Friday, July 11, 2008

Investing, saving, being frugal and living lavishly

I have been thing a lot lately about investing. I am not flush with cash, and while I make a modest living doing website content and web consulting, I would not be adverse to having more cash on hand. It seems every day that it costs a little more to live: Gas cost me $65 today to fill my tank and I seem to be going through more than 1 tank per week. The stock market is abysmal. My cell phone bill is ridiculous. I bought $100 worth of groceries today and enjoyed a lovely pedicure--at no small cost. (My toes look lovely...) That said, the mortgage is at a fixed rate, there is some equity, even if the home value has slipped and the cars are paid off. We have no college loan debt any more, nor any credit cards that aren't paid off monthly. I saw a show yesterday that had couples interviewed who were saying they had $200,000 in credit card debt! And that was before the house with the ARM, the cars, the private school tuition for Junior, the 2x a day Starbucks habit. Each story got worse. Bad choices, no investments, lifestyles they could not afford.

And I could only think of two things: "What are these people thinking?" and "How can I make sure this doesn't happen to me?"

Even with a little cash in the bank, and many many years until an official retirement, a strong financial future is not guaranteed. Not for me, and not for many people. Investing now, while there is essentially a "sale" on making money is smart. But making a smart investment is not always easy. The "old way" may not work, the "new ways" may be too new. So many want to rely on schemes and procrastination. Think about all the people put money into property in California, and Florida. They thought they were making a smart decision and now sitting on a house that is valued less than they paid for it 5, 10 years ago. 401ks are based on diversified investments--in the stock market--which I don't have to tell you is down.

Now that is all a lot of my own personal information, but it sets up my experience and tells you were I am at. I have been investing in Prosper now for about a year an a have and to date have 58 loans funded. Now, I am not one to talk about money in any great detail on the average day, but I did want to share with you my prosper story. Those 58 loans represent 58 people whom I am helping get out of a bad credit situation. These people are consolidating credit cards, or paying off other high interest loans--or getting through other financial tough spots. For each of these loans there was background info, the person's story, credit history, credit score, expenses, etc. And I choose my loans carefully. There is a high default rate, especially now, and I am fortunate to have all my payments from these people current. Admittedly, on occasion there is a late payment--but so far, everyone is hanging in there.

Now Prosper isn't for everyone wanting to make an investment. It is risky. But so is the stock market. Right now Prosper is paying an average 17% for me, which I consider rather decent. Right now Prosper is a good investment. A smart investment. I re-invest the money each time I am paid back+interest, enough to fund another loan. It will be a long time until I take the money out of this (loans are for 3 years), and with each re-investment I push that back again.

But I don't need the cash today. Today I will ride my bike, clip my coupons, go without. Today I will splurge on a pedicure, but I will sacrifice something else. Because I need to look to tomorrow. I do not want to be one of those people talking to Suze Orman about how I screwed up and paid my 15% interest rate credit card with a cash advance with a 30% interest rate, and can't pay my electric bill. I do not want to look at this period of "economic slowdown" as the "time I lost all my money."

I am investing in my future - $50 at a time...

If you are interested is learning more about my Prosper story - how I choose my loans, or my investment strategy, I would be happy to discuss it here. Feel free to comment below or email me directly.

Meghan Wier
Writer - Author - Woman - Investor.

Meghan Wier
Author Writer Web Consultant

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