August 22, 2006

Whoops

I was feeling lonely over here because the site meter showed 0 visits since last week. Turns out I forgot to add the site meter html to my new template.

Prosper-ish

I’ve been watching various bloggers talking about Prosper and wondering if I could or should try my hand at it. The fact that there’s no real guarantee is unsettling, though why it’s more unsettling when it’s a loan to a real person rather than money I invest in mutual funds doesn’t make much sense.

I’ve not made any further moves towards Prosper because I have two “loans” outstanding already through family connections that are a traditional sort of Prosper. To be honest, I think that this informal but monitored set-up we have is very similar to what Prosper is based upon.

One is an outright loan with a family friend who needed cash capital. He offered 3% interest monthly and since it’s an anonymous loan he uses PaDucky to facilitate the interest payments, and he subtracts that amount from the total that PaDucky owes him. Essentially, his paying on my loan to him is forgiving a business loan he extended to PaDucky at a much higher percentage than I could earn anywhere else. Previously, when he was able, PaDucky did pay that cash to me, but since it just got paid into the household bills anyway I didn’t worry about it when he wasn’t able to any longer. Not only do I not have to help pay back that debt in cash, it’s still slowly being “paid down.” And no, he’s never asked me to help, I just feel obligated when we still do business with this person. I’m rather proud of that one.

The second is the pre-Prosper family loan community that I’ve just started with this year. PadresDuckies have apparently used this system to raise large amounts of cash on short notice for business capital for years.

Basically, a large group of people (approximately 40+) decide they’re in. The same person is always the banker in this very odd game of banking. She holds the cash and guarantees that no one is going to cut and run with the money. Everyone makes a first payment of say, 200, which she uses to begin funding the whole process. The first payment is collected from everyone and that sum goes to the first winner of the bidding process. Basically, it means that (40 times 200 equals 8000) $8000+27% is the pot every month, and traditionally, whoever wanted the pot typically bid the amount of interest they were willing to pay. This interest rate has varied greatly in the past, but this particular banker has set the interest rate at 27%: she won’t allow it to go so high as to financially cripple the eventual winner but it’s definitely lucrative if you wait it out. [I think my numbers are right.]

Because this is a family/community sort of thing, everyone can have different rules, but I’ve been told never to do this outside of this particular group because she’s very trustworthy and it’s nearly impossible to verify anyone else’s trustworthiness. Each “play” goes for as many months as there are people. In this case, there are 40 people, so 40 months. Every month someone takes the pot, and then they’re only in the game to pay their 200 plus 27%. You either pay your 200 until the end and then take your pot, gaining the whole 27%, or at some point in the game you decide to bid for it and take the pot and pay your remaining portion at 27% interest. You can still profit if you wait it out longer than half of the total time involved. There’s a slight variation of putting up a pot of your own to buy someone’s stake, and then they pay you the interest money directly, and you still get a pot in the end. Obviously, you have to decide that you’re willing to invest your money in this investment model rather than another.

It’s basically risk-free because you’re going to get your money back when you want it, depending on how long you can afford to pay and if you decide you want an infusion of cash for any reason. I found it very intriguing that there’s always someone who wants the pot so you’re never forced to cash out early as I’d feared, or so PadresDuckies reassured me. I decided to give it a whirl, and managed to buy someone’s stake but it’s definitely a long wait for the payoff.

Trading the lump sum is worth it to me because I will be able to bank the monthly interest for MaDucky without taking it out of my own paycheck, and when I get the total pot, I’ll keep the interest and reinvest the principal.

This is a rather unique investing opportunity that sort of musses up my net worth assessments. I don’t include those two loan amounts in my net worth because I really don’t know how they’d fit in. I don’t consider them touchable assets, I generally just track them monthly and forget about it. It’s like the ultimate game of hiding money from yourself, but just because it involves absolutely no effort on my part and I’ll just unnecessarily fuss over it. I guess they’ll just have to sit out for now!

August 20, 2006

Financial Advisor I’m Not

But I had the chance to help out a friend today in reviewing her finances and to set up a credit card debt repayment plan.

I did reiterate many times that she should tell me when we approach her comfort level in personal finance juggling and that she has many other options in doing this, not just to take my personal experiences and preferences as ironclad. She’s a good friend so I don’t want her to feel obligated to just follow my advice blindly or to do things my way for fear of offending me.

No dollar details here without her permission, but she’s on a limited income and has about 90% utilization on her credit cards. We talked about her monthly/quarterly expenses and broke down the expenses by paycheck. We also started her off easy with an INGDirect referral to be opened tomorrow. We’ll research some 0% BT cards for her during the week, with an eye towards opening up that Citibank $100/$100 bonus checking and e-savings accounts so that she can start taking some steps toward debt reduction while using that bonus money as seed money for her emergency fund.

I’d say we’re off to a nice start!

August 16, 2006

Virgo? Libra?

I’m on the cusp, as they say, because some newspapers have me as the one, some as the other. But I’m much more a Virgo than a Libra (thanks to SingleMa):

Virgo (August 23 – September 22)
You probably know exactly how much you have in your bank account, Virgo, right down to the last penny. You get the most pleasure from your wealth when you follow it closely and stick to a budget. You also like to get the most for your money — in fact it’s something of an obsession for you — so you do price comparisons before buying anything lavish. You’ve got a secret weakness for natural fibers, handcrafted items and organic food. Don’t deprive yourself of these pleasures.

Libra (September 23 – October 22)
You love the things that money can buy, Libra, but sometimes have difficulty prioritizing your spending. After all, there’s no point in having a beautiful set of china if you have no food to serve on it! A professional financial adviser can be enormously helpful to you. Of course, a balance-oriented person like you will want a portfolio that is comprised equally of stocks and bonds. For purchases, you’ll find art, antiques and entertainment most satisfying.

[Can you tell I just discovered colors?] I do know exactly down to the penny what I have, in each of my ten accounts. And I do, neurotically, check everything every day. You know why? Because I excel at screwing up. Yes, I do insist on getting the most for my money, because I don’t have much of it. But, natural fibers, handcrafted items, and organic foods? No, no weakness here. On the other hand, I do love what money can buy, I just don’t have trouble prioritizing, nor would I suffer a professional financial advisor who didn’t know more than I did, gladly. Sadly, my portfolio is heavily weighted with stocks right now, and I’m hoping that’s not going to sink it quickly.

Oohhhh, Retirement Plan!

TO: University Non-Exempt Retirement Plan Participants

University non-exempt employees have frequently expressed a desire to be included in the university’s Exempt Staff and Faculty Retirement Plan. Many of you confirmed that preference in the benefits satisfaction survey in 2004. The Retirement Plan Review Task Force is considering returning to a single, tax deferred retirement plan covering all eligible faculty and staff.

This week, we will send a short survey to your home address to get your response to our ideas for change. Let us know your opinion by completing the survey and returning it to us via campus mail by August 22.

I can’t believe how excited I am about the possibility of matching funds!! Except I wonder what they’ll do with the current Supplemental fund. I really almost don’t care, as long as they start matching funds.

August 15, 2006

15 days, -$ 235

It’s my August mid-month challenge! After I straighten out a couple of issues and pay back one card for work expenses that were reimbursed, I have [150] dollars for the rest of this month. And I’m [135] dollars for the hideous utility bill. I’m negative [235] dollars at midmonth. For shame!! This is not a good tingly feeling I’m getting here. How shall we make up that negative, so as not to dig into the savings allowance this month?

Well, I have a small chunk of DealBarbiePays money coming in the end of the month. I think I’ll wait a little while longer to request the next withdraw since I could spend a little time looking for more high amount offers.
Just requested a cashout on my wee little Fatwallet balance, they PayPal now! I hope that means it’s coming sooner.

I think that leaves me needing approximately $150 of creativity.

[I know I worked a LOT of OT last pay period, tomorrow we’ll see how much that overage really amounts to, but since I’m behind on my insurance/household bill deposits I feel like using that would just be cheating. Filling in old holes takes priority over new holes in the budget.]

Working even more OT this week is rather difficult considering my boss wanted me to take this Friday off to hang out with CousinDucky. And frankly, she’s worth more than a little OT.

So, creativity, GO!

Health makes wealth?

Three weeks ago I started going to a yoga class that a few friends were going to try. The relief has been incredible. I’ve been able to go without a couple of my daily pain medications that had become routine substitutes for pain and stress relief. [I know, bad, I didn’t like the idea either.] I’m saving money on those prescriptions and who knows? Maybe the condition that those meds were prescribed for will improve as well! Ok, maybe not but still, it’s a far better treatment for my aches and pains than the “take three, call me next month” routine my doc and I had going.

If I break it down, purely financially, then I think this is the more expensive out of pocket route:

Yoga: approximately $8 per class, once a week.
vs
Meds: $30-$40 once every three months, plus a $10 copay for the bimonthly visit.

Total:
Yoga: $88 for three months
vs
Meds: $50 for three months

However, the intangible benefits are more difficult to measure. How much is not having a funny taste in your mouth worth? How much would you pay to learn how to ward off the physical symptoms of stress rather than popping a pill when they start manifesting? Let’s say it’s worth $5 for a major stressor, $2 for a minor stressor. At that rate, I could “afford” to be stressed or upset 2 major and 4 minor times, or 3 major and 2 minor times in three months before yoga broke even.
I’m going to guesstimate that Yoga will break even in two days. Tops.

Here’s my real math problem for this post:
Can I afford to go twice a week AND take MaDucky with me one of those two days? Obviously I’d be paying her shot. Yes, it’s a luxury to take the class twice AND add MaDucky to the bill, it’s just that … well …. I take that class to get away from everything. That includes family and family problems. I’m concerned about her health too, but am not willing to completely sacrifice my only relaxation time.

I’ll lose an hour of overtime per day that I leave *early* to go to this class, so I’ll lose that if I just don’t work on the train. Again, I break even working on the commute home twice a week. I’m planning to take up that second class when the next session starts, in about three weeks. The second class will be the one I bring MaDucky too.
It’ll cost $88-90 for the both of us for the next 6 weeks, due in early Sept. [It’ll go on my credit card of course, but I don’t use the card as a crutch, it’s just a halfway house for my finances – a means for me to make a little extra on the side.]

Hm, at $15/week, that’s about $60 out of my personal budget, leaving me $30. Or I could split it between my medical and personal budget, my half is medical and MaDucky’s is personal.

In any case, my point is that if the yoga classes ultimately relieve the pain and discomfort long-term then the amount of money I’ve been spending on medications and doctors’ visit will decrease annually, and I will not have to continue spending on new medications to treat the almost inevitable conditions that will arise secondary to the main condition.

Case in point: the stress became so intense at one point that my eyesight was compromised. The optometrist said that the condition of my eyes were such that I needed bifocals. $280 later, I don’t even use those glasses anymore. What a waste!

***As I’m writing this I realize that I’ve been positively negligent when it comes to tracking my expenses, just depending on knowing vaguely what my allowances are. Considering how well that’s NOT going, either I return to the daily/monthly budget sheets, or I create yet another fund for the bigger expenses like travel and miscellaneous expenses like dog and driver’s licenses.