the New Millennium (2002), created this index in the 1970s. The index is based upon the simple equation where the unemployment rate is added to the inflation rate to equal the Misery Index.

At the moment, the sum equals 4.7% + 3.82% = 8.52%, or less than 10 percent of the population. You might ask, then, why everyone seems so miserable lately, especially since today's Misery Index is far less than the 21.98% sum that occurred in June 1980 and closer to the lowest percentage of 2.97%, recorded in July 1953.

Allow me to offer you some support for your perspective on misery. A Parade Magazine survey performed by Mark Clements Research in April this year showed that 48% of Americans believe they're worse off than their parents. See? If you're miserable, then you fall into line with about 150 million other American residents, or at least with almost one-half the number of individuals who participated in this survey.

But, why is the misery so much more palpable in the survey than it is in the Misery Index? According to economist Milton Friedman, the higher misery index is based more on a "Permanent Income Theory" rather than on unemployment and inflation rates. This theory assumes that people measure where they are today relative to where they expected to be a few years ago, rather than on knowledge about what the average income was four decades ago.

Say that you planned to increase your salary over the years to equal two times your age, and at age 41 your salary equals only $41,000 rather than $82,000. While you might feel like a failure, your income equals a male's median income for 2005. And, if you're a woman who makes $41,000 per year, you make $10,000 more than most median-income women in this country. I would call that a success, depending on how you handle that income.

Tom Van Riper, the writer who quoted Friedman in a recent Forbes.com article, adds that when Americans compare themselves to the top 1% of America's population who earn a disproportionate salary, the misery mounts. Those 2005 median incomes, represented by $41,386 for men and $31,858 for women are, without a doubt, paltry in comparison to Tiger Woods' $87 million dollar salary that same year.

I have my own theory about misery when it's equated with money. My formulation is based upon U.S. Commerce department numbers that show the average American's Personal Savings Rate over the years. In 1985, the personal savings rate equaled 11%, the highest percentage recorded between 1965 and 2005. In 2005, however, that personal savings rate equaled negative 0.4%, one of the lowest amounts recorded during that same period.

Personal saving is the amount that remains from disposable personal income after expenditures on personal consumption, interest, and net current transfer payments have been finalized. The amount left over is available to acquire financial assets such as investments, to use towards acquiring a home, or to reduce liabilities by repaying principle on mortgages or consumer debt.

But, how can that rate dip below zero? The Bureau of Economic Analysis (BEA) explains the problem:

"If expenditures on personal consumption, interest, and net current transfers exceed disposable personal income in a quarter, personal saving will be negative. This can occur because current income is not the only possible source of funds for consumption expenditures?"

When the consumer cannot meet mortgage payments because he lost a job, for instance, he loses his home and creates a negative personal saving rate. And, if he dips into deposits saved in previous periods, sells financial or tangible assets, or borrows to meet debt, then that person can become so miserable that immediate comfort seems impossible to achieve. Although the BEA claims that spending must eventually fall back into line with income, you might question how that alignment could occur when a household emergency wipes out assets.

Bankruptcy can bring some relief in some situations. Alternately, when an individual's income increases, he can alleviate some misery as he allocates income to reduce debts and to increase assets. That last road can seem endless, but only because it requires a great deal of self-discipline. Additionally, it helps when a person is insured against emergency situations. Insurance of any kind can bring some very real peace of mind, if the individual can afford it.

The real joy killer is represented by increased health insurance costs. Premiums that workers pay for employer-sponsored health insurance rose on the average of 7.7 percent this year, and have increased 84 percent since 2000, according to the Kaiser Family Foundation, a health-issues research center. Many more median-income Americans worry that they may not be able to pay that health insurance bill in the future, because housing costs and increased energy and gas costs have cut into their salaries.

So, if you feel miserable, you're not alone. In fact, you may have more company than that Parade Magazine survey suggests. But, if you built up a debt with unnecessary purchases over the past few years and if you avoided personal saving as well, I'll have to ask you to step out of the misery line. Paste on a grin, get help to turn your finances around, and don't compare your lifestyle with the rich.

In other words, fight for your right to save for your future, even if it's just one step at a time. In the long run, self-respect - not money - is the best anti-misery medicine.

Until Next Week,
Linda Goin