Success Warrior: The Blog That Embraces ADHD

More on being a Prosper group leader

Group leaders get a little kickback from their work.  I think it's something like 1% on the loan.  Some of the lenders on Prosper say it's not enough to justify the work involved.  I need to email a group leader and find out exactly what kind of work is involved.  From what I know, they check some documentation and make a few phone calls. 

I need to find out just how much time is spent in the vetting process. 

Group leaders also help attract attention to the listing by working the forums a bit.  Help get the word out. 

I was thinking about starting a group that concentrated on getting people out of high interest credit card debt and worked toward being debt free.  I think it would be a great service but I need to find out if I would have the time to do it.

About Prosper Groups

Prosper groups can add an extra level of risk management to the equation.  Active group leaders go the extra mile in verifying information for members of their group.  Borrowers join groups to gain the credibility of the group increasing the odds that they will get their loans funded. 

Group leaders gather information on the borrowers such as pay stubs, tax information, and anything else (except a credit report) that they feel necessary.  The credit information is already pulled by Prosper.  Many group leaders talk to borrowers on the phone to get a better feel for the person.  If the borrower passes all the tests, the group leader accepts the borrower in the group and puts his stamp of approval on the loan listing.

Some group leaders are more picky than others.  Some aren't picky at all.  Group leaders get a cut of any loans that are funded so some group leaders take anyone that wants in the group and do little, if anything, to vet them. 

Some group leaders have excellent track records and you know that funding a loan for one of their members has a high likelihood of being repaid.  Many group leaders fund their members because they have worked to verify that the person is probably going to pay the loan back.

I've considered creating a group myself for people who are trying to get out of debt but I don't know if I have the time to go through the verification process with borrowers.  I'm still trying to decide if it would be worth it.

More on this tomorrow.

I'm going to be funding another Prosper loan today

So I have been looking over the listings.  Some of them look more like they are asking for charity than for a loan.  I read one today where a woman sounded like she was in desperate times and I couldn't see how she would ever pay the loan back.  It didn't even sound like she had any intentions of paying the loan back.  She probably won't get funded.

I think I'm going to go lower risk this time.  I've looked at a couple loans that would fit what I'm looking for today.  I'll pick one this afternoon and make my bid.  I'll probably fund another one later this week.

I have money earmarked to be used for Prosper.  $100 a month.  That's $50 put toward two loans.  My goal is to get to where I have money coming back to me just about every day of the month.  That will be pretty cool. 

I'm also going to put the money that I get back, right back into loans so that it acts like compound interest.  It should add up after a while.  I plan on doing this for 36 months and then seeing if I want to continue from there.  I may move on to putting my $100 a month somewhere else or I may continue to fund Prosper loans.

If it works out for me, then I'll probably keep going because it's a way to help people who can't get help (or as good of an interest rate) at traditional places. 

I have been thinking about starting my own Prosper group.  I'll explain that tomorrow.

I have a story about money for you

Unfortunately I'm going to have to save it for tomorrow.

I should probably mention my arch enemy, the credit card companies soon to.  I don't want them to think that I have forgotten about them.

Eternal vigilance is the price of liberty.

Banks and the politicians they own walk a delicate line

Ben and I have been discussing energy costs in the comments and I wanted to add something longer here.  The energy costs have gone up and will continue to go up.  We have the technology to create cheaper energy but we just won't do it right now. 

I have no doubt that we will eventually create the cheaper energy.  It's just a matter of time.  When will it happen?

If it doesn't happen through lobbying, then it will happen when the riots break out one winter.  When people can no longer afford to pay for heat in their homes, they are going to be pissed.  When the government starts threatening the lives of the people, it won't take long for the people to rise up and revolt.  Military suppression will only go so far when grandma is dead because she couldn't pay for heat on her fixed income. 

The government will take as much control as they can and banks will take as much money as they can, right up to the breaking point.  They keep trying to move the line a little bit to see just how much control and money they can take and every once in a while, they cross the line.  When that happens, violence erupts and they have to take a step back and come up with a new plan. 

Power companies will continue to raise their rates each year, citing a myriad of reasons, until the people finally decide that it's enough.  When will that happen?  I don't know but I do know that it will be a cold day and that people will set fires to get warm.  They probably won't be too concerned with what they're burning either.  If I was a power company, I'd be using some of my profits to put in a dang good sprinkler system.

The heat bill and my allowance

The two aren't connected but I wanted to cover them both today. 

Last fall before it got cold, the electric company raised its rates by 12%.  Our heater is electric not to mention that in the winter you use more lights.  I have some thoughts about the size of the increase and maybe I'll go into that tomorrow.  Today it's enough to know that they did a huge increase in time for winter.

We vowed not to let our bill go up by 12%.  It just wasn't going to happen.  We have kept the thermostat at least one degree lower than last year and at night we put it even lower.  I taped around a door that we never use to keep warm air in and we put plastic over our worst offending windows and the french doors. 

This month's bill was 10% lower than last years even with the price hike.

I got my allowance today.  That's what my wife called it.  I don't know that it's MY allowance because I put the money into savings and investments.  I get a little less than 5% of our net as my allowance.  Right now, I'm splitting the money evenly between savings and investments.  I'm going to do that until I have my saving up where I want and then I'll switch to just investing.  It will take me a while to get my saving where I want it though.

Every little bit helps.

10% saved on the electric bill.  5% gaining interest or value.

It all helps.

My plan for Prosper

My plan for Prosper is simple.  I'm going to put $100 a month into it plus reinvest anything that I get out of it and just keep doing that for at least 36 months.

My reason for this is to make money but not in the sense necessarily of making serious money but for a different reason.  I am working on things that give me a sense of money coming into my life even if in small amounts.  It's part of the overall plan.  We are putting most of our money into paying off debts and not into making more money but I think it's important to start that brain shift as early as possible even in small amounts.

If I fund 36 loans, they are going to come due on different days.  Not all of them will be on different days but enough will be that I should be getting payments every day or two and if it skips a day, I'll be getting a couple of payments to make up for it.  Each payment will only be for a couple of bucks but that's not the important part.  The important part is that people will be paying me the principle they owe me plus interest every day. 

I think it's going to be strong reinforcement to the concept that I'm building.  And right now, an extra 70 bucks a month is still money coming in.  Of course, I'm going to reinvest it for now but eventually, it will be money coming in for the purpose of spending somewhere else.

We'll see how it goes.

I received my first Prosper payment yesterday

The borrower paid on time and I received my cut.

$.86 in principle was paid back and I received $1.23 in interest. 

That's pretty dang good.  Not in the amount of course but in the ratio. 

The most important thing about Prosper is learning what it's like to be on the receiving end of interest.  The amount isn't that important.

Most of our money is going into paying debts off which doesn't leave a lot of money left over for investing.  That's the way it needs to be for now.  I won't say that it's impossible to get ahead while paying interest to someone else but it sure slows down the process. 

There are people out there that will borrow money at a low interest rate and invest it in something that is supposed to earn them a higher interest rate.  I understand the principle but for me, the answer is to owe no one.  There is going to be a great feeling of freedom in knowing that I don't owe anyone money. 

It won't just be a feeling either.  It will be actual financial freedom.  I'll go into that a bit more tomorrow.

"Accept that you'll always have a car payment."

Have you ever heard that?  I have.  It takes five years (or 6 or 7 now) to pay off a car and when it's paid off, it's time to buy a new one.  Not only have I heard it but a few years ago, I believed it.  I had been brainwashed by some unknown source but that source is probably someone that collected the interest I was paying on my car loans. 

My thinking has changed of course as I now see the game that is being played and have a better understanding of the rules.

If you follow my Money Choice plan, you can pay off every debt that you have in 5 years.  Every single debt including your house in 5 years.  In the time that most people pay off one car, you can be completely debt free.  I'm going to say it one more time because it's important to understand how powerful the brainwashing is.  People are taking 5, 6, and 7 years to pay off a car only to start the process over again when they could actually pay off everything they own in the same amount of time.  And this has been taught as being "normal".  Are you getting the picture?  Do you think there are people out there collecting your interest that want you to think that it's just the way of life to pay extra for everything for the rest of your life?

Here's another thought for you.  If you didn't have any debts, no house payment, no car loans, no credit cards, how long would it take you to save up to pay cash for a car?  Less than 5 years?  Less than 3 years?  Less than 2?  Depending how much you make and how much the car costs, maybe even less than 1 year. 

You can buy a car in one or two years but for some reason you just have to "accept that you'll always have a car payment." 

Not me.

Letting It Sink In Some More

Yesterday, even after posting about the car payments, I could not get it out of my head.  A lot of times, once I post, it's done.  When I blog, it seems I'm more of a cut/paste guy instead of a copy/paste guy.  I take what's in my head and put it down on paper and then I move on to thinking about other things.  Yesterday, my mind kept going back to this car payment thing and this is what occurred to me.

Granted my wife and I have been doing this plan for 9 months now so we have a little headstart but . . .

My coworker is going to pay off a couple of debts in the next few months so that he can afford the payments on the H3.  This summer he's going to go in and convince a bank to buy an H3 and he'll buy the car from the bank with interest over a 6 year period.

In those 6.5 years, following our plan, my wife and I will have paid off every debt we have including our house and will have time to save up to pay cash for a car of equivalent value to an H3.  We'll own the car and have no payments on anything.

Of course, that means that we have to go for 6.5 years of not driving that car.  Somehow I think we'll survive.

Tomorrow, some more about cars and brainwashing.