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  • Morning Coffee: It’s Mega Swag Bucks Friday

    Search & WinSwag Bucks is by far my favorite way to earn free money, so I love Fridays, when there’s an increased chance of winning big Swag Bucks. Plus, get a daily Swag Buck by taking the Daily Poll, and another daily Swag Buck for using their toolbar. Disclosure: If you join Swag Bucks using my referral link, I’ll get bonus Swag Bucks, so thank you if you do!

    It’s been a long time since I mentioned ShareBuilder, but three years ago, I bought my first (fraction of an) individual stock through them – a very tiny share of Berkshire Hathaway B, in fact. I haven’t done much with Sharebuilder since, but I’ve been pretty happy with them – their statements are timely and their web site is pretty easy to use. I love that they have different plans to accommodate different types of investors (I went for the pay-per-trade plan that has no other fees), and of course, the very important fact that you can buy partial shares of desirable stocks. Of course, make sure you know what you’re doing before you invest in any stocks! And, although the banner doesn’t say it, when you click through and register via the banner or this link, you’ll get a $25 sign up bonus when you deposit $25. Links via Escalate Media Affiliate Network

    I am totally envious of those of you in Northern California: I got an email that today only (9/24), Rocky JR Whole Body Chicken will be $0.99/lb at all Northern California Whole Foods locations. The best sale price I’ve seen on a whole chicken at Whole Foods is $1.99/lb, and this is half that! Petaluma Poultry’s Rocky was the first USDA approved free range chicken, and is free of antibiotics, contain no added hormones or preservatives, is 100% vegetarian fed, humanely raised, sustainably farmed, dairy free and soy free.

    Get 10 points at Pampers Gifts to Grow with code 1FORMEGTGSEPT23.

    Michaels stores will be hosting an American Girl event on Saturday (9/25), where girls can make all the supplies they need to throw a doll-sized party. (Via Moneywise Moms.)

    The New York Times reports that some Manhattan Walgreens stores are selling fresh produce. I would be in heaven if I could buy at least some of my produce with Register Rewards!

    You can use this printable Facebook coupon to get free Kobari beef at Panda Express on September 29 (next Wednesday).

    I mentioned yesterday that the printable coupon for $2/1 Playtex Gentle Glide has reset, and now Common Sense with Money lists some scenarios to get free or super cheap tampons.

    Banner via Escalate Media Affiliate Network

    Free Money from Lending Club

    I haven’t mentioned peer to peer lending in a while, mainly because I haven’t been thinking much about investing. As a refresher, peer to peer lending sites allow people like you and me to lend money to other people like you and me. The borrowers sometimes can’t get loans through traditional means (like from banks), or sometimes they’re just looking for a better rate. Lenders can pick and choose who they want to lend to, taking on the risk that they’re comfortable with.

    I mentioned Lending Club a while back, when they gave me some money to play with as a lender. I invested conservatively, in borrowers with the highest grades and therefore the lowest risk. So far, they’ve all paid consistently and my rate of return is over 8% – pretty awesome in this economy.

    Now, Lending Club wants to give everyone money. Right now, when you sign up to be a lender, Lending Club will deposit $64.62 into your account for you to invest (because bank profits were $6.462 billion last quarter). Last time I checked, you only needed a minimum of $25 to invest in a loan (investments are pooled until they total the amount requested by the borrower), so you could invest in two loans with the bonus money and find out what peer to peer lending is like for yourself. Some restrictions apply (for instance, residents of certain states cannot become lenders). Offer expires 12/31.

    Disclosure: The email I received from Lending Club instructs me to tell you to use this referral link so you can get the bonus, but as far as I can tell, I don’t benefit from it.

    The lesson everyone should learn from Bernie Madoff: Diversify

    The one thing I haven’t been able to understand about all the losses caused by Bernie Madoff is why so many people had everything invested with him. A few months ago, I read an LA Times article about Nancy Silverton, a well-known pastry chef, in which Silverton admitted that she knew she ought to diversify, but the returns with Madoff were so good that she kept putting it off. Maybe that’s all it was – greed.

    The need for diversification came back when I read that a mortgage broker in Hawaii ran a Ponzi scheme that lost $30 million, and his victims appeared in court to say they’d lost everything. Again, it sounds like the investors were simply lured by the prospect of easy money.

    For me, between the Ponzi schemes and the current recession, I’ve learned that I don’t want to trust one entity with all of my money. I already felt that way anyway, but the feeling has been reinforced. Our cash holdings are spread between three banks, and our retirement funds are with three separate institutions. It’s not that I think anything will happen to any of these financial entities, but I’ve always been cautious and now I’m extra cautious when it comes to trusting anyone with my money.

    Certainly, for all of the Ponzi scheme investors, losing even half of their life savings would have been devastating. But at least there’d be something left if they’d diversified.

    Lending Club Part One: Getting started

    I first mentioned my interest in peer-to-peer lending back in November 2007, when I branched out of my comfort zone and bought an individual stock. (A tiny portion of a Berkshire Hathaway B stock share.) Back then, I was thinking about continuing to expand beyond my comfort zone of investing by venturing into P2P lending, and have mentioned it periodically since, but it’s always been on the backburner.

    Until now. I received a special bonus for joining, and I’m not one to turn down a chance to learn for free, so I signed up. Others have written extensively about Lending Club, Prosper, and P2P lending in general. (Try The Dough Roller, Mapgirl’s Fiscal Challenge, Lazy Man and Money, and Moolanomy, just for starters.) So I won’t write about the basics of P2P lending because I just don’t have the inclination or time, and I probably wouldn’t do it as well as DR or Pinyo. Instead, I’ll just share my personal experiences and impressions along the way.

    I was a little apprehensive about signing up, just because I am always cautious about disclosing my personal information. However, I knew I’d have to disclose some information and didn’t feel Lending Club was overly intrusive. I didn’t want to link a bank account, and I didn’t have to – apparently linking a PayPal account is enough, although I didn’t even have to do that since I wasn’t adding any funds to my account.

    Once I’d signed up, picking loans to invest in was fairly straightforward. Mapgirl’s frank posts about loans that aren’t performing well convinced me that I didn’t want to take a lot of risk. Even the lowest risk loans at Lending Club earn close to 8% interest, so it’s still a fairly decent return. I had the option of letting Lending Club automatically choose my loans for me based on the risk I was willing to take, but instead I chose four $25 loans manually.

    I selected borrowers who all had a solid credit history and credit score, seemed to have a good reason for wanting to borrow money, and a low debt to income ratio. I also chose one loan that seemed like it might not fund to see what that’s like. And if that loan does fund, I’ll still consider it my greatest risk, because despite the good credit history, credit score, debt to income ratio and decent income, I’m a little disturbed by the revolving credit balance of nearly $42,000 and projected monthly payment of over $500 (the borrower’s gross income is over $5000 per month, but one spouse is currently unemployed). If I wasn’t willing to take a little extra risk because this is a learning experience, I wouldn’t have selected this loan.

    So that’s where I stand now. All of the loans I selected have yet to be fully funded and processed, but I should have an update in about a month!

    When procrastination pays (or, thank goodness I hadn’t gotten around to creating a Lending Club account!)

    Update: I was waiting for DebtKid to weigh in on this issue, since he writes for LendingClub’s blog. He has a much more optimistic interpretation of LendingClub’s actions.

    I’ve mentioned previously that I’d like to get in on the P2P (person to person) lending scene. After reading posts from avid P2P lenders like Lazy Man and Money, The Dough Roller, and Moolanomy, and carefully reviewing both the Prosper and Lending Club sites, I decided to join Lending Club and make four $25 loans (using a $90 Sharebuilder bonus plus an extra $10).

    Except that I never really sat down and signed up. I intended to review the fine print one more time, but I never made time to do it. In this case, it turns out, procrastination was a very good thing.

    Earlier this week, The Dough Roller and Cash Money Life posted about this notice from Lending Club:

    Lending Club has started a process to register, with the appropriate securities authorities, promissory notes that may be offered and sold to lenders through our site in the future. Until we complete the registration process, we will not accept new lender registrations or allow new commitments from existing lenders. We will continue to service all previously funded loans during this period, and lenders will be able to access their accounts, monitor their portfolios, and withdraw available funds without changes.

    The borrowing side of our site will remain generally unaffected by this registration process; borrowers can continue to apply for loans and new loans posted after April 7, 2008, will be funded and held only by Lending Club.

    Until the registration process is completed, the company will undergo a quiet period and will not be able to respond to press and other inquiries about Lending Club or the registration process during that time.

    It looks like if I’d already funded loans, they wouldn’t be affected, but this event simply shakes my confidence in Lending Club. I don’t know enough about lending laws to figure out what the problem is with Lending Club, but I do know that I’m happy I didn’t create that account with them. (LazyMan thinks Lending Club is dead.)

    I’m still interested in lending with Prosper, but I think I will wait a few weeks to make sure there’s no reaction to Lending Club’s actions first.

    Improving My Personal Finance Management: Learning about income-producing investments

    NCN of No Credit Needed has asked readers, What One Area Of Your Personal Finance Management Would You Like To Improve?. My answer came immediately: investments.

    I think we have a solid grasp on budgeting, spending, saving, and paying off debt. The one place where we could use a lot of improvement is investments. Mostly short and mid-term investments, or as I sometimes like to think of them, income-producing investments. Because we’re doing fine with retirement and even college savings, where the timeline is over 15 years (goodness, it is possible that our oldest will be heading off to college in “only” 15 years?!).

    So what I’d really like is an alternative income stream, something unrelated to our jobs that produces a fair amount of money each month. But my investing knowledge is mostly about short-term, liquid investments where the focus is on preserving capital (like CDs) and long-term investments (like index funds).

    I’m lacking knowledge in the intermediate range, however. I don’t think it should be too hard to learn about mutual funds that focus on generating income as well as growth, since I already know a fair amount about how mutual funds work. But I’d like to learn more about tax-exempt funds, as well as other instruments (like Treasury securities and TIPS). My learning process will probably be slow, just because of my schedule, but I’ll post updates when there’s something to share.