Wednesday, July 15, 2009

Money money money

I shouldn't have bought a home theater projector and screen, but I did.  I wanted to pimp out my home theater room in the basement.  The screen is 118" on the diagonal so it's going to be cool to watch movies on that big ass screen.  I should've used the money to pay people back, but it's ok.

My new pledge is to have some fiscal responsibility starting now.  I still need to get some yard stuff this weekend, but other than that, no more big purchases.  I need to rebuild my oh shit money in case oh shit happens.

I was happy to see Prosper finished its quiet period so I can start making some money from that pretty quickly.  The concept is pretty cool: people put up requests for money and you bid on them.  Let's say someone wants to borrow $10k at 10%.  You can bid anywhere from $25-500 (?) at any interest rate lower than 10%.  Since an average savings account is dribbling out 1.5% interest, you can make more here.  Of course, there is the risk that someone will default, but that's why you just bid a little on a lot of loans.  You can spread the risk out.  Even with the default, you can still out ahead.  I think it's more stable than the stock market and you can help people rebuild their credit. 

Each loan listing gives a range for the borrower's credit score.  I thought I was doing well near 800, but some of those borrowers are in the 820-840 range.  Holy moly.  I think I can get up there thanks to my mortgage.


Anonymous said...

Have you ever tracked your expenses for a month or so to see what your spending habits are? It's a good lesson - you can do it low tech using a small notebook that you carry around and note down all your purchases (including the $2 items you tend to buy) and then examine the areas you're buying. We did this and discovered that Pete was spending $7 a day on lunches (so $35 a week, $140 a month on lunches when you could easily make your own for a fraction of the price - and probably healthier). It's amazing how seemingly small things add up. You might find that you could cut down on takeaway coffee or renting DVDs or something if you are trying to save money.

For the last 4 months or so we've been recording expenses in an excel spreadsheet to get a feel for our spending habits (apparently we spend a lot on groceries!). We don't use it for budgeting - just more for interest and as something to take to a financial planner to discuss money stuff one day. We have fields such as income, mortgage, strata fees, council rates, water rates, gas, electricity, clothes, haircuts, pharmacy, doctor/dentist, house hold items, gifts, membership (gym etc), foxtel, internet - basically anything that you spend money on and then record it against day spent. Could work for you maybe?

Jeremy said...

I used to do that back in the day, but it didn't really help. I know where I'm spending the money. I don't drink coffee nor alcohol nor do I smoke. I rarely go out to eat (less than 4 times per month) and I use NetFlix rather than going to the theater.

My biggest problem is that I have little impulse control and I'm also impatient. Let's say I want to pimp out my home theater. Do I wait to save up all the money to leave a margin? No, because if I'm going to do something, I want to do it as quickly as possible. I think it comes from not wanting to be obligated so I try to finish things that I have to do as quickly as possible. It's a definite character flaw.

Anonymous said...

Well not much you can do about that except to make yourself a bit more disciplined. Perhaps you could try and set yourself a rule that any purchase over say $300 (or whatever) you aren't going to make that day and give yourself 24 hours to think about whether you really need/want it. The reason why we've managed to pay off our house is that we basically save 70% of our income (I mean it helps we earn good money, but we try and consider every purchase we make too).

Jeremy said...

That's great that you can save 70% of your income. I definitely need to work on saving more.

I think one way for me to do it is to designate one account my fun money account. After I pay my bills and whatnot, I can put money into that account. It might not fill up fast so it should slow down my spending.