Monthly Archives: May 2009

Lending Club Review and Progress

Posted on by  at  6:00 am
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A few months ago I decided to give social lending at Lending Club a try (my Lending Club review). I was intrigued by Lending Club’s business model, and having a little experience on the other side of the loan officer’s table, I thought maybe I could score a decent return.  Here are a few updates from my Lending Club progress report.

For my initial social lending experiment I decided to invest a small amount of money in two loans. Lending Club categorizes borrower profiles based on a variety factors such as credit score, income (which they verify).  I balance this against the borrower’s personal story.  Trying to read credibility in black and white is not always easy, but when you read someone’s story in the context of their other information you can usually get a feel for their authenticity.

To spread my risk out a bit, I balanced investments in Lending Club borrowers between a medium-risk borrower with a low-risk borrower. Both loans are being paid and are in good standing, yielding an approximate net annualized return on investment of roughly 11%.  Not bad for a rookie.

lendingclubprogress053009lg
Click for a larger view

Advantages of Investing With Lending Club

  • You have the opportunity to earn better returns than traditional market investing
  • Lending Club is selective about the types of borrowers they allow to join
  • Flexibility to trade notes, or hold them and reinvest (or withdraw) the interest
  • Free to join

If you are interested in investing with Lending Club I suggest starting with a small percentage of your overall portfolio until you get your feet wet.  I think you’ll find their platform very straightforward, whether you decided to invest in individual loans, or a collection of loans.  Of course, I haven’t invested enough to exactly live off passive income at this point, but it’s a start, and the potential is there for investing more down the line.


Family Summer Vacations Needed

Posted on by  at  3:00 pm
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For the last couple years now the idea of going on a summer “staycation,” not a vacation, has been all the rage. Bloggers across the frugal landscape touted the financial benefits of staying put, becoming a tourist in your own town, or spending a week working around the house. I even wrote a couple posts extolling the benefits of a family summer vacation at home. Well, for me “staycation” is a worn out term. This summer, I want to take a real vacation.

Cades Cove Great Smoky Mountains
A picture I took inside Cades Cove, from our last vacation to Great Smoky Mountains National Park

Our family hasn’t been on vacation in a few years now, and this past year has been an extremely trying one with two major medical crises affecting our family (for those who don’t know, or don’t remember, my mom suffered an aneurysm and stroke, and is still recovering some ten months later). Another close relative has been battling illness. Frankly, we’re a little worn down. I’d like to see different scenery, and smell some fresh air, even if it is just a long weekend.

So, looking ahead to this year’s summer vacation I had the idea to head to the Smoky Mountains for a relaxing few days. Unfortunately, I burned through most of my personal leave at work, so our summer vacation plans will have to work around a long weekend. Still, it will be fun to take a short timeout from the daily grind.

Of course, we’ll have to vacation with cash since we no longer borrow money. This is not a show-stopper, but will require a bit of planning. I’ve created a “vacation” fund at our online savings account and will put away a bit from each paycheck between now and late July to prepare for our trip. Ideally, I’d like to return to the mountains when fall colors are at their peak, which may require a second long weekend in October.

Staycations are great for those trying to get out of debt, or saving for a specific, short-term purpose (i.e. a down payment on a house, etc.). However, if your debt snowball or savings plan will take more than a couple years, I recommend finding a way to take a short, cheap summer vacation with cash. We all need a little break every now and then, and admitting to it makes us no less dedicated to our financial turnaround.

Six Flags Theme Parks - Buy Online Now!

How to Say “No” When Your Child Wants Something

Posted on by  at  6:00 am
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There’s something about children that tugs at our heartstrings and makes us want to keep them safe and protect them from heartbreaks of any kind. That’s why we feel upset and sad when we see their big eyes fill with tears and their tiny faces scrunched with anger when we refuse them something they want.

How often have you shopped with your little one and found the experience nightmarish because your child wants everything he/she sets eyes on?

My niece does this, and it gets pretty embarrassing when she throws herself down on the floor and bawls her heart out when her mom refuses to buy her something. But no matter how hard the tears flow, no matter how long the tantrum continues, it’s not good to give in to the whims of your young one. Besides the fact that you cannot afford to buy them all that they ask, it sets a bad precedent if they learn that they can manipulate you with just a few tears and tantrums. If you face similar problems with your child, here’s how you could try to convince your child to behave better:

  • Mean it when you say NO: If you give in when your child begins to act up, the same routine is going to repeat itself every time you go shopping. Your kid is going to get used to the fact that a few tears are enough to make you relent and buy whatever he/she wants.
  • Don’t try to make it up to them by buying something else: Besides being a financially foolish move, it does not give you the advantage you need when you go shopping. Children are perceptive, and that’s why they will soon realize that they can get something out of a shopping trip by crying hard enough.
  • Forget the incident once you leave the shop: Don’t harp about it or go on about the way your child behaved in the mall or shop. This will only make them more rebellious and determined to do it again.
  • Talk to your youngster: If he/she is at an age where they can understand money, tell your child that you cannot afford to buy them all that they want because of your financial situation. If he/she is just a toddler, use the line that the product they want is not good enough, and that you’ll buy something better.
  • Remember that kids forget easily: Your child will most likely forget the incident once you get out of the shop and stop for an ice cream or snack or see a clown on your way home. That’s the best part about children – they don’t hold grudges.

Learning to say NO to your child, for their own good, is a great way to instill the value of money in them at a very early age. Once they know that they cannot buy indiscriminately, they will learn the art of saving and spending money more wisely.

This post was contributed by Kimberly Peterson, who writes about the accounting degree online. She welcomes your feedback at KimPeterson2006 at gmail.com.

Weekly Roundup: The UN-BROKE Edition

Posted on by  at  6:00 am
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This Friday night, May 29 at 9:00pm ET, ABC will air a special titled Unbroke: What You Need to Know about Money.  The hour-long program will feature a number of celebrities including The Jonas Brothers, Will Smith, Samuel L. Jackson, and even the talking E*Trade Babies.

It will be interesting to hear the mainstream, pop culture take on how to solve personal finance issues.  TheStreet.com will be providing some commentary about the show via Twitter, and has invited a few personal finance bloggers to joing in.  If you happen to be watching with the laptop handy, you can follow our conversation on Twitter by following the hashtag #unbroketv.

The Fab Five

Building a Compost Bin. I’ve largely skipped the gardening season this year, and unless I work up a late summer/early fall garden this year may be a total wash.  Still, manufacturing some sort of compost bin is on my to-do list, and this is an excellent resource on the subject.   (@ Gather Little by Little)

I Survived – But Just Barely.  This post from Ron was an instant classic!  He runs down a diverse list of things he’s “survived” over the years, despite dire predictions from the media.  (@ The Wisdom Journal)

Finding Your Passion.  Over the last twelve years or so I’ve held a variety of jobs that seemed to fit my passion, only to later discover that wasn’t it and burn out.  The lesson I have learned over time is that no “job” is my passion; my passion is to build something on my own.  Too bad I’m too broke to be an entrepreneur!  (@ Million Dollar Journey)

50 Bad Money Habits That Will Leave You Eating Alpo for Dinner.  Often times it is the examples of what not to do that make the strongest impression.  That’s the case with this incredible resource of things not to do to experience financial success.  (@ My Super-Charged Life)

Some Thoughts on Angel Food Ministries.  I’m including this one because, like many of you, I have long been interested in Angel Food Ministries. Trent provides an objective look at the service, and shares a few of the highlights, and low-lights, of their organization.  (@ The Simple Dollar)

The Best of the Rest

Site of the Week

KidsBowlFree.com.  Hat tip to Frugal Dad reader Jasie who introduced us to this site earlier in the week. According to the site you can receive up to two free games of bowling each day during the summer for your kids, and you have the opportunity to pay a one-time fee for a “family pass” which allows up to four family members (including adults) to bowl a couple games each day as well.

Unfortunately, our local bowling center was not listed as a participant, but if your local lanes are participating this could be a frugal way to get the kids out of the house for a few hours during the summer.

5 Secrets To Sustaining Good Financial Habits

Posted on by  at  2:00 pm
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Two dentist visits ago I had a cavity. It wasn’t my first cavity, and it probably won’t be my last. This one didn’t come as a big surprise because it was around the time when I was eating on the run, eating late at night, and not going through my usual brushing/flossing routine. The extra appointment for a filling (and the extra costs) reinforced my commitment to taking better care of myself going forward.

Why all this talk about oral hygiene? Because it sort of reminded me of my own financial turnaround. When we go through a particularly troubling time, and wounds are fresh, it’s easy to remember how things felt before we turned them around. Just like I brushed and flossed like crazy in those weeks immediately following my cavity, most of us can easily make sacrifices when we first go through a financial turnaround.

But over time your dedication to new habits gets tested. You get sick. There is an emergency. You simply lose interest. And slowly your resolve to do better fades. Old, bad habits reemerge. The intensity you had immediately following the negative experience flames out.  So how does one keep up that intensity? Here’s a few ideas.

1. Write down your goals (be specific). It isn’t enough to say, “I will avoid getting a cavity at my next dentist visit.” Be more specific. I will brush and floss my teeth after each meal and before bedtime. Similarly, setting a goal of “Saving some money for vacation” is not sufficient. I will save $1,000 in the next twelve months for vacation is much more tangible.

2. Find an accountability partner. Some people argue against telling others when starting out a new challenge. I’ve never understood why. Share your goal with a trusted friend, or your spouse, so they can help remind you of your goals when you start to slip a little.  If your best friend knows you are trying to pay off $5,000 in credit card debt they are less likely to invite you shopping, but might opt for a dinner and a DVD at their place.

3. Keep your goals close. When you feel yourself starting to slip, whether it is on a new nutrition plan, or an improved financial plan, make it easy to refer back to your original goals. Consider typing them in a small font, cutting out the list and laminating it for your wallet or purse. I did something similar by putting a wallet-size picture of my kids in front of my debit card. It was a visual reminder of why I was making this turnaround, and I saw it every time I wanted to spend money.

4. Remember progress, not perfection.  Many people miss their goal for a variety of reasons.  Perhaps the goal was unrealistic, or something unforeseen came up and caused you miss your target. Instead of being discouraged and giving up, celebrate the progress you did make!  If your goal was to pay off $5,000 of credit card debt, and you only paid off $4,000, that still leaves you with $4,000 less debt.  Don’t feel sorry for yourself and run out to charge your cards right back up to $5,000 again.

5. Surround yourself with people with a similar goal.  This is the reason I started Frugal Dad. It was my hope that it would attract people like me with shared dreams of financial freedom. I draw a lot of inspiration from readers who share their stories in the comments, and in private via email. It’s nice to have those daily reminders to keep us on track.