Sunday, June 25, 2006
The whole point of cheapskate home security is based on deterrence. Here's my ideas:
(1) Find a friend who pays for security service and get one of their signs. Security companies usually give two or three with an installation. Perhaps, your friend has a spare. Once you get the sign, put it up in your front yard.
(2) When on travel, use some timers for your indoor lighting. Here's an Amazon search of indoor light timers.
(3) Consider using random security measures for your house so that someone planning an burglary doesn't get a good read on your routine. Here's some ideas:
(a) Cycle between your outdoor lighting scheme. Rather than have all of your outdoor lights on, cycle between using your lights for your front door, back door and/or garage
(b) If you have a garage, don't always use it.
(c) You can probably come up with a few others.
(4) If you're traveling, stop your mail or have a friend pick it up.
(5) Consider a baseball bat or other weapon near your bed. This may be suitable if you're not scared of conflict and you don't have a sophisticated alarm system (with sensors for windows, glass break sensors, etc).
(6) Plant thorny bushes near potential access points.
(7) Set up motion sensors on your exterior lighting.
(8) Get a dog. A cheapskate alternative is if your neighbor has a dog that shares your fence line. We've got this situation and their dogs always bark when I walk in my back yard.
(9) Consider getting signs such as "This house protected by Smith and Wesson" and/or "Beware of dog." Even if you don't have a dog or a handgun, it could be a deterrent.
(10) Keep your grass cut, don't let your newspapers pile up.
(11) Get dead-bolt locks.
Adopting all of these ideas is certainly not cheap. However, a homeowner or renter could probably take a few of these ideas and come up with a low cost alternative. Additionally, if you're a real cheapskate, remind yourself of the true expense of having a home intrusion/burglary occur (might be a little incentive to open the wallet/purse).
Wednesday, June 21, 2006
Right now, membership is set at invitation only. Email me if you desire to be associated with this group. I tentatively plan on:
(1) Finishing the group's prosper profile within the next three weeks.
I will reconsider relaxing the group's restrictive invitation only membership policy closer to the time that the group's profile page is finished. These next three weeks will allow me time to pattern Feng Shui Financing after the best bits and pieces of other prosper groups.
Please leave recommendations as necessary in my comments section.
The title is a little bit misleading. It's actually my opinion that you should DELAY funding your account. Here's the reason why:
(1) Lenders and their deep pockets appear to be growing at a faster pace than borrowers willing to submit good applications. I define good as prosper borrowers appropriately setting the interest rate they're willing to pay in line with their credit grade. I'm finding TOO many cases of people with the worst two possible credit grades asking for loans at rates around 10%. Get real! Prosper.com's primary mission is not to provide a forum for charity. (Enough of my rant)
(2) This imbalance between lenders and borrowers is causing some of the good loans to get bid down to lender risk adjusted rates equivalent to a Certificate of Deposit.
- Prime example: Within the last 48hrs I watched a "D" credit graded teacher get a roughly 12.9% interest rate on her loan. Working backwards (by trial and error), prosper.com's auto fill calculator shows me that lender's bidding on this loan got a risk adjusted return of only 6.7%. On top of this, they're assessed Prosper's 0.5% annual fee to yield an APY of roughly 6.2%. These lenders are much better off buying preferred stock or going to bankdeals and finding a bank running a certificate of deposit promotion.
(3) Ok, here's the take away... If you haven't funded your account yet, consider taking a break for about two weeks and checking back. Perhaps the supply of borrowers (with good applications) will fall in line with the current demand of lenders.
(4) Alternatively, if you're patient, go ahead and fund your account. However, if you're picky like me, you may not be able to find more than one or two decent loans a week.
I'm thinking that the groups that "vett" the loan applications are not doing a sufficient job training their loan applicants in writing a loan request. If I ran a group, i'd seriously consider trying to set a minimum interest rate based on each loan applicants credit grade. While, there probably isn't an efficient mechanism for enforcing this, i'd certainly try to steer them in the right direction. Absent of opening my own group, I whole heartedly recommend the group "due diligence." It's group leader has consistently turned out quality applicants. Let's see if he keeps it up.
Additionally, I HOPE that over time, people are going to hear about the great rates that borrowers are getting on loans and that the growth rate in borrowers may eclipse that of lenders and correct this temporary supply-demand imbalance.
Finally, prosper borrowers should consider listing their loans at their state's max interest rate. Not very many people are doing this. If done, they'll get an instant rush of bids through prosper's automated fill system. On top of that, they'll get massive click traffic for their application. Their application will pass most of the lender's initial screens. In no time, they'll have a 100% bidded loan. Then, they can sit back and watch the lenders bid the rate of the loan down like starving piranas
Good Luck All (Borrowers/Lenders)!
Watching the Stock Trades of One of the Sharpest Stock Pickers (CNBC Squawk Box Maserati Competition Winner)
Thomas Ko is still on a hot streak. He's matched up against 5 bonafide stock market professionals and is kicking their butt too!
Go to the MSN Strategy Lab to watch Thomas Ko's trades. Thomas Ko started with a hypothetical $100k on June 16th and has already turned it into $134,548. Part of his edge is probably the fact that he's hot and everybody is piling in, more so than the Jim Cramer (BoooYAH) fanatics.
This is what I found:
(1) Transfers initiated on Sunday, Monday and Tuesday had the quickest turn-around (3 days)
(2) Transfers initiated on Thursdays had the worst turn-around (6 days)
Prosper.com states that transfers should occur within 2-4 days of initial request. I have yet to see a 2 day transfer. I suspect that my results may be varying from others in that I use a regional bank vs. a national bank. In this respect, my regional bank may be slower than some of the major national banks that Prosper.com has worked with.
My recommendation to you:
(1) Use the just-in-time financing strategy (multiple transfers during the week)
(2) Establish a baseline amount equal to (1) or (2) times your normal bid. Keep this in your Prosper account at all times. This baseline amount won't collect interest, but can be immediately used to bid on those loan requests that have the "automatic funding" feature. Some of these loans are being filled in less than 3 days. I even saw a great deal yesterday (C rating @ 18% interest rate). This request was for less than $2k and actually funded in less than 4 hours after initial posting.
(3) Transfer the bulk of your funds on Tuesdays. This way the money is in your account for the weekend, a period where no new money is added to prosper lending accounts.
Summary of my results for lending transfers (your results may vary)
Transfer Initiated / Transfer Completed
Sun / Wed (3 days)
Mon / Thur (3 days)
Tue / Fri (3 days)
Wed / Mon (5 days)
Thur / Wed (6 days)
Fri / Wed (5 days)
Sat / Wed (4 days)
I have yet to see a daily deadline for balance transfers. Does anybody know whether balance transfer requests initiated after a particular time are deferred until the next business day? If so, what's the time?
Monday, June 19, 2006
In April we got a Dish Network satellite system. We skimped on paying the extra $5/month for the local channels but we splurged and got two DVR receivers (our first time to have either a DVR or satellite dish).
Anyways, upon initiating our contract we got a $100 rebate good for $10 off each month's bill for 10 months. The rebate form stated that it was valid between 2/1/2006 and 6/30/2006. Knowing that I had plenty of time (like mailing taxes on April 17th), I procrastinated until today to mail it in. MY MISTAKE. The fine print on the document says that it has to be postmarked within 60 days of account activation.... We activated the account on April 8th! Having a very Homer like moment here (DOOHHHH). Well, it's already stamped, i'm sending it out anyways. We'll see if they overlook it.
Saturday, June 17, 2006
What did I have to do? I provide them w/ an email account and they send email advertisements to my account. I read the advertisements and get 5-10 points for just reading them and 200-1000+ points for participating in particular sales promotions.
I've never had a problem with the site and would recommend it to others. If you want, send me an email and i'll do a referral. Mypoints.com has a current promotion where people referred by friends get 125 free points for their account while the person providing the referral gets 100 points.
Since becoming a member of the mypoints community, i've only participated in one promotion (getting a sharebuilder.com account). All the other points that i've obtained (16,900) have been via their email advertisements.
While I say you can get $20 in gift cards/year, there are others out there who could get over $100 per year based on shopping patterns. This combined with the use of rebate credit cards can provide you a way to double-dip on refunds/kick-backs.
Here's some specs on my site:
(1) Technorati Rank: 210,838 (30 links from 16 sites)
(2) One of the highest rated blogs on pfblogs.org, currently hold a rating of "7+" clicks per article
(3) Now have 103 articles posted to site
(4) Successful interview at money blogger podcasts
(5) Strongest trait: I'm a finance geek!
Send link exchange requests to: pluggedinfinance(at)gmail.com
ING Direct has simply fallen behind the pack in offering competitive rates. Heck, my local credit union (Navy Federal) is offering as high a return on their money market accounts. Cashing out now also establishes a lower baseline account value in the event ING Direct tries another promotional period of offering a higher interest rate to new money.
As for gambling, I've kept to a budget; however, most games require a "rake" which shifts any game from equal odds to one that has a negative implied value (house always win). I feel that i'm better off using these new funds to boost my prosper.com bankroll in order to construct a real return portfolio that should net my family around a 12%+ real return.
So far, I've got 9 active loans (18.38% avg interest rate) with 4 going to funding and 2 in the bidding process. Short term, i'm considering keeping my loan bids around $50 or so. I'll probably start doubling my bids to $100 once our loan portfolio achieves $50/month in interest income.
Friday, June 16, 2006
As for my opinion on car leases, haven't done one yet (only buy them). However, if I did, I'd start with Costco (wholesale club) and use them for comparison shopping. Costco tends to have good deals, and i've heard favorable things about their car leases from a relative (relative got two hondas via Costco).
Wednesday, June 14, 2006
(1) Check out Eric's Credit Community. This site gives a lot of good stats about Prosper lenders and borrowers. Recommend looking at his summary of delinquent loans. One limitation of this site is that some inaccuracies exist in the data that Eric presents. For example, his site lists me as having loaned out $500+ in loans. I've loaned out $377. It seems that he isn't capturing the cases where loans get bid to 100% but get pulled by the lender before Prosper transfers funds to the borrower's account. Absent of this example, much of his other data is invaluable.
If you look at the delinquent loan list, you'll find a common theme: In 79% of the late loan cases, the group leader did not participate in the bidding. If a cook doesn't eat his/her own cooking, are you confident in eating it too? I like to check for this whenever i'm bidding on loans. I typically use my own screen/filter to identify ideal loans; however, I quickly gain a little more confidence in my bid when I see that the group leader is bidding too. The group leader is typically involved in vetting loan applicants (directly or indirectly) and should have the best information to determine whether the risk vs. reward is more favorable for the lender or borrower. This approach has its limitations in that some groups state that they bid on all of their loans (watch out for this).
(2) The proper lending dead-zone occurs during the weekends. I call it a dead-zone b/c I believe that ACH transfers (money) do not occur during this time frame and there's fewer lenders able to lend when loan applications are expiring. My tip: make sure you have at least one increment of your typical bid in your account by Fridays. This way, you can participate in bidding on loan(s) when other people have less capability of bidding and competing against you.
(3) Seeing that the big money likes the same loans as me is reassuring. Right now, "L5" is the biggest lender on Prosper. After I find a loan that I like, I'm a bit more reassured when I see the big lenders, like "L5," bidding on the same loan. This third comment isn't empirically tested to determine validity. While pure conjecture, many people with wealth don't get wealthy by being dummies.
(4) It's my personal opinion that you should stay away from borrower's that are either asking for charity or have a tone similar to "help __ out," "need a break," etc.
(5) It's my personal opinion that you should not bid on business loans when the borrower's APR is greater than what you perceive is a reasoanble profit margin for them.
Feel free to scroll down to my other listings. Many of the recent ones are specific to Prosper lending.
Sunday, June 11, 2006
This should work well for most households. I put the best ones (lux and casino hotel toiletries) in the basket while keeping the cheaper ones for our master bath.
Saturday, June 03, 2006
An Implied Tax On Prosper Lending Portfolios: Just Realized That Prosper Pays You Less Than What You List as Your Minimum Yield on Bids
Prosper.com doesn't make money just off the "delta" between the borrowers APR and the lender's approved APR bids. There is an additional 0.5% fee charged on all loans. In addition, the group rewards don't come from the "delta" mentioned above. THEY GET DEBITED FROM PAYMENTS MADE TO THE LENDER. This is disturbing because a lender viewing the Prosper.com help section titled "FEES" (as of 3 Jun 2006) will not see anything about group rewards at all. Furthermore, Prosper.com goes to the point of saying in this specific section that "There are no other fees of any kind."
I previously inferred that they come from the "delta" between the borrower and lender's APR, now I feel a bit betrayed. However, I know realize that while Prosper should communicate this fee more effectively, it's a novel strategy to channel lenders into joining groups in order to offset this implied "group rewards" tax on loan portfolios.
I discovered all of this when I examined the performance on our first two loans. This is what I found:
(1) First loan of $50 to a "B" credit rated individual collecting 11.85%... $1.68 was paid, $0 removed as a not sufficient funds fee (NSF), $0.03 was removed as a group reward fee and $0.02 was removed as a Prosper.com fee.
(2) Second loan of $50 to an "E" credit rated individual collecting 21.50%... $1.93 paid, $0 was removed as a NSF fee and $0.05 was removed as a group reward fee and $0.02 was removed as a Prosper.com fee.
Bottom Line: $3.61 paid, $0.12 deducted (3.3% implied tax)... While the 12 cents doesn't go to federal or local governments, I view it as an implied tax. If you only look at the group reward fee, I had $0.08 removed (2.2% implied tax).
If you read the fine print in the fees section, Prosper states that the actual service fee ($0.04 of the $0.12 deducted this time) actually varies depending on the timing of the loan.
I recommend that lenders be careful and understand that your bid is actually an annual percentage rate (APR) vice an annual percentage yield (APY=what's actually deposited in your account). Your winning bid will be reduced by 0.5% or more to get your APY. Prosper.com will give you an APY in the "loan performance" section. However, I remain suspicious as to whether or not Prosper is calculating the APY correctly. It is not clear as to whether or not they are factoring in the group rewards deducted from lender disbursements to determine the actual APY. IF NOT, THEY SHOULD!!
On another note:
(1) When is PROSPER.COM going to start advertising with commercials?
(2) When is PROSPER.COM going to start offering IRA options?
(3) When is PROSPER.COM going to start paying interest on funds not invested? Come one, even brokerage firms pay a measly yield.
Please don't construe the tone of this posting as anti-PROSPER. I will continue to use it. I may have made a mistake an overlooked a disclosure that specifically addresses "group rewards" fees against disbursements. Now that I know "group rewards" get deducted from the money that is due to me (the lender), I will re-evaluate how much I value the vetting done by groups sponsoring borrowers.