Tag Archives: prosper

Prosper and Lending Club P2P Investment Update

When I started investing in P2P (person-to-person) lending, back when it got its start, proper regulations weren’t in place. Thus, as you can see above, my returns were kind of crappy in the early days. Now that the P2P sites had to add much more stringent regulations, my returns aren’t that bad at 7%-8%. This is how my Prosper account is performing:

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While I only had about $350 remaining in my Prosper account, given the results to date, I decided to put another $500 in and see how it performs. This is definitely a test and alternative investment while I focus primarily on my stock accounts.

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2009: A Year in Personal Fiscal Review

2009 was an incredible year for be in terms of income. Since graduating college in 2005, I had at most made $30k per year, with months of the year usually dedicated to unemployment sans unemployment checks and freelancing to fill in the gaps. As much as 2009 was not a perfect year, my income this year hit approx. $70k before tax. So I made more than double what I’ve ever made before. That’s the good news.

My spending also increased in 2009. I spent $35k this last year, according to Mint. This included unnecessary splurges which I likely rewarded myself due to my promotion. Next year, I’m going to create a budget and stick to it, as my goal is to save 30% of my after-tax income, about $15,000 assuming my income remains the same (which odds are it won’t). I’d really like to save $20,000 next year, but to do that I’d really have to force myself to be frugal. Which isn’t a bad thing, it’s just something I’ve never done before. I might try, especially with Mint’s budget tool and my new iPhone helping me keep my finances in check each month.

To save $20,000 in 2009, I’d have to save $1,667 each month. Assuming my take-home pre-tax pay is $66,000 (which I like to pretend is $33,000 after taxes) I have $2,750 a month to spend. That leaves me with just $1,083 a month of spending money if I really want to save $1,667 per month. Again, this is certainly possible. I’m really inspired by blogs like Under $1000 a Month because if a family of 4 can live off less than $1,000 a month (!!!) then so can I. Right?

Well, I’m not sure I can. My mental health therapy is expensive, as are the meds I will likely be on in 2010. That’s my biggest cost that I’m not willing to give up. I’ve already cut back on voice lessons, though I’m taking a dance class which is $60 / month. And my car may become a wreck in 2010 (with 170k miles on it, I don’t know how much longer it will last) which could mess up the whole savings thing.

I figure I have $800 in set costs (rent, bills, gym, car insurance) and then anything else on top of that which is vital… food, gas, new tires, etc. All-in-all it doesn’t seem like I can live on less than $1,000 a month. Well, I could, but that would mean NO therapy and no dance lessons (and definitely no laser hair removal package, which I’m almost sure I am going to purchase in early 2010 for $300 / month over 12 months.)

My goal for 2010, though, is to seek out ways to live frugally, besides my set expenses, so I can save a lot. Maybe not $20,000, but it’s not so bad to make that my goal. I’ll aim to save $1,667 a month and budget for this as possible. If I can increase my annual income with additional freelance work, all the better. I count my interest in as well, so if my stocks happen to perform well and my P2P accounts happen to stop defaulting, I might hit this goal. Who knows. I do want to focus on keeping my budget in check. If I can save AT LEAST $1,200 a month in 2012, my networth will hit $50k, which is really my main goal for 2010. I read somewhere that at 30 your savings should be at the amount you want to live on for one year of retirement. I’d like $80k a year in retirement, so I want to hit $80k in savings by 30. Which is going to get totally messed up by my potentially going to grad school… but it won’t exactly help matters if I’m out of a job either.

Anyway, here’s to 2010 being prosperous and smart for me and for everyone out there reading this little blog of mine. 🙂

How much should I save and where should I put it?

Lots of my readers think I’m a spoiled brat with a spending addiction, and occasionally I get a comment along those lines. Part of the reason I started this blog is that I agree with that statement and I’m trying to be smarter about my finances. Without the PF world I probably would be in debt by now instead of having $45k in savings. Yes, I have a shopping addiction. Yes, I need to stop making excuses for buying expensive clothes. Yes, I need to focus on saving more. But my biggest problem is not knowing where to save. It’s not the best excuse, but it’s true.

I can easily put away $5k per year in my Roth IRA because I always save up that much the year before (I overestimate on my taxes and pretend that money doesn’t exist) but beyond that I am not sure where to put my savings. Spending the money is, sadly, a lot easier than figuring that out. Again, an excuse, but I really don’t know where to put my money. With no 401k at work, I’m not sure where I should save. Do any of you have ideas for me?

I have some automatic transfers set up. $100 / month to ING Direct liquid emergency fund, $50 / month to Sharebuilder, $50 / month to my 529 plan. I’m not really sure how to save for retirement beyond my 401k or if I even should be saving more than that right now specifically for retirement. If I could figure out HOW MUCH I should be saving and WHERE I should be saving it, believe me, it would be a lot easier to save it.

My current accounts…

Checking: $375
Basic Savings Account: $301
CD / Emergency Fund: $8,073.49
ING Direct Savings / Liquid Emergency Fund: $3000
PayPal: $70

Roth IRA: $14,482
Sharebuilder Stocks & ETFs: $9,801.43
Vanguard Index Fund: $4113.69
Vanguard 529 College Plan: $890.44
Lending Club: $555.95
Prosper: $233.10
HSA: $1000

Where on earth should I be putting my savings and how much should I really try to save each year?

Lending Club: All My Deliquents

I’m back in the positive on Lending Club! That really isn’t that exciting, given I had high hopes for my Lending Club loans. I have 20 loans out at $25 per loan. Thus far one of them has been “Charged off” and 1 is “31 to 120 days late.”

So of $500, $50 or 10% of my original loan is gone, just due to two defaults (the late one is going to default, I’m not going to delude myself.)

The charged off note was a C rating, the only C rating I invested in on Lending Club because I wanted that 13.47% interest rate. The loan that’s 31-120 days late was an “A” rating, though, with a 9.63% interest rate. It looks like on that one I’m still owed $20.70 which I will never see again.

I always liked the “idea” of P2P sites like Prosper and Lending Club but my experience on both of them has not been that great. I’ve pretty much lost money on both. I’ve been careful with my Lending Club account, only investing in “A” ratings except a random B or C when I feel inspired to lose my money. But as my A rated late account proves, even an A rating doesn’t guarantee a return.

My net annualized return on Lending Club right now is a whopping .72%
That’s beating my Prosper account which I’ve all but given up on.

Apparently I’m under performing on Lending Club:

Have you used Propser or Lending Club? What is your return rate these days?

Watch Your Back Lending Club, Prosper is Back, at least in California

It felt like Prosper was in a quiet period longer than George Bush was in office, but the P2P lending site is now back online. I’ve invested with both Prosper and Lending Club, so I’m excited to continue my trial of both services to determine which is better.

The relaunch brings about some changes for Prosper. Most notably, the site has a new service that will help financial institutions take loans they’ve already made and resell them to Prosper investors.

Wait a minute… that kind of sounds like they’re trying to sell US their toxic assets. Hopefully they’re also offering up high-quality loans where personal lenders can get a piece of the action.

According to the Wall Street Journal, Prosper investors benefit with potentially higher interest rates on loans that have already been vetted by a financial institution, are current and have at least three months of payments that have already been made.

Still, risks are inevitable when you’re lending to who knows who, regardless of their credit score (uh, speaking of that risk, an “A” rating loan that I had going on Prosper for a while just went late 4 of My Loans on Prosper are now Late (not counting the one that already defaulted) — 3 of those 4 Loans are “A” rated and one is “B” rated — they were fine before Prosper relaunched – wonder if they hadn’t been updating defaults in their quiet period. Starting to think P2P lending is a bad idea!)

According to the WSJ, the average lender return since the company’s inception in 2006 is 2.8%, after defaults. But since March 2007, when the company starting providing more information about borrowers’ credit and employment histories, average lender returns have improved to 4.8%.

Since Prosper’s Securities and Exchange Commission registration process is still going on, it is operating under an intra-state exemption from the California Department of Corporations. That means that, for now, only California residents and businesses will be able to lend or invest in Prosper loans, although borrowers nationwide can apply for a loan. Once the company completes its registration process, other financial institutions and lenders in other states will follow, says Chris Larsen, Prosper’s chief executive.

Haven’t read anything yet about that ridiculous $100k networth (beyond your home price) to be a lender, like the rules over at Lending Club. I wonder if Prosper has added that in the fine print. I’ll let you know if I find out anything more.

The Carnival of Wealth, Money and Life: Spring Fling Edition

Welcome to the (slightly belated) April 25, 2009 edition of Carnival of Wealth, Money and Life. The economy may not exactly be blossoming, but as April showers bring May flowers, wise investing during the gloomy recession may lead to a great crop when the stock market stops getting rained on by sour economic reports.

This edition takes a look at ways to best prepare for that recovery…

WEALTH

Matthew Paulson helps with tips on How to Choose a Good Financial Advisor posted at American Consumer News.

Summer Munyon offers up tips on How To Find The Bottom Of The Real Estate Market posted at Tallahassee Real Estate Blog, saying, “If you want to know the beginning of the next phase of the market turn, just keep an eye on the green line in the graph below. You can visit this graph (updated twice per week) at The Market Bulletin.”

Darwin presents 6 Prudent Uses for your Tax Refund This Year posted at Darwin’s Finance, saying, “How to avoid squandering a great opportunity: 6 prudent uses for this year’s tax refund.”

Dividends4Life presents Who is Irving Kahn and Why Should We Listen to Him? posted at Dividends Value, saying, “Comfort in your investing process only comes from having been there before and experiencing the gains after coming out of a downturn. Today we have the opportunity to learn from the experiences of someone who has lived through many downturns and profited from it.”

Get to know more about investing when bargains in the market are abundant. MoneyNing presents Ins and Outs of a Stock Exchange posted at Investing School, saying, “Stock exchanges perform a critical function in the world of trading. Find out what they do by going through the article.” As the stock market goes through turbulent fluctuations en route to recovery, you may want to check out Verna MorrisThe Definitive Inverse ETF Guide posted at ETFdb. cody butler presents What Is Forex Trading? posted at Investment-For-Beginners Blog, saying, “An introduction to the basics of forex trading.” Nesher presents Global Watch List to monitor your trades from around the globe posted at Internet Stock Trading for Beginners. Silicon Valley Blogger presents Best Online Stock Brokers For Cheap Stock Trades posted at The Digerati Life.

Sarah Scrafford presents 100 Lectures That Will Teach You to Be Rich posted at Clear View Education Blog.

MONEY

Looking for cash-saving tips? Gregory E. Rouse presents Family Meals for Under $5 posted at Frugal-Living-Skills Blog. Lindsay presents Home Brewing to Save Money (and have fun) posted at Off the Urban Grid. Lulu presents Save Money By Packing Your Own Snacks posted at How I Save Money.net, saying, “Small savings add up over time.” Wren Caulfield presents Why Commute by Bike? posted at True Adventures in Money Hacking, saying, “How biking to work can save you money and improve your health and well-being.” Joseph presents Budgeting Tips posted at Penny Pinching. Michael Gvirtzman presents Expense Allocation Between Wants and Needs posted at Mind Listings, saying, “Discusses expense distribution between golden categories: needs, wants, savings.”

Teach your kids about money starting today. Madison presents Summer Jobs for Kids – Ideas for Summer Jobs for Kids posted at Kids and Money.

Kim Staudenraus writes Feeding the Vending Machines posted at Tranquility Financial Visioning, saying, “Do you really know where you money goes each month? Many lose track of a dollar here and there from vending machine purchases. But is it really a dollar or two?”

Chris presents Is my money safe in a bank? posted at Home I Own.

MoneyEnergy presents Goals on Fire: The Link Between Personal Finance and Positive Thinking posted at MoneyEnergy.

Jeff Rose writes on Managing Your Money While Deployed, One Soldier’s Story posted at Jeff Rose.

debt kid wants to know What Would You Do with a $5000 Interest-Free Loan? posted at DebtKid.

Andrew Peel asks How Will You Manage Your Money After The Recession? posted at APeel Solutions Blog, saying, “President Obama has endorsed them, Donald Trump has so has Robert Kiyosaki. What are they? Small businesses is the answer. In particular online home businesses. The main reason some heavy hitters back them is because they have a global reach from your home PC. But do you know how to get wealthy and stay wealthy?”

Clair Schwan writes a post on How to Make More Money – at work at Frugal Living Freedom, saying, “Here are some ideas about how to make more money as an employee of another. That’s where most of us fit in, so it’s reasonable to know some of the ways that we can earn more without the need for another job or an enterprise of our own.”

Finance Tips 101 fills us in on how Scholarships Come In All Shapes And Sizes posted at Finance Tips 101.

Mark Aucamp writes Credit crunch means talking about money and the lack of it posted at Money Saving Tips, Consumer Finance, Expert, Advice and Help | Talk Money Blog, saying, “It’s not difficult to get involved with the debate about the credit crunch and the current national and global recession.”

Want to learn more about credit cards? jim presents Understanding FICO Credit Scores posted at Blueprint for Financial Prosperity. Debt Free Destiny informs us Why Repairing Your Credit Makes Sense and Saves You Money posted at Debt Free Destiny. Joseph presents Understanding Credit Repair Is Very Important posted at How To Raise My Credit Score.

Savings Toolbox presents Property and Casualty Insurance – What You Should Know posted at Savings Toolbox.

LIFE

Corbett Barr presents How you can live the good life without being independently wealthy or retired posted at Free Pursuits.

nickel
offers up advice on How to Protect Yourself from Identity Theft and E-mail Scams posted at fivecentnickel.com.

Leave Debt Behind asks Are You Responsible for Your Deceased Parents Debt? posted at Leave Debt Behind.

Billeater presents Electric Choice- Compare Electric Providers, Switch and Save posted at Billeater.

Joel Gray gives tips on staying healthy: 24 Hour Fitness – For Today’s Fast Paced Lifestyle posted at Health Tips 101. Gal Josefsberg presents Five Quick Ways To Save Money By Being Healthy posted at 60 IN 3, saying, “Wealth is not a prerequisite for health. Join me and learn a few simple ways in which being healthy can save you money.”

Mikkal Travvis presents How To Start An Organic Garden posted at Organic Health.

kathryn says it’s important to Treat Yourself to a Free (Or Cheap!) Treat posted at Out of Debt Christian, saying, “Economy got you down? Pay a huge tax bill last week? Or just feeling the need for a special treat? This is your week! Here are three great free (or super cheap) treats to take advantage of…”

Samir Bharadwaj presents Taking Stock of Your Life in Short Text Messages posted at Samir Bharadwaj dot Com, saying, “Taking stock of where you have come from and where you are heading is a required activity, a milestone along your continuing journey. Here is one way of going about it, and asking the right questions.”

Patrick @ Cash Money Life presents How Much Life Insurance Do You Need? posted at Cash Money Life, saying, “Life insurance is essential for protecting your family against the worst thing possible. Be sure to insure yourself.”

Dorian Wales presents Challenging Happiness – Exploring the Irony of Human Nature posted at The Personal Financier, saying, “The irony of human nature – anxiety for those that have everything and depression for those that have nothing.”

Michael Miles presents Freedom and choice posted at Effortless Wealth and Abundance.

That concludes this edition. Submit your blog article to the next edition of
carnival of wealth, money and life
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Obama Giving Stock Buying Advice

The other day Obama said that it’s probably a good time to buy stocks if you plan to hold for the long term. There’s been a lot of fuss about how the President shouldn’t be telling us when we should buy stocks, especially since the stock market has gone down 25% since he’s been elected.

I have mixed feelings about this. On one hand, it’s important for the President to show faith in the economy, and since people trust Obama for the time being, or at least like him, they may listen to him. But… it really isn’t good to tell people to go buy stock, and then to watch the markets crash even more.

While I believe in the long-term prosperity of America, times are a changing, and I’m kind of thinking we’re going to be stuck in this depression for a while. I worry that people are going to get pissed at Obama if he starts giving stock advice – even if he does say that it’s a good time to buy for the long term.

What do you think about the president giving stock buying advice?

Lending Club: Thumbs Up

I’m liking Lending Club thus far. If you’ve been reading my blog for a while, you already know that I was pretty happy over at Prosper lending out money at good rates to borrowers, but then Propser went into a quiet period and I was left with no where to lend my money… or so I thought. Then I found Lending Club. I have $250 out right now at an average rate of 11% – which is way better than what the stock market is doing.

One thing I haven’t focused on much is how great these P2P lending sites are for people who need to borrow cash. Apparently it’s near impossible to get a loan these days, even if you have good credit. And even if you do get a loan, the rates suck. If I needed cash, I’d definitely look into borrowing through Lending Club. Actually, as a borrower I don’t see a reason not to borrow through lending club if you have a decent credit rating. The risk in Lending Club comes from the lender, not the borrower. Just pay back the money on time and it’s a good deal all around.

The latest deal I read about for those with good credit? Personal Loans at rates as low as 7.88%. Borrow up to $25,000.

Have any of you used Lending Club as a borrower? What have your experiences been?

Lending Club: My 2009 Money Challenge

Each year, I like to try something new in personal finance. I don’t want to waste money, but I don’t mind testing the waters a bit with a small percentage of my income. Last year, my big test was on Sharebuilder… and my stocks obviously have not performed well (except Mickey D’s (MCD) that’s at least not losing money).

This year, I’ve decided it’s Lending Club’s turn for a little game time. I finally figured out how to use the site (phew) as last I was on I thought I had bid on two loans and apparently never made a final order. Oops. So I’ve now made a final bid/order on two loans for $25 each and I transferred in $200 from my paypal account.

While I don’t think Lending Club will make me rich (and I have little faith I’ll do better than break even given my luck on Prosper), I do like that you can lend just $25 per person. So you have a little more room for less costly defaults. Of course, then you also have more loans to default. I’m not mathematician, so I’m not sure which is better.

Regardless, I’ll start out with this $250 and see where it gets me. I’m also going to up my investing on Sharebuilder this year. I can’t resist a good sale. Thinking about purchasing some Proctor & Gamble stock, but not sure. Any stock I buy now will lose money over the coming year or two, it’s just a matter of how it looks in 3, 4, 5 years down the line.

At least with Lending Club I’ll either get my money back in 3 years or lose it in 3 years. With the stock market… I could make money and it could be gone in 10 years… as we’ve seen in the last 10 years. And I don’t really have much faith in banks or the ability of anyone – even Obama – to stimulate the economy. Of course, without such stimulation, even P2P lending is at risk – big risk. If jobs get cut people can’t pay their bills, even if they really want to. That’s just how it goes. So I don’t want to put too much money into P2P… just enough to see if Lending Club is better/worse than Prosper.

Lending Club: First Impressions Part II

I haven’t made my first loan on Lending Club, but it seems I’m set up and ready to go as soon as the loan is funded. One very distinctly different thing about Lending Club versus Prosper is the lack of “person.” That is, on Prosper you get photos of smiling people (often with cute little kids) to tug at your heart strings and make you want to “invest” in them, even when you shouldn’t.

On one hand, I like that because it makes me feel ok about defaulting every once in a while… I feel like I’ve helped someone out, even if I lost my money. At Lending Club, I’ll probably be a lot more upset if someone defaults… because there it really sets you up to be a bank, not a charity. Which is fine, it’s how P2P lending should be, I’m just not used to it being that way.

So I’ve picked my “notes” — which seem to be set at $25 each (I don’t understand how to put more money into a note yet, or if I need to buy multiple notes at $25) and now I guess I just have to wait for them to be funded for the loan to begin.

Since I’m using “free” money I went for a little more risky loans… a C1 rating and a F3 or something… the rates average to 15% or thereabout. I’ll give these loans a little while before deciding if I want to put any of my tax refund into P2P. I know P2P is going to be big in 2009 and surely Lending Club will profit from it… I’m just not so sure I feel comfortable with the risk, especially as everyone seems to be losing their jobs, houses, and ability to pay off debt.