Microsoft (Stock Quote: MSFT) is pulling the plug on its Microsoft Money personal financial software, citing a glut of free or low-cost financial software for consumers. So if you’re a Money user, what are your alternatives?

First, some background. Microsoft clearly admits that banks and other financial institutions have done such a stellar job of producing their own free personal financial management applications. In addition, they say that the demand for “price tag-based” software has pretty much dissipated. But Money isn’t going away right this minute (more on this below). Current Money users should be able to use the software in connection with their bank accounts for the short term.

Microsoft Money Plus Deluxe had retailed for $49.99, and “upgrade” versions like Money Plus Premium retailed for $79.99

Here’s the actual statement from Microsoft announcing the end of Money plus:

Microsoft Money Plus will not be available for purchase after June 30, 2009. All purchased Money Plus products must be activated prior to Jan. 31, 2011. With banks, brokerage firms and Web sites now providing a range of options for managing personal finances, the consumer need for Microsoft Money Plus has changed. After suspending annual updates of Money Plus in 2008, Microsoft is announcing today that we will no longer offer Microsoft Money Plus for purchase after June 30, 2009.

Specific versions of Microsoft Money impacted include:

• Microsoft Money Essentials
• Microsoft Money Plus Deluxe
• Microsoft Money Plus Premium
• Microsoft Money Plus Home & Business

The need for Microsoft had already stopped selling Money Plus in retail stores last year, and had also put an end to regular software updates. The company obviously felt that the personal financial management landscape had changed dramatically in the 17 years since Microsoft Money first came out.

Just as obviously, Microsoft doesn’t think the loss of its Money software platform is a blow to users, although it might be an inconvenience.

Most Money customers used the software for three primary reasons: to manage loans, investments, and regular banking accounts. Many users relied on Money to pay bills and organize their taxes, as well. In addition, many banks had partnerships with Microsoft to enable customers to pay bills and manage money through Microsoft Money.

Bank of the West, for example, allowed customers to pay bills through both Quicken and Microsoft Money for $7.95 per month, and .45 cents for each transaction beyond the 20 covered by the monthly fee. And Wells Fargo (Stock Quote: WFC) offers online banking (for a fee of $3 per month) and online bill payment services (for $6.95 per month) via Microsoft Money and Quicken.

While Microsoft has already began contacting financial institutions that Money is on the way out, the company is allowing existing customers to keep using Money, with the exception of Money Essentials, to pay bills and manage their bank accounts, with participating banks. That said, most Money online services, including bill pay via Epay and Apay, will be gone entirely by January 31, 2011. Microsoft says you can verify your expiration date in Money Plus by selecting Help / About Microsoft Money; it appears to the right of the serial number.

That 2011 calendar date could make Quicken a ready-made alternative to Microsoft Money, or force more banks to look around for other online bill payment services for their customers.

For Money customers looking for free alternatives to the Microsoft software, try out Quicken Online or Mint.com which “downloads, organizes and graphs your personal finances automatically, every day”, according to the company’s web site.
To find out exactly what your bank’s policy is on account management and/or online bill payment through Microsoft Money, contact your bank directly.

— For more ways to save, spend, invest and borrow, visit MainStreet.com.