Making your PC faster (again) and last longer

I work in the IT business and I am constantly asked by people how to make their computers faster (and therefore lasting longer). This question is more complex than it sounds but not so bad that it would take all day to explain. I won't get into specific instructions here but give the basics of what you can do. Most of these things are free if you do it yourself.

• Remove spyware. I use Ad Aware or Spybot to remove spyware. This is the number 1 cause of slowness in Windows. You can prevent most spyware from being installed by using another browse such as Firefox. Internet Explorer is very prone to spyware. Do this once per month.
  
• Virus Scan. Viruses can really slow up or even prevent your computer from working correctly. If you run virus scan (I recommend avast (free)) and it finds something it will try to remove it. My rule is that if a virus is found you should reformat your computer. Do this once per month
  
• Defragment your hard drive. This will add a lot of speed back if you haven't done this in a while or at all. This will reorganize the files on your hard drive so it can find and read them faster. Do this once per month.
  
• Remove programs you don't use. If you still have old programs and/or games installed that you do not use then go to Control Panel and uninstall them. This frees up hard drive space and will increase Windows' response time. Do this yearly (at least) or on an ongoing basis.
  
• Add some RAM. This has to be bought and physically installed. If you are not comfortable opening the case of your computer you can have it done professionally. I suggest maxing out the RAM in your PC if money permits. Find memory for you PC here.
• Reformat your hard drive and start fresh. After you have backed up everything you can clear out the hard drive and install Windows fresh. This removes a lot of junk and gives you a clean start. It almost always makes your PC faster again. I like to do this once per year as a spring cleaning list item.
  
• Replace your hard drive. If your computer is going on 3 years old and is still slower than when you bought after all of the above has been done you may want to replace the hard drive. It has physical parts that wear out and physically slows down. They are inexpensive these days. I recommend Seagate hard drives for reliability and good warranty.

If none of the above makes your PC as fast as you think it should be then either you have a really old computer (more than 3 years) or it has some other sort of hardware problem. In this case it makes more sense to buy a new one as you can get them inexpensively these days. For those in the market for a new PC I suggest Dell. They might be slightly higher in price but the hardware quality and support is well worth it. Go for the minimum warranty as it is not worth the extra money.

90% of the time the above tips should get you back to "normal" again. You don't have to buy a new computer in most cases!

7 Things you can do today to cut expenses

I find that I am constantly evaluating my expenses to see where I can cut back. Cutting expenses is a lot easier than trying to increase your income. I am a firm believer in the saying "It is not how much you make but what you keep." Someone earning $30,000 per year and saves $3,000 is a lot better off than someone earning $100,000 and saving $0. Living under your means will allow you to save money.

I have compiled a list of things people can do to cut expenses now. This is handy for those starting to budget or having to reduce a budget due to a job loss or income reduction. Examine your expenses and see if you can do any of the following:

• Take your lunch to work: I am guilty here. I go to lunch very often but can justify based on sanity terms. I work in IT and am on the phone all day. I need to get out for a bit to remain sane! I do plan to start bringing lunch and still leave for a break, though.
  
• Cancel the land line phone: If you have a cell phone you can do this. I have heard the argument that you may have a home security system. Most of these now work with a cell phone antenna that can be added onto your system. This can save you, on average, $40 per month which is $480 per year! If you really need the land line switch to Magic Jack.
  
• Make your own coffee! Even though we are currently in bad economic times I still see some fairly long lines at Starbucks each morning on my way to work. $3 for coffee 5 days a week saves $780 per year!
• Maintain your car: This can (potentially) be a big one. I asked my dad, a mechanic, what could be done to save money. He recommends keeping your tires inflated properly, changing the oil on the correct schedule, and put the minimum gas octane that your manual states. This will ensure smooth running and better gas mileage!
• Shop around for insurance: I wrote an entire post on saving money on insurance here. Premiums vary from company to company so it definitely pays to shop around! Even if you save $10 per month it is worth your time.
• Use Coupons! I highly recommend reading Coupon Cravings daily as they have some really good deals and save on food and health items in particular. It takes almost not time and they have done the coupon searching for you!
• Check your bank and credit card fees: Be sure to close and change your accounts so that you don't pay needless annual fees or monthly service charges. Change banks or to a credit card (with the same company) that does not carry an annual fee to save today!

All of the above items will cut any budget fast! You have to focus on the expenses that you can control easily and get them as low as possible without sacrificing quality of life or health. I am sure we all can do at least one of these today and begin reducing expenses. Including me!

The IRS 30-day wash sale rule explained

The IRS has a rule that if you sell a stock for a loss and buy it back in less than thirty days they consider it a "wash sale" and you cannot take the loss on your tax return until you sell it again (and of course not buy it back within 30 days). This prevents portfolio churning and creation of a fake "loss". The rule is a bit confusing so I have decided to try to explain it here.

I will start with an example:

You buy 100 shares of XYC stock for $500. You sell the stock today (September 28, 2009) for $300 (net). You have a loss of $200.

If you do not buy XYC stock again for the next 30 days you can take the loss on your tax return next year. This is the simple part. If you do buy it back in less than 30 days then you cannot take the loss on your tax return. It gets "rolled over" until the next time you sell. I will continue with my example:

You sold the stock as listed above. You decide that this was not a good idea and buy it back for $350 the next day. Now your basis in the stock is $550 (adding in the "washed" loss. Your "buy date" for tax reporting purposes is the original date in which you first bought the stock.

This is where it can get tricky. You actually did lose $200 of your original $500. It is a real loss. The IRS says you have to wait to claim that loss on your taxes until you sell your XYZ stock again without triggering another wash sale.

I should also mention that option contracts on the same stock are considered a wash as well. If you sell stock at a loss and then buy a call option on that stock the IRS rules state that it is still a wash sale since it is a "substantially" similar security. You have to carry forward your loss in this case as well.

Short sales are also included in the wash sale rule. If you sell short, cover the short, and sell short again without 31 days going past then you have the same wash sale as above. Your loss will carry over until you are no longer "washing."

This rule is complicated but of high importance to traders. People can find themselves having the IRS change their tax return if it is violated. I have written my own interpretation of the rule here but for more information check out IRS Publication 550. Please note that I am not a tax advisor and this post does not constitute advice.

New Credit Card Laws helping those who carry consumer debts!

I just got an email from Disover. They are changing their practices to be in line with the new laws under the CARD act. It is good that the government has taken a step to prevent banks from overcharging people and stop slamming people with fees and unreasonably high interest. I am pasting a summary from my message here:

SUMMARY OF CHANGES

INTEREST RATES

• Annual Percentage Rate (“APR”) increases for paying late or exceeding your credit limit. We will no longer increase your APRs on your existing credit card balances if you pay late or exceed your credit limit. Your APRs on new transactions may increase to a Default Rate only if you fail to make a payment when due. However, if we increase your APRs for new transactions to a Default Rate, we may, as described below, periodically review your Account to determine if your APRs should be reduced.
• Grace Period. Your grace period for new purchases is changing, which may help reduce your finance charges.

FEES

• Overlimit Fee. We will no longer charge an Overlimit Fee.
• Pay-by-Phone Fee. We will no longer charge a Pay-by-Phone Fee.
• Balance Transfer and Cash Advance Transaction Fees. If you make a balance transfer or take a cash advance, the maximum transaction fees will be increasing to 5% of the amount of each new balance transfer or cash advance, as applicable, with a minimum of $10.

PAYMENTS

• How Payments are Applied. Payments made in excess of the Minimum Payment Due will now generally be applied to high APR balances first. This may help you pay off your high APR balances sooner.
• Minimum Monthly Payment. The Minimum Payment Due calculation is changing, which may result in a higher required monthly payment. Making a higher monthly payment will help you pay down your balances faster.
• Payment Processing Time. Mailed payments received at our processing facility will be credited to your Account on the same day if received by 5PM local time, instead of the current 1PM cut-off time.

The only negatives I see is a much higher balance transfer fee and most likely higher minimum payments. Even though you do pay off your debt faster it does not mean everyone will have the ability to pay those higher payments. I have also read about banks, such as Citi, trying to push annual fees onto customers unless they spend a certain amount on their cards.

Only time will tell what credit card companies will do in the way of fees, interest, and what people will tolerate as a result of these new laws. I think it will be a positive outcome for the consumers in the long run but it may take some time to hammer out. We must all work to be free of consumer debt so things like this don't make a large impact on our financial lives!

Investing Psychology: Taking a loss

One problem that I and most likely every other investor has come across is being faced with a loss on a particular stock, bond, or mutual fund. No one likes to take a loss on their investments and it is a tough pill to swallow. I sometimes find it hard to stick to my guns and dump the losers so I can invest in potential winners.

Just yesterday I finally sold a couple of my loser stocks. I decided back when I bought them on the time frame and amount of gain I expected from it. The problem is this gain did not materialize and in fact became a significant (50%) loss on the investment. Fortunately for me it only totaled $350 originally invested so it is not the end of the world. I still found it hard to sell even though I assured myself I would no matter what.

Today I was thinking about why it was so hard for me (mentally) to sell them. For a while I kept telling myself "it will come back up" and "the market is just in a tough spot now." I actually delayed selling beyond my planned time as a result. I now know why I did it:

1. Selling for a loss is like admitting defeat. It feels like you surrendered.
2. Selling for a loss means you were wrong. This is not always true but we seldom enjoy making wrong choices.
3. I do not like making bad investment choices. In my case I spend a lot of time working and researching for my investments and do not like making bad decisions.
4. The economy is down. This is a fact and I know some of the loss is the result of this. My downfall was blaming the entire loss on it.

I also need to note that these investments were individual stocks. I bought them because I thought they were undervalued and the market proved me wrong. I have a small portion of my portfolio that I use as "play money" to invest as I choose. I have always loved finance as a hobby and like to dabble in the market a little. I do this partly as a learning tool and partly for the potential returns and the fun of it.

The psychological aspect of this experience can also be applied to "normal" diversified mutual fund investments. If you need to sell off some investments to pay for a large unexpected expense or even in retirement for income it is important to sell it correctly. If you sell from other investments and not ones that happen to be down you can throw your portfolio even further out of balance and actually increase risk or exposure to a certain asset class.

The moral of the story here is to have a set investment plan and stick to it. Re-balancing once per year is absolutely necessary in order to stay on track and not get too heavily into one investment. It forces you to sell winners while they are high and buy others while they are "on sale." If you do choose to invest in individual stocks or "play the market" a little you must have your "acceptable" loss and gain amounts and stick to them. Getting greedy or procrastinating can wreck havoc on your financial health!

Saving on Insurance: The multi-line discount and higher deductibles

Every year we spend a lot of money on insurance. We have to carry health, life, homeowners (or renter's), auto, and the list can go on. The rates can vary widely and it is definitely worth shopping around annually to get the best rate. You should also compare rates with higher deductibles to save money.

The best method for shopping for insurance is to start your search for auto insurance. It tends to be the most expensive and varied of all the types of insurance. Once you have located the best rate be sure to compare the rates at a $500 versus $1000 deductible. I have found that the difference in the annual price is $500 or even more. You are better off putting the $500 difference in savings so you earn interest on it instead of needlessly spending it on insurance premiums.

Once you have located the best auto policy for you the next step is to have them quote you on homeowners (or renter's) insurance, life, and liability then ask for a multi-line discount. Having more than one type of insurance at the same company will save you money on both! The other types of insurance rates do not vary nearly as much so you do not have to worry about getting the best deal one each one. Focusing on auto and a multi-line discount will ensure you a good deal all around.

Raising deductibles on all types of insurance will lower the premiums. The best strategy is to raise the deductible and put the difference in premium into emergency savings until you build up enough "self insurance" to get back to the original deductible. Once you have built up enough to cover the amounts you can take the difference and add it to other goals such as retirement savings and debt payments.

Suggested Deductibles by Insurance type:

• Auto: $1000 - This can be the biggest money saver!
  
• Homeowners: $2500 - Claims are rarely made. Be sure that the deductible meets the requirement of your mortgage holder but no less!
  
• Health: This really depends on your current state of health but I suggest no lower than $1000 for relatively healthy people.
• Renter's: $1000 0r higher - Furniture and appliances are expensive. In case of fire or theft this is worth the negligible monthly premium.

Following the above method will most certainly save most people money in one way or another. The multi-line discount tied in with higher deductibles can save hundreds per year. We are all looking to cut expenses and this is one easy way to do so. Getting quotes on insurance is free and does not take a really long time to do. Start today and you will be pleased with your efforts!

Dubli.com: Gambling for products?

I have looked at and tried out dubli.com. It is a new site where you buy credits to see the price of an item. Every time you click "show price" it takes away 1 credit and drops the price by 25 cents. The idea is to find a good deal where you get something, such as a gift card or ipod, at less than it's face value. It sounds good on the surface but they actually make a fortune.

Here is how it works:

• Credits: Each one costs 80 cents. Each click of "show price" only drops it by 25 cents. If you buy the item they still make 65 cents off you. If not then they keep it all!

• Pricing: Each item starts at full value. You have to get lucky to get one that is low and not bought by someone else yet.

• Shipping: Starts at $6.95 even for gift cards. To break even you need the item to be at least 8 dollars below face value.

Bidding types: Auction, Zero, and Unique Bid

• Auction: The price gets bid down by clicking "Show Price." It costs you 80 cents (1 credit) to do this. The price drops 25 cents each time. If you like the price you can buy the item on the spot.

• Zer0: Same as auction but you only get the item if you are the person who bids it down to zero. With them making 65 cent per bid that means they make a 65% markup!

• Unique Bid: Who ever bids the lowest and is the only bidder at that price gets the item. It is time limited.

Based on my evaluation this is basically gambling for products. It is most certainly stacked in their favor because they make money no matter what price they sell it for. You have to get very lucky to get the item at the very low prices they advertise on their site. I gave this a try to figure out how it works and ended up slightly ahead on a couple of gift cards.

Don't fall into this trap! You will lose more than you stand to gain from a site like this. You are much better off on eBay or craigslist if you are looking for a deal on something. Let's be smart with our money!

Budgeting for happiness!

Budgeting has gotten a bad connotation these days and not justly so. It is a very useful tool that helps us to track our money and not over spend and get into debt (again). This does not mean that we have to live unhappy and restrictive lives because we have a budget. The key is to make sure to budget for happiness.

How do you budget for happiness?

Simple! You have to make sure that your budget includes money (and time) for things that you actually enjoy. I will use myself as an example. My two favorite things to do are travel and try and find really good and affordable restaurants. I have categories for each in my budget. I set aside a set amount for my travel fund as well as eating out each month. A little can go a long way here.

First and foremost you must have all of your life essentials covered. After that you should not feel like you have to save every dime over the essentials for retirement or other goals. Being able to retire and enjoy life later is important but it is also important to enjoy life now as well. If we don't take time to enjoy ourselves now as well as later then why bother?

In my own example I budget $100 per month for eating out and on average $50 for travel funds. I use miles to get my tickets so I don't need to save as much for travel. This represents a very small portion of my budget currently as I am also paying down my debt. Even with debt I feel it is important to do something I enjoy in order to stay sane and not get discouraged. Any good budget will have built in motivators to help you stick to it.

There is no "correct amount" to set for doing things that make you happy. The best formula is to: pay your essential bills first, then save the correct amount for retirement, then budget for things that are fun, and finally save anything else left over. My only exception to this "rule" is that you need to have an adequate emergency fund before doing fun stuff. It is simply too important! Following this formula will ensure success and happiness over the long term.

Why do I (or we) save money?

A lot of personal finance bloggers spend a lot of time and energy on how to save and cutting expenses. I personally think we do not write enough about why we save. Most of us need to see a "light at the end of the tunnel" to keep us on track. Today's post is intended to do just that!

Why do I save? Here is my list of reasons in order of importance:

1. Emergencies - I need to be financially prepared for most emergencies that can be thrown at me. These include: job loss or downsize, medical emergency, large unexpected expense, uninsured loss (deductilbles), and any other financial hit
2. Retirement - I plan to be off the job market and enjoying life as soon as possible. The more I save the sooner I can get there. I have dreams of traveling the world and I need a residual income to fund this.
3. Vacations - I put high value in this. I work hard for my money and everyone needs a break in order to stay sane. I use Delta Skymiles to book my flights and save enough for my room, entertainment, etc. This is my one "luxury" per year where I can let loose and have fun without worry.
4. Self Employment - I want to eliminate debt and become a consultant so I can work when I want too. This requires a bit more savings in the bank to pad the lean times in the market. This is lowest priority for now.
5. Larger Purchases - I currently have no large purchases in mind but I use this for cars, appliances, home repairs, or other more expensive needs that may come up over the years.

The bottom line here is: the reason we all need to save is to be able to do what we want more often (freedom and independence), not have to worry about where our food money will come from in later years (security), and to feel we are working towards a tangible goal and not just working to live (sanity). If you keep a clear vision such as mine above we can all have a better life and breathe easier each day. I look at savings, especially for retirement, as: The more I save today is me buying back my time in the future to do what I like to do. I don't want to work forever and the only way to stop working is to save today!

Why do you save and what for? Are you in line to meet your goal(s)?

Estate Planning: Overview and the minimums everyone should have

I have found that a lot of people procrastinate when it comes to estate planning and getting their affairs in order in the event of the inevitable: death. It is not easy to think about which is probably why most people ignore it or put it off saying "I will take care of it later." I am here to say that you need to take care of this as soon as possible as you never know what tomorrow will bring. You have to make sure your loved ones are taken care of!

Documents are the first step. Everyone should have, at a minimum, the following:

• Will: You have to decide and put in writing who gets what from your possessions when you pass away. This is also where you specify a caretaker for your children in the case of absence or simultaneous death of the other parent. Don't let the state decide who gets your money and stuff!
  
• Living Will: This document gives the power to allow someone to pull the plug if you are in a coma or vegetative state where doctors think you will never wake up. Choose this person wisely! Typically it is a spouse or close family member.
  
• Financial Power of Attorney: This gives someone the power to act on your behalf for your finances. This is useful if you become incapacitated or unable to take care of them yourself. This is typically given to a parent or spouse.
• Medical Power of Attorney: This gives someone the power to act on your behalf for medical decisions. If you are unconscious and doctors need permission to do a surgery or other procedure someone can sign on your behalf to get you healthy again! This is also typically given to a parent or spouse.
• Life Insurance: If you have children or others who depend on you financially then you most certainly need life insurance. You need enough to replace your income until they are able to take care of themselves. It is also good to have enough (in addition) to pay off your mortgage if you have one. I will discuss this further in it's own post here.

Above are the minimum that everyone needs. It is worth spending the money to have an estate attorney draw them up so you have all of your bases covered. A lot of firms offer a package deal for all of these documents at a reasonable rate. There is no chance for correction on these documents after you are gone!

I must also say that keeping them up to date is just as important as having them! If you get married, divorced, a large inheritance, buy a house, or any other major event you need to revisit these and update them as needed. You want to be sure that your intentions for your estate are in writing and legal. A lot of people will all of their assets to a trust and then modify the trust document as needed. This is easier in some regard and I suggest talking to an attorney for more details on trusts. They are complicated yet powerful legal tools for people with a lot of assets.

Estate planning is not as daunting and bad it most people think it is. It is not pleasant to think about but it is one of those chores we need to get out of the way so we can move on with our lives. Be sure to keep them in a safe or safe deposit box and have your estate attorney have copies on file too. Make sure your loved ones are taken care of!

Target Date Mutual Funds: Cheap and easy retirement investing!

With the vast majority of people not having the knowledge or time to research the stock market need an easy option to save for retirement. A lot of the major mutual fund companies have come up with a solution: The target date retirement fund. They can be useful tools for long term investing.

These are obviously for the passive investor. You simply pick the fund that is closest to your expected retirement year (such as 2030) and you invest your retirement savings in the fund. It is automatically allocated to a basket of funds that keeps you diversified. As the date approaches it automatically moves your savings toward income assets.

I must add that these funds are not for everyone. If you are more risk adverse than the allocation of these funds then they may not be a good fit. They start out quite growth-oriented and high risk and move towards a more conservative portfolio over time. If this is the case then you should create your own mix of funds and rebalance manually over time.

Another issue is that you are letting the fund manager how to invest your money. If they decide to change the allocation you may not even know about it. It could be changed to taking more risk than you can stomach or possibly even less than you desire. You have no real control over where the money gets invested.

Target date funds can be useful tools to some investors. I use them as a benchmark for my own investments to see if I can do better than the "pros" do in asset allocation and investment choices. If you do decide to use these funds then consider splitting among 2 different companies to achieve more diversity of allocation and investments.

September 2009 Prosper Lending Update

It is the middle of the month again and it is time for my update on prosper.com lending. I reinvest all payments into new loans when I find one I like. I had 2 new bids become loans last month and also bought 1 note at a discount on the trading platform.

Here are my stats as of today:

Outstanding Loans: 46
Late: 2 (< 15 days)
Late: 0 (> 15 days, < 30 days)
Current: 44

Closed Loans:

Charged Off: 1
Paid Off: 3

Open Bids: 1

Total currently invested: $1608.35 (Principal Value)
Cash in Account: $59.83

Total Principal: $1668.18

Net Change from last month: $25.37 (+1.54%) increase

Tip: Use E-mail / Text Message alerts from banks

A lot of banks and credit card companies are offering email and/or text message alerts for their customers. You can customize them for transactions over a certain amount, payments due, payments posted, statement ready, and many more. This is a great way to stay on top of things!

I personally use them so I don't have to (try) to remember each one's due date and amount. I get emails from them and go online to pay as needed. This helps avoid late fees, interest, and headaches each month. You can also do similar alerts for your bank account so you don't overdraw it. This is usually a free service from your institution.

I use the following institutions that already have this service in place: Chase, American Express, ING Direct, and others. The added bonus of getting email on a smart phone, such as my iPhone, allows me to stay on top of things all the time. This has also helped me catch fraudulent large transactions on my credit cards that I don't even use any more!

This free service can save us all time, money, and hassle down the road. You always know where you stand without having to log into each account separately (in most cases). It does take a little time to set up in the beginning but is time well spent. The peace of mind and useful information it provides makes life easier!

Top bank fees and how to avoid them

Banks these days are piling on the fees. Some are hidden and some are obvious. We can all do our part to avoid them. I despise bank fees unless I get more than that value back from it. With a little research and planning we can save hundreds of dollars per year. Here is the list:

• Monthly Service Fee: Some banks charge you monthly just for having the account. This is ridiculous. Solution: Switch your account to a free account or change to a bank that offers one. Average Savings: $10/month ($120 per year)!
• Overdraft Fee: All banks have this fee. They make a fortune off of them too. The average is $30 per transaction. Solution: Use automatic payments, online bill pay. STOP USING CHECKS! Online bill pay can send checks to any person or business and it is free. No envelopes or stamps needed. Having and overdraft line of credit is a good idea too!
• Overlimit Fee: This applies to credit cards. You get hit with a fee of up to $39 if you go over the spending limit even if it is only $1! Solution: Set up email and/or text message alerts for when you get within $100 of your limit. See my post about setting this up here. There is no need to pay this junk fee!
• Late Payment Fee: This applies to loans and credit cards. Also includes utility bills. Solution: Set up automatic payments or online bill pay so that they are all paid on time. This also saves you interest in the long run!
• Annual Fee: This applies to credit cards. They are a lot less common these days but are still in existence. You must gain a tangible benefit that is worth more than the fee in order to justify it. Solution: Most credit card companies have a card that does not carry an annual fee. Switch to that type of card by calling them. This can save $50-100 per year or more!

Most bank fees are needless profit centers for them. They rely on laziness and ignorance to make lots of money off of people. Everyone should evaluate the fees they pay each year as part of a comprehensive annual personal financial review. Are you spending needlessly on bank fees?

Saving: Food is the most variable of all costs

People often struggle with budgets and end up going over. There are a lot of bills we cannot control such as utilities and mortgage but a few we can. The ones we control are the easiest make changes in to stay in our budget. Food is the most varied of our costs and is the easiest to control.

I struggled for a long time with my food budget because you can spend nothing one day and a lot the next. It was very hard for me to pin down. I was trying to stay within a daily amount of spending and that simply does not work. One nice(r) dinner out and you blew 3 days worth of food money. My solution: Have a monthly amount and subtract from it.

My solution was not 100% perfect. I could forget to subtract something or simply get lazy. Today I combat this by using any coupons I can to save money and keep an eye out for specials at both the grocery store and at restaurants. A LOT of restaurants are offer great deals, coupons, free food, and other promotions just to get people to come. I use a lot of buy one get one meal coupons and saved hundreds.

I also try to plan meals somewhat. If I know that I am going to dinner with friends this week I subtract an appropriate amount from my budget. I also have a schedule of places that I go to lunch each week so I can estimate that too. I leave some of it as discretionary so I don't feel restrained to what I can eat and where. I think this is a good mix that keeps eating interesting. All of this combined keeps me within budget more or less. Give it a try!

Interested in Prosper Loans? - Forum

I am an active borrower and investor on prosper.com. I have done this for over a year now and have been satisfied with the results. I have made good lending choices and borrowed money to reinvest. My current average interest rate is 18.38%. Not a bad return!

I currently give monthly updates of my status as an investor and also belong to a group on prosper called Socorro Capital Partners. We exchange listings that we like, discuss financials, and compare strategies and performance of our portfolios. We also run a forum that is very helpful to lenders and borrowers alike:

SCP Forum

I am a moderator on this forum and we stay on top of all things propser and also dicuss general finace and the economy and markets. We are a small but growing community as prosper is now live again and we are gaining new members to the forums. Check us out!

I will be giving another update to my own prosper status on Sept 15.

Saving Money: Coupon Resource

Lately I have come to love my coupons. I have found some great ones that I have taken advantage of such as free sandwiches at Arbys, Groupons for restaurants, Restaurant.com 80% off deals, and the list goes on. This stuff adds up fast!

I found a site that is updated constantly with great deals. It is actually a blog that I found out about from a friend and I find myself checking several times a day now. Their are many great deals to be had. Here is the site:

Coupon Cravings

This site has printable coupons that are on popular items such as food, household, travel, and many others. Some of them can be a little tricky to get but always worth the trouble. In today's economy I am always looking to save a buck and this helps a lot. It takes care of a lot of the searching for me!

Have a look and start saving more today!

Happy Labor Day!

Today I am moving into my new house. It is half finished remodeling and is livable. The ending of my lease forced me and it makes money sense to move now.

Hope everyone has a great holiday!

The road to financial independence

I realized that I have written quite a few specific posts and tips for getting ahead but have yet to write about the big picture: Becoming financially independent. It is a long process that will not occur overnight. It takes discipline, determination, and focus to achieve.

Firstly, I want to define financial independence and what it means to me. I believe that financial independence is being able to live life doing what I want, when I want, and how I want without needing a full time job (salary). It is being able to live off of my savings (and earnings from those savings) to cover all of my expenses. This does not mean that I will not work it just means I don't have to work.

Secondly, everyone will define financial Independence differently. The basic idea is to be able to do what makes you happy without having to rely on another person or business for your livelihood. I personally want to travel the world and to do that I need passive income and cannot work full time (in one place). Becoming financially independent is the only way I can make that happen.

Their are many steps to becoming financially independent. I have summarized them here:

1. Pay off all debts and build emergency fund. I must attack each balance until they are all gone. I must also keep an emergency fund of at least 2 months living expenses so I don't fall back into the debt trap in the case of an unforeseen event.
2. Save, Save, Save! Once debts are gone I will channel the monthly income used to pay them into savings, investments, and business opportunities. In that order. I need to minimize tax liability and maximize returns on my savings and investments.
3. Re-balance and shift investments. Once I have saved a large portion of my goal I need to start moving out of growth and into income generating investments. At this point I will look at it as income replacement. I foresee this beginning around the $500,000 savings mark where I need to take less risk.
4. Achieving independence. I will be near my goal of $1,000,000 in net worth and begin the shift from saving to living off of the assets. I might work part time or run my own business to supplement income and unexpected expenses.

The above is very generalized and non-specific. This is the formula everyone should use to reach retirement (financial independence). There are lots of specifics that go along with each step which I will cover at some point on this blog. I have been focusing on step 1 thus far as I am in debt elimination mode and want to get to step 2 ASAP. Step 2 is the longest step in the process and the sooner you get there the longer your investments can grow. This also means you will need to save less in the long run as your savings will have more time to earn returns.

Everyone's road to financial independence is different. Life has a way of tripping up our financial well being but with good planning and an emergency fund we should be able to handle anything it throws at us. The top areas that must be focused on at all times are budgeting, saving, and self control. Without these we will be slaves to the paycheck for our entire lives. Do you still want to be working when you are 80?

New Mac OS X Snow Leopard: Save money on your upgrade!

If you are a Mac user like me then you already heard about the new version of OS X, Snow Leopard, that came out on August 28th. I am currently using it as I got it the day it was released. I must say it is much faster and more streamlined.

I currently own 2 Apple computers. My Macbook Pro and my Mac Mini. The upgrade costs $29 for one computer. The family pack is $49 for up to 5. I went with the family pack and saved $10. I also thought about it some more and figured out a way to save even more!

My friends have Macs as well. We all pitched in and used up the 5 licenses between us. That means our upgrades were only $10 each! This saved me $30 and 3 wasted licenses. Everyone wins in this scenario.

If you are waiting to upgrade please do something similar to the above. Have everyone pitch in and get Snow Leopard. It is truly a great improvement over the last 2 versions and you can get it cheap! It is also important to mention that upgrading from Leopard (10.5) gets you 6 GB more hard drive space back!

September Net Worth Update

It is the 1st of the month again and it is time for my report card. I did good!

As of today my current net worth is (30,926.59). That is an increase of $2,846.89 over last month. The major factors contributing were accelerated debt repayment, money added to savings from side work, and lower spending overall.

I expect next month to be an odd month since I am moving into my new house and moving always throws off the numbers a bit.

Alternative Income:

Youdata.com: 0.50
eBay Comissions (from work): $47