Care to Prosper? P2P Lending Update

I'm rather risk adverse when it comes to my finances, but the idea of person-to-person lending has enough reward behind the risk for me to take some chance on the newly-minted credit market.

My Prosper plan is to handpick one listing per month to fund. I transfer $50 from my paycheck to Prosper and decide on a listing that I think is worthy. Most often I chose folks in the A or AA category (though I recently went as low as C) and I pick people who are trying to get a lower rate on their credit debt or who need smaller amounts of money for important things like house repairs, doctors bills, etc. I try to stay away from business loans.

Here's an update on how my Prosper accounts are doing (none have defaulted yet, knock on wood.)

Total Account Value: $357.43
Amount Invested: $350

Average Interest Rate: 14.76%

[[6 loans out, $50 each]]

Loan Title	$	Interest Rate	Credit Grade	Principal balance
Paying off/ Consolidating Credit Cards	$50.00	16.00%	C	$0.00	Current
Let me pay you instead	$50.00	17.00%	B	$1.06	Current
Termites have destroyed my home, †	$50.00	15.55%	A	$2.21	Current
Paying off Adoption Credit Debt	$50.00	19.33%	B	$2.11	Current
Help Me Study Abroad ** Relist #2** †	$50.00	13.00%	B	$4.66	Current
Emergency Home Repairs - Winter †	$50.00	7.00%	AA	$5.06	Current

Ridiculous to Stay, A Pain in the Ass to Go

Ah, it's a beautiful Saturday morning in my lovely studio apartment. The spring air is keeping the room cool - in a few weeks it will be piping hot outside, with the heat somehow collecting in between the walls of my studio.

In the background of my waking state is TLC's "My First Home." A couple is looking for a home in the Bay Area, and they've found one they loved.

Meanwhile, I search Craigslist ads vigorously. It's not that I'll find a place to move today, as my move-in date is July 1 at earliest, but I'm still trying to decide whether to leave my complex for a more affordable option or stay here and deal with a tight budget and less savings.

When I moved in and the studio cost $905 including utilities, it wasn't that much of a jump from the $700 + utilities room share options available on the market. For $100 extra dollars, approx, I could have a place of my own. That was a no brainer.

Then rents went up to $1050 and I decided to stay. It was a shock, surely, but it still seemed like a pretty good deal given my options.

$1300 - is about double what I could be paying for a room share situation. I could even compromise and get a room and bathroom in a 2br/2ba condo apartment for less than the $1300.

Moving is such a pain in the ass, though. I could hypothetically "move" for little cost, if I can get some friends to help. As far as furniture goes, I don't have much. The only large thing I'm sold on keeping is my bed, since I bought that new for a whopping $800 two years ago (I decided after 6 months on a used futon with poor support, I deserved a good night sleep). I have a large bookshelf I got at Target a few months ago and it's really heavy - but it would be a shame to toss that! Other than the bed, bookshelf, and some small tables, I have a piece of crap IKEA coffee table that started to fall apart before I put it together (though it's functional) and a large horizontal dresser that I could part with - I'm not sure anyone would want to buy it, but I'd consider trying to sell it on Craiglist. I have plenty of room in my closet now for my clothes, and I'd hope that wherever I move would have at least this much closet space. Then there's a TV, a printer, a microwave, and other odds and ends. I really don't have that much stuff. It's still a bitch to move, but it's not like I'm moving a house worth of life. It's just whatever I could fit in a studio for the past two years.

Also, having less space might be good for me. It would keep me organized as there wouldn't be places to hide things. Heh.

The downside of getting a roommate is - well - obviously enough to have me living in a studio currently. Noise. Roommate drama. Not being able to cook naked in the kitchen. These things are hard to compromise on. :)

My biggest fear is that I won't find anything I like. I have some cushion. If I decide to move - I'd come back to California around June 20-something, and I'd have that time to finish getting out of my apartment. I'd put my things into storage and move in with my good friend who has offered up her second bedroom. I'll pay her rent, but it will be way less than what it would cost to stay in my studio in August. $1300 versus, maybe $500 or something (plus whatever it costs to put my things in storage for a month.) That will cover the 2 weeks in June that I can't work because I'm going to be in Israel on vacation. Then I can really take some time to find a good living situation.

The real question is, how picky am I? I get anxious in so many living situations. Finally, in this light and airy studio I feel, well, at the very least calm and comfortable. The greenery outside (beyond the parking area) makes me happy. It almost reminds me of home, back east. I love waking up here.

But is it the stupidest thing in the world not to move? If I did move, I'd look for a place ideally that costs less than what I'm paying now, so I could pay under $1000, and I'd put any extra money between that and the $1300 I would be paying for my studio into a special down payment fund. I'm tired of renting, and dealing with yearly rent increases.

I just wish I felt more settled. All of my friends are getting engaged and married. Buying homes. Me? Well, I've been in a relationship for two years. We joke about moving in together one day but we're talking more apartment than house. He's going to grad school in fall 2009, and who knows where I'll be. That's why it really doesn't make sense for me to buy anything right now. Even though the prices for condos in the area are coming down while rents are going up, up, up.

The more I think about it, the more I realize the only logical option is to move. I could be saving $500 a month if I find a place for $800, or $6000 a year. $6000 a year is nothing to shake a stick at. That's a huge chunk of change to go to my downpayment fund. Even if it's $4000 and I get a slightly nicer place, it's still a lot of money.

*sigh* - I just... wish there was an obvious option hitting me on the head. But life is never so black and white.

May Spending Report, May 9

This month I am making a few purchases for my "free" trip to Israel, so my budget is a little off. I will make up for this by being really frugal with my budget and trying to underspend it once I get back from my trip.

Next month is going to be difficult because I am missing two to three weeks of work for my trip, and that's unpaid time off. Which is fine, I just need to be careful to be really frugal next month. Luckily, my parents will probably feed me while I'm home, and while in Israel the trip provides some meals. So if I can get away with just paying my fixed costs in June, I can afford to take the trip. Granted, the trip is free, so this is a frugal vacation by proxy. Can't complain about that!

-------------------------
FIXED COSTS: $1420
BEAUTY: $20
ENTERTAINMENT: $37
FOOD: $40
TRANSPORT: $82
SHOPPING: $201
INVESTMENT: $250
--------------------------
$2050 / [$2400 budget for month]

(($350 left for May))

Still need to...

*go food shopping (approx $80)
*get water shoes for trip ($60?)
*haircut ($70)
*get bathing suit? ($90)
------------------------------
Still to spend: $300 (put any extra in vacation fund!)


---------------------------
FIXED COSTS: $1420
Rent: $1050
Phone: $55
Cable: $72
Health Insurance: $129
Gym: $27
Car Insurance: $87
----------------------------

Beauty
$20 (eyebrow wax)

Entertainment /Hobbies
$15 (camera fix)
$22 (theater ticket)

Food [*still have to do food shopping for May]
$23.99 (dinner for two)
$10.24 (dinner)
$6 (dinner)

Transportation
$5 (Bart fare)
$66.21 (Gas)
$3 (bart Fare)
$5 (bart fare)
$2.25 (caltrain)

Shopping
$148 (dress for trip)
$53 (shirt)

Roth IRA [investments]
$200

Prosper [Investments]
$50

Put that rebate check into your emergency fund, before it's too late!

If you work a full-time job and aren't making a gadzillion dollars, chances are you've received (or will receive) a $600 check from the government.

Whatever you do, DON'T use it to "stimulate" the economy.

Don't let the Iraq war fool you -
It's not patriotic to be in debt.

For all of you folks out there who always say that you don't have enough money to start an emergency fund, this handout really is a prime opportunity. Take your $600 (or whatever amount you received), spend, say $100 of it, if you feel the need to, and put the rest of it in a high-interest savings account.

If you haven't started an emergency fund yet, this is now your emergency fund. While an emergency fund should have more than $500 in it, at least that's a start.

Try to add $20-$50 a month to this savings account. Otherwise forget the money exists.

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WEALTH, MONEY AND LIFE NETWORK SERIES

The Wealth Money & Life Network is a team of personal finance bloggers ranging in age from 20-60. Each month, we choose a different topic to focus on and write posts about from our perspective. This month's topic, if you haven't guessed, is "emergency funds." Check out some of the other great posts on this topic over at the WEALTH, MONEY AND LIFE NETWORK

Is Moving Worth It?

As many of you know, my rent has gone up $400 in the past two years. That, alone, should be enough to get me out of this $1300 a month studio apartment.

But looking at the apartment rental listings on Craigslist, there really isn't much for anything less. And at least this is utilities included for $1300 a month.

Going from $1050 a month to $1300 a month is definitely going to mess up my budget. I finally was making enough to do some serious saving (so that one day I could buy a house, god forbid) and this price increase basically makes that impossible - unless I manage to get a job that pays even better than my current job, which is probably possible, but I love my current job, and it pays pretty well, and I'm so happy working for this company, and I don't want my rent price to control my career.

It's possible I can find a place cheaper. There are studios occasionally on the market for anywhere from $900 to $1200 in the area. By area I mean anywhere from South San Francisco to Sunnyvale. The "SF Peninsula." Silicon Valley. Where the majority of people who live here are engineers making bank, and the rest of us are, well, half-wishing we were engineers.

Getting a roommate seems like the only logical thing to do right now. I don't do well with roommates. Living alone has taken my depression and thrown it out the window. For the most part.

Lucky for me, my friend volunteered her second bedroom as a place for me to live in July. That's very nice of her. I'll pay her rent, of course, and I'll save some money because I won't be paying $1050 or $1300 - what I would be paying if I stay in my current place. I can't stay there forever, but a month will probably be ok. She has a big dog and I don't get along that well with most dogs. But maybe I'll make friends with the dog in July.

So if I decide to move out, I'll pack up most of my stuff before I leave for my trip, and then put all my furniture into storage when I get back at the end of June. In July I'd do my apartment shopping and, fingers crossed, I'd find something decent that's a good amount less than $1300 a month so the entire moving situation was worth it.

Given, I'm somewhat picky about my living space. I like light in my apartment. I work from home most of the time, so I need a place where I can be comfortable working. A place that isn't too small. I get really claustrophobic in teeny tiny studios. My current studio is nice and large. It would be nice to have a balcony or patio. It would be nice to have a second room to make my office, so I could deduct that portion of the rent on my taxes. I'd probably turn the bedroom of a 1br into an office and keep the living room set up as a "studio." I hope the IRS wouldn't mind that I store my clothes in my office closet.

Emergency Funds: Save Yourself

THIS IS PART OF THE WEALTH, MONEY AND LIFE NETWORK SERIES.

Sometimes it's easy to spend every last time we earn and then some. Being in debt is almost synonymous to "being American." The American Dream is to not have to worry about money spent because, at some point, it will magically reappear. Maybe the streets aren't paved with gold, but opportunities will eventually balance illogical spending.

The fact is, for most of us, that's not true. That's why it's vital to have an emergency fund. An emergency fund is basically a certain amount of money that's set aside in a liquid savings account, that can be accessed in cases of - here's the keyword - emergency.

Having to go on a last-minute vacation does not qualify as an emergency. Needing to get a new shirt definitely not does qualify as an emergency. Losing your job and needing money to pay the rent and eat, does.

It's actually fairly easy to save up an emergency fund if you budget wisely. Even these days when the economy is so awful, there are ways to save. Skip your morning Latte at Starbucks, put your change into a piggy bank, don't buy a new outfit this month, etc.

If you're starting from scratch and your salary seems too low to start a fund, start small. Open a savings account online, pref. one that earns "high interest," and put in your first $25 when you get your next paycheck.

Every month, promise yourself that you'll save $25. When you get into this habit, bump it up to $35, and keep going until you're saving $50 - $100 a month, more if possible.

Ideally you should have about $5000-$8000 in your emergency fund.

I was keeping $5000 in a liquid CD which I considered to be my emergency fund. I've recently liquidated that CD, but I'm moving the money over to my ING account which I'm planning to label "DO NOT TOUCH."

It's so much better to have that money to tap into when something wicked this way comes in one's life. Having the fund means you can avoid at least some of the stress that comes with not having enough money to pay for an emergency - bounced checks, collection agencies, bad credit, or even bankruptcy.

Here are some more tips for saving money:

- Bring cash to the grocery store, and a list of things you need. Overestimate on the cash that you bring a bit, but stick to your list when you go shopping. Put all of the change into a piggy bank in your room. Every six months or so, bring that to the bank to put into your emergency fund.

- Turn off your lights except when you need to use them at night. Take the estimated savings on your electric bill and put it towards your EF.

- Don't go overboard on gifts. This is a hard one for some people. Remember, it's the thought that counts. The money you spend on a gift for someone else is money that could be saved. I'm not advising you to stop giving gifts entirely, but you don't need to spend large sums of money for your friends OR significant others. (Especially in boyfriend/girlfriend land, where sometimes gifts can end up costing hundreds of dollars.) Enter into a relationship (or friendship) in a healthy way, including setting gift expectations, will help everyone involved save money and get into good financial habits for the future.

- Rebate check? Screw saving the economy, "save yourself." \ You know that $600 rebate check you received (or will receive) this year? Put it directly into an emergency fund. I know it won't necessarily help the current economy that way, but what do you owe the economy? Poor spending habits got us all into this mess. To really help the economy, everyone in this country needs an emergency fund and needs to learn how to save!

What do you do to save?

Read what other WLM-Net Bloggers have to say about emergency funds:

Dollar Frugal: Emergency Fund Etiquette (sorry to DF for leaving this post off of my list originally!)
The LocoMono Website: Defining Your Emergency Fund
How I Save Money: Save Money in an Emergency Fund
Saving for a Home of My Own: Rebate Check ---> Emergency Fund
Dividends4Life: Are there cracks in your foundation?