Emily's list: California drowning in red ink debt edition

We're used to California being declared in a state of emergency for wildfires, but on Wednesday, Gov. Arnold Schwarzenegger declared a state of emergency over California's finances, according to Reuters. It's no surprise that the state has experienced financial turmoil in the past few years, but things have reached a dire point now that there is a $19 billion budget shortfall.

The budget is five weeks overdue, and it might take a few more weeks until the Democrat-heavy legislature and Schwarzenegger, a Republican, can get their act together and agree.

The red ink totals 22 percent of the $85 billion general fund budget the governor signed last July for the fiscal year that ended in June, Reuters reports. The article blames the recession, the housing slump, high unemployment and financial market turmoil as the main causes in California's drop in revenue.

In the declaration of emergency, Schwarzenegger ordered that tens of thousands of state employees take three days of unpaid leave so the state will have enough funds to pay essential debts. He estimated that the government will run out of money by October if no progress is made, and that the state comptroller may have to start issuing IOUs next month.

It's scary enough facing our own personal debt and potential bankruptcy, but it's frightening seeing debt on this scale. The fact that the most populous state in the nation is so far in the red that they are writing IOU notes -- much like I did when I was a kid and wanted to buy something before my parents had given me my weekly allowance -- is frightening. I hope the governor and legislature are able to reach an agreement before more state employees must go on unpaid leave or worse. I'm not sure whether they will ever be able to totally terminate their debt (sorry, I couldn't help myself).

For a healthy dose of personal finance tips, advice and ideas, read on for my roundup of the week's best blog posts.

1. The Digerati Life gives arguments for and against the new credit card industry regulations and reveals where she stands.

2. Not sure if your money is really going to the right place when you donate? Darwin's Finance discusses how to avoid charity and donation scams.

3. 20s Money ponders whether America is like the Roman Empire before its great fall and discusses the similarities.

4. Budgets are $exy discusses some of the pitfalls that come with lending money to family or friends.

5. How much insurance do you really need? Money Ning explains several kinds of insurance that aren't quite necessary, including payment protection for your credit card.

6. Money Crashers outlines a financial triage strategy and explains how you can use it to efficiently organize and demolish your debt.

7. Bible Money Matters shares his perspective on financial mistakes that young families make, including carrying too much debt.

8. Cash Money Life reveals some interesting facts and trivia about identity theft -- something that can affect everything from your credit to your reputation.

9. Living Almost Large discusses the frustrating experience of recently losing her wallet and explains the steps she took to protect her finances.

10. A guest post on the Happy Rock chronicles the process of accumulating and then tackling $40,000 of debt.