Some "pennywise" investing with my mad money

Posted on July 8, 2009 by Jessica

Back in January I took $100 and invested it in something new and different–peer to peer loans. I made my loans with Lending Club and divided my “investment” into four different loans of $25.

All are still current and one is even paying back aggressively. I’ll have another $25 back to reinvest around the end of the month.

So far, my net annualized return is 10.22%. My mom also used their IRA product and is experiencing an even better return (so jealous!).

I might invest more this way later after debt-freedom. It ties money up for a while (about 2-3 years) but you slowly get it back. I might use it like a CD ladder. I’m very excited to see how well P2P lending will fare after the traditional credit markets free up, but I certianly like this process a lot more than traditional banking.

Surprise Cash Infusion!

Posted on April 9, 2009 by Jessica

This isn’t the kind of “making money online” that I had envisioned, but it’s making money and isn’t any work at all, so I’ll take it!

One of my Lending Club borrowers is especially ambitious and paid a large chunk of principal back yesterday. This means I’ve just gotten an infusion of cash that I’m getting ready to re-invest. If you’ve got a Lending Club loan, please tell me about it, I’d love to invest in yours.

This particularly ambitious borrower combined two car loans into one shorter-term loan so he could get pay off his car loans faster and more conveniently.

Thanks!

Lending Club Annoucnes an IRA Product

Posted on March 25, 2009 by Jessica

Lending Club announced today a new self-directed IRA product.

This is great news for folks like myself who are both self-employed and fans of P2P lending.

If you want to start an account for the 2008 tax year, you need to be enrolled and have funded your account by April 15th. The account goes by “real postal mail” not electronically, so hop to your research right away.

You can read more at the article I posted to Prosper Lending Review, where I’m a guest writer.

Need Money?

Posted on March 23, 2009 by Jessica

I’m going to invest a little more money in Lending Club. If you’ve got a loan in funding, please tell me about it–I’ll consider it as I select one.

A Happy Lending-Club Surprise

Posted on March 23, 2009 by Jessica

As I was taking a look at my Lending Club account, I realized I’d made a big mistake in my understanding of the process. In my Mint.com account where I usually view my account I can see the $1.27 of interest that I’ve earned in the past month on my $100 investment and I’ve been feeling pretty good about that. What I didn’t realize is that I have an additional $3.87 in the account as cash that doesn’t show in my summary. This $3.87 is an additional principal amount that has been repaid by my four borrowers. This means I’m almost four dollars ahead of where I thought! I realize this isn’t much, but considering how small my investment was, and how short the term has been, I’m impressed. All my loans remain current. My husband today congratulated me on taking the plunge to try something new, even though he’s not usually big on trying new things, especially with money.

Thanks also for those of you who’ve visited my advertisers–I’ve had some ad revenue come in lately and as I’ve mentioned before, all my ad revenue gets “debt snowballed” towards the balance of our adoption debt from adopting our last precious daughter.

All Ad Money Gets Snowballed!

Posted on March 19, 2009 by Jessica

I’m an investor at Lending Club. I started out putting in just $100 because a friend suggested I try it. Now I think I’ll be contributing more frequently. You see, despite my broker’s best efforts (I am not loosing money in the market right now), my lending club is earning 10.98% while my IRA is falling substantially short. (Though not negative–a special thank you shout-out to Dean S. at Edward Jones!).

Lending Club is a peer to peer lending platform, where investors like me can put out little loans to others (lots of little loans from investors makes one large loan to a borrower). I’ve bought four loans at $25 each, and they’re doing quite well. I earn interest on them every day and it’s fun to take a look at the interest accruing. I’m just one month in to my investment and I’ve already earned $1.18. More principal payments are due in the next week or two, so I should be getting a little more income this way. I’m helping someone else out (I think all of the loans I purchased are debt-consolidation loans), and I’m making a little residual income.

It’s fun to browse through the borrowers and choose the person you’re willing to fund (you can ask questions if you want to know exactly how they’re planning to pay you back!). Remember, these are loans, just like if you were to spot me a $20 for lunch. There’s always the risk that the borrower won’t repay, but unlike loaning a friend a few bucks for lunch, Lending Club has an excellent debt-collection team, so you can be assured they’ll track your borrowers down for you. Also, they’re invested in their loans too–so A: they think it’s a good investment and B: They’re on the hook as much as you if the loan goes sour.

In a further vote of confidence, Lending Club announced this morning that they’ve just received their 2nd round of VC funding, which is great news! They’ve just received another $12million in capital to keep up their growth.

Here’s a cute video about how it works:

Part 4 of 5: Alternative Income Strategies

Posted on February 27, 2009 by Jessica

This part of my strategy is mildly controversial and not yet totally proven, but it’s working for me and it’s a whole lot of fun. I’m going to encourage you to risk only what you can afford and give it a try. Our 401K, 403Bs and IRAs are tanking. We’ve literally lost 50% of our retirement/savings this past year. Seriously not fun because we have been very diligent during our working careers to save responsibly. I’m too afraid to try the stock market just yet, so when a friend suggested I investigate microloans, I decided to give it a try. First I put $25 on Kiva.org in a five-month loan. No problem, in five months, I get my money back and in the meantime, a nice lady in Central America is starting her clothing shop. No harm, no foul, and my interest-free investment is more secure than under my mattress or in my 401K. Thank you Kiva. But then I wondered if it was possible to make interest on these investments. Turns out, there is. I joined Lending Club and invested $100 into four loans, to prime borrowers only. There’s a risk of default here, but I invested only in prime borrowers, and only $25 in each, so there’s a pretty good chance I’ll get paid back at least most of what I leant. Also, Lending Club has a reputation for really chasing down those who owe money. Most forms of microlending have very low default rates though and as I’ve learned more about these while blogging at Prosper Lending I’ve decided to go ahead and keep investing. So far, I’m making money every day on my “microinvestment” of $100. This month, I’ve made $.60, and I have monthly payments of $3.33 owed to me tomorrow. Not bad for doing nothing. It’s like being a landlord with less commitment and no midnight maintenance calls. If you’ve got a little cash you’d like to invest (or if you need to consolidate a higher interest loan into something lower-interest) you might want to give peer-to-peer lending a try as either a borrower or investor. I love how interactive it is—I got to choose who I was investing in. Other options include Microplace (international investing) and PertuityDirect (a mutual-fund version of peer-to-peer lending).

The bottom line: diversity in your investments is good right? I’m helping someone and earning 10.89% interest right now. Not too shabby.

Back to list

Be Debt-Free Calculators

Posted on February 26, 2009 by Jessica

The average American household has about $9,200 in credit card debt. I hope you’re in the bottom end of average. I’ve busted more than this already in 2009 (and it’s only February) and I have just slightly more than this left to go before my debt-free goal of July 2009. It’s going to be close but I have faith that we can beat it. What then? I think we’ll go to Disney Land (but not until we’ve saved for it).

CNN Money’s Get Out of Debt calculator:
Enter your debts (they’re optimistic as there’s only five lines but an option to add more). Choose from the following options:
1. Fixed Payments (how long ‘til I’m debt-free?)
2. Minimum payments (how long will it be and how much will I pay?)
3. Debt-free deadline (what do I have to do to be debt free by my desired date?)

This calculator is anonymous and produced by a reliable source (CNN). It is very, very easy to use. Unfortunately, one thing it fails to mention is that this payoff plan will only work if you put those cards through the shredder!

Living on a Dime:
You don’t have to get out all your statements, but you should know what you owe in total and the average interest rate. Plug those in the boxes and you can click “show me the light” which will say how long it will take and what it will cost to be rid of your debt. Another cathartic, though not very useful button is “take it all away” which simply clears the boxes. I realize this is likely so you can re-enter different information and try it again. I put in the same info and “took it all away” several times in lieu of paying a therapist today. I feel better already.

Bankrate.com’s Debt Calculator:

Bankrate.com is a Web site for those shopping for credit cards. If you feel like you’ll be compelled to try… don’t bother, use one of the earlier links. This is a pretty good calculator though. It also shows the interest rates of some other cards. I hope your rates are better than theirs. I know mine are.

What all of these fine organizations fail to do is to remind you to sit down and chop up that card. I’m saving my chopped up card chips for a craft project. Maybe a mobile, or a mosaic or a Christmas Tree ornament. I’m waiting for the inspiration to come to me. (I have strategically tossed some chips from each card in hopes of preventing my relapse into using the cards, but it feels so good to be this close to debt-free that I’ve never felt compelled to use the cards or order replacements.

Another thing that these sites fail to mention is that if you haven’t called in the past three months for a lower rate, you need to do it. Will your card company do a 0% balance transfer from another card? Will they reduce your interest rate for even a short time? I called back in December and got my rates lowered on almost all of my cards. One even told me to call back each month for a lower rate, and would you know, it’s working? My credit card interest rate is now between 5%-8% and it is 0% on one card until August.

Take a look at my post earlier about my results with this technique.

Not having any luck with credit card companies lowering their rates? Many people are using Lending Club to consolidate their credit cards into a single lower-rate loan. I’m an investor (yep, I invest in these kinds of consolidation loans!) with Lending Club, and I’m really happy with the company.

Also, if you’re looking to consolidate, be sure to get rid of those cards so you don’t just start over!

Snowflake!

Posted on February 17, 2009 by Jessica

I truly hate the “a little here, a little there” approach to paying off debt. Sure, I know it works, but I hate doing it, it’s a pain. I’ll do it anyway now becuase I know it’s the right thing to do.

Also, this week is midwinter break for our oldest daughter, and I thought this would be a good opportunity to instill some financial virtues in her. This morning we put on some loud music and sorted out the “penny bucket” which had about four pounds of coins of various nations. We sorted all the US money into coin rolls and such, and then dropped it off at the bank, $33. Not too shabby.

I’ll “snowflake” this to the last credit card. I’m ambitious now. I’ve seriously caught myself looking around the house to decide what I could sell to unload that one LAST debt and be free of my plastic chains.

Last week our oldest daughter came home and sat down on the sofa by where I was writing and said “Mom–today I learned about interest. Did you know there are good kinds of interest and bad kinds of interest?”

Wow. Those kinds of teaching opportunities don’t come along every day do they? It was the same time that the tax refund came and I was just about to pay off two credit cards entirely.

I sat her down and opened our Mint.com dashboard. I showed her our “good” interest, such as my Lending Club investments, which are earning about 11%). I also showed her our “bad” interest, and how we were going to pay off two of our three credit cards and put them through the shredder.

I encouraged her to save for her future. Tomorrow we’re opening “Smarty Pig” savings accounts together. Come back soon to see how that went.

The Pennywise Family

Category Archives: lending club