Friday, December 30, 2016

2016: The Year In Review

So, it's that time:  time to look back at the year that has passed.  It is time to look at successes and failures and to consider where we want to go from here.  I'm going to paste the text from my goals post from January and, in blue, talk about what went right and wrong.

1.  Continue my Loyal3 Lunch portfolio, adding an average of $20 per week, or $1000 over the year.  More would be better, but a lady has to live a little, right?

Very few people were reading my Loyal3 Lunch posts, so I quit doing them.  I also lost my motivation to avoid the lunch counter on an off during the year.  I do continue to invest via Loyal3 using money I earn in dividends from Motif investing or using money I am pulling out of Kickfurther.  I know I should avoid that lunch counter more and since one of my 2017 goals is weight loss, that should be more motivation.  

2.  Devise a budget and work with my husband to stick with it.  We've never done this in a formal sense and despite the fact that we have limited some of our large expenditures, it seems that money is slipping through our fingers rather than going to meet long-term goals.

We did this for a couple of months and it showed about what we expected--we spend too much on food, both in restaurants and in grocery stores.  However we aren't real motivated to change that.  I'm going to suggest we budget for food away from home this year and see if we can reduce this cost.   

3.  Unless we end up needing to buy a car this year; do not take any money from savings; live on current income.

Except for what we spent on cars (yes, plural) we succeeded.

4.  Add $300/month to our Prosper or Lending Club accounts as savings for another car.  We have enough money in the bank for our next car and should we need to use it, we will stop investing in these accounts to replenish our savings.  

We added $850 to our Prosper account this year and we bought new (to us) cars in August (for our college girl) and September (for my husband).  The car for college girl was a planned expense; the one for my husband came about because my son wrecked his car and since my husband was driving an old high-mileage car, we passed that down to my son and got my husband a nice car.  Of course with new cars comes more expensive insurance so our transportation expenses have increased significantly this last quarter.  Hopefully college girl will get a real job shortly after graduation in May and take over her own car expenses.  

5.  Continue our 401K savings at the current level.  Maybe next year we can increase them, but right now, holding steady is about the best we can hope for.  

This goal was accomplished.  However, neither one of us are expecting substantial raises this year and we've both been hit with increased health insurance premiums.  We've left those saving rates alone.  

6  Add $100 per month to each of our Roth IRA's.  This will be a challenge.

At tax time we were looking a pretty big bill so we contributed $1000 each to our regular IRAs.  Later in the year we contributed $1000 each to our Roths. We also transferred some money from a non-IRA retirement account to our Roth IRAs but that's not new money invested.  While we didn't contribute monthly, we did add $4,000 to our retirment money and that's a good thing.  

7.  Renovate my den.  I'm expecting about another $1500 from my dad's estate.  I want to pull out some paneling, put up sheet rock, and paint.  If there is enough money, I want new flooring. 

Still waiting for the IRS to finish with my Dad's estate.  On the other  hand, I now think the final installment will be a little over $2,000.  

8.  A second honeymoon for me and my husband.  My youngest is going on a Girl Scout trip this summer, and since she won't be home, we'd like to leave the big ones and go off on our own for a week.  

We did this and had a great time in New York City this summer.  

9.  Earn at least $50 per month from freelance writing.  I currently have a client and I'm going to try to pick up some more work.

Success!.  The client I talked about here only hired me once more, but I've picked up two regular clients for whom I enjoy working.  I've earned over $1,500 this year as a writer. 

I spend most of Memorial Day looking at job offers on Upwork and responding to them.  As a result, I picked up several jobs this summer and actually spent a good deal of time this summer writing for other people.  However, the bottom line is I wasn't paid a whole lot for most of the jobs, I didn't particularly enjoy doing them and I haven't actively pursued new clients.  

I write regularly on education-oriented topics for Classloom, which is a social media app for teachers/schools.  This week's topic is standardized testing and it includes a link to a survey where you can give your opinions about whether standardized tests have become monsters.  I picked up that job on Upwork and at least right now, there is no end in sight.  

One regular topic on this blog is Kickfurther and one of my Kickfurther Merchants of the Week, Mulberry Silk Comforters, pays me to write blog posts for them. 

What are your financial goals for the next year?


Friday, December 23, 2016

Gifts Money Can't Buy

I wrote this last year and since it is all still true (and I have stuff to do to get ready for Christmas) I'm just re-posting.

If you read personal finance blogs, you've noticed a lot of posts lately about thrifty gift giving; and ideas range from homemade gifts, to IOUs for services, to garage sale finds.  My list is going to be gifts that money can't buy.

Money can't buy family or their love, and without them, life would be so empty.  Thank you God for the gift of my family.

St. Cecilia's Roman Catholic Church (Greenpoint, Brooklyn).jpg

Money can't buy faith; and without it there is no long-term hope.  Thank you God for the gift of faith in You.  

Money can't buy the beauty in nature.  Yes, it may cost money to go and see places far from home, but most of us live close to natural beauty, beauty we may not even notice because to us it is so normal.  Thank you Lord for the beauty of the earth You made.


Especially in light of recent events, we realize that money can't buy peace.  It can buy weapons, it can support armies, and the lack of it can make men easy pickings for terrorists, but money can't buy peace, either worldwide or within our homes and hearts.  Please God, grant us peace.  

May the Joy of Christmas be with you and you loved ones now and forever.  God Bless each of you--you are another thing money can't buy--readers for a blog!

Friday, December 16, 2016

Financially Savvy Saturdays #173: I'm Co-Hosting!

Welcome to Financially Savvy Saturdays, the savviest personal finance blog hop on the planet, created specifically for personal finance writers! We welcome all things money here. Whether you've written anything from how to hit your 2016 financial goals to frugal holiday gift ideas, you're invited to link-up. If it ties into personal finance, we want to read it!

FinSavSat Banner
Racing Towards Retirement

This weekend we're excited to welcome back Ruth Ann from Racing Towards Retirement, where she writes about, you guessed it, life closer to retirement and how to prepare for that next step in life.

  Tweet about it. You can use #finsavsat when tweeting about the party!

  Concerns about SEO? Recently many bloggers have decided to stop participating in events such as Carnivals. If you're worried about how participating in this link-up could effect your SEO, I'd encourage you to check out this article

Interested in co-hosting? Co-hosting is fun AND easy. If you’re interested, you can email us via brokeGIRLrich(at)gmail(dot)com or info(at)diseasecalleddebt(dot)com with any questions. Or if you're ready to take the plunge, you can sign up on this Google doc.

If you’ve co-hosted before and enjoyed it, please consider doing it again! If you’re interested but nervous about getting involved, please email one of us, we love talking to new bloggers and would enjoy explaining how blog hops work and getting you more involved!

Feature of the Week

As this week's visiting co-host, Ruth Ann has selected her favorite post from last week's blog hop to be this week's feature - 5 awesome books about money - for women, by women at NZ Muse.

Click here to read her post!
Click here to read her post
If you submit a post, you could be featured in next week's party!

We do have a couple of rules for participation. Those who don't follow the rules will have their link taken down.

1. Your post must be written in the past seven days, related to personal finance and not be solely a giveaway. 2. Be sure to include a link to one of your hosts by copying and pasting the html in one of the boxes below into your linked up post. You have the option of the button or a text link. 3. Follow your hosts. You can follow brokeGIRLrich on Google+, Facebook, Twitter, Pinterest, OR by subscribing to her RSS feed. Also, you can follow Racing Towards Retirement on Twitter, Pinterest, facebook, OR Bloglovin. 4. Comment on at least one post before and after you that have joined the party. 5. HAVE FUN!

Please copy and paste this button into the post you link up:

Disease Called Debt

OR copy and paste this code for a text link:

 *Part of Financially Savvy Saturdays on
" rel="nofollow">brokeGIRLrich, and" rel="nofollow">Racing Towards Retirement*

Wednesday, December 14, 2016

What Should You Do When You Retire?

Once upon a time, it seems not so long ago, I was the mother of infants.  My hair's natural color was brown and retirement was a long way away.  Now my "baby" is twelve, my middle child is graduating from college and the oldest is twenty-four.  Time has flown by; I won't talk about my natural hair color, and before I know it, retirement will happen.  

Most of us realize we need to plan financially for retirement and so we pay off debt, contribute to our 401k plans and invest in stocks, bonds and real estate.  We want to have money when those paychecks stop arriving. 

But what are we going to do with our time, once our employer doesn't fill 35% or so of our waking hours?  Last time I checked, one of the best reasons to get a job was to avoid daytime television.  Are there other ways to avoid that wasteland?  While we don't want to turn retirement into another "to do" list or job, having a plan will help us get the most out of our golden years.

Friday, December 9, 2016

2016: Expenses: The Year in Review

This is the time of year when bloggers start looking back at the year, seeing what went right, and seeing what went wrong.  I'm going to take some time this week to look at this year's major expenses and comment on them.

In either December or January we will make our last contribution toward my daughter's college education.  We've been lucky--for tuition, room, board and books we've paid about $24,000 for four years.  This has been a planned expense but one I'm glad is about done.

Friday, December 2, 2016

Another Look at Motif

I've spent the last two weeks reviewing no-commission stock brokers so I thought that I'd spend this week taking another look at a low-commission broker, Motif.  

When I started investing with Motif, they offered the ability to buy a motif--a basket of up to 30 stocks--for one commission of $9.95.  You could invest as little as $300 in the whole basket.  Now they have added the ability to trade individual stocks for a commission of $4.95 per trade.  Periodically Motif offers reduced commissions for certain activities.  For example, on Black Friday they offered 50% off all commission.  

How Does the "Motif" Concept Work?

Motif offers some professionally designed motifs--baskets of stocks based on a certain theme or investing goals.  I own two  motifs of dividend paying stocks, one of companies which have bought back stock, one that contains stock in companies involved in cyber security, one of stocks with low beta, one dealing with video gaming and one of stocks in companies with whom I do business.  The professionally designed motifs include companies I've never heard of, much less considered investing in.  The professionally designed motifs are rebalanced regularly, and investors are encouraged to rebalance their holdings in that motif accordingly (and to pay the associated commission) but they are not required to do so.  I have not chosen to rebalance my holdings and taking a look at all of them, using 20/20 hindsight,  at least so far, it has been the right choice. 

Does Motif Have Anything New?

The latest thing Motif is offering is "Motif Blue", which is a subscripton service.  Users pay a fee of between $4.95 per month and $19.95 per month based on the level chosen.  The starter level is for people who have only one motif and it  allows you to auto-invest in that motif and to auto-rebalance it monthly.  The mid-level "Standard" offering is $9.95 per month and allows auto-investing in any number of motifs, auto-rebalancing of all professional motifs and one commission-free stock or motif trade per month.  Users are also entitled to some market reports.  The $19.95 level gives real-time stock quotes and gives up to three free stock or motif trades per month.  If you'd like to try Motif Blue, use this link and you can try it for three months, free.  If  you do, I get free time too.  

Do I Recommend Motif?

Somewhat.  A motif is similar to a mutual fund or ETF in that it is a collection of stock shares.  It offers a level of diversification that purchasing shares in one company does not.  If you want someone to do the work for you and assemble a basket of stocks fitting a theme, then Motif can be a relatively inexpensive way to achieve that diversification.

However, unless you have an aversion to trading via smartphone, you can get lower costs (though not factional shares) via Robinhood.

For small investors though, due to fractional shares, you can get a higher level of diversification via Motif.  You can purchase a motif for as little as $300 and that motif can contain shares of as many as thirty different companies.  Obviously, $300 will not buy you anywhere near full shares of those companies but Motif allows the purchase of frational shares.

What Are My Plans With Motif?

My plans for my Motif account are to basically hold it.  I have eight motifs.  I created one of them, the other seven were "motifs of the week", offered for sale at no commission the week I bought them.  There are far too many companies involved for me to have a life and keep current on the details of each one.  

If I decide I want out, I can either sell the shares in a particular company in a motif, and pay a $4.95 commission or I can sell the whole motif and pay $9.95. Considering that a "large" position for me is $200, selling off share of individual companies is going to eat my profits quickly.  I plan on reviewing the motifs I own on a periodic basis and if they are not keeping up with the market, I will probably sell the motif as a whole and reinvest the money via Robinhood or Loyal3.  

Many of the companies I own via Motif pay dividends I have been withdrawing those dividends and reinvesting via Loyal3.  Now that I have a Robinhood account, it will be getting those dividends.  

Have you invested via Motif?  Do you think it is worthwhile?


Thursday, November 24, 2016

Robinhood: Commission Free Stock Trades

Last week I wrote about Loyal3, which is one commission-free stock broker.  This week I am writing about another, Robinhood. 

What is Robinhood?

Robinhood is a smart-phone based stock brokerage.  All transactions are done via phone app.  In order to use Robinhood, users can register on the website but then must download either the Android or Apple version of the Robinhood app.  No trades can be conducted via the website.  

How Do You Use Robinhood?

Once the app is installed on your phone, you can enter your banking information and transfer money to your Robinhood account.   A feature known as "Robinhood Instant", if activated, gives you immediate access to up to $1,000 that is en route from your bank account.  It also gives you instant access to money made via selling shares.  

To purchase shares of stock, simply search for the ticker symbol or company name on the app. Tell the app how many shares you want to purchase and whether you want a market order (meaning you'll pay whatever the going price is at the time the trade is made) or a limit order (meaning you tell the app how much you are willing to pay per share and if the stock is at or below that price, the shares will be purchased.  Selling shares works the same way--you tell the app how many shares to sell, and whether you want to sell for the market price, or whether you only want to sell if a certain price is reached. 

How Much Does Robinhood Cost?

Robinhood does not charge for stock trades involving US stocks, so you can buy one share or a hundred without worrying about trading fees.  Robinhood does have fees for transferring your account to another broker, for buying foreign stocks (even Canadian) and for paper statements or confirmations. 

Robinhood also offers  a service called Robinhood Gold that allows you to buy stocks with borrowed money, allows you to trade after hours (without it, orders placed after the market closes are executed first thing in the morning) and gives you instant access to larger deposits.   The cost of Robinhood Gold increases as the size of your account increases.  

What Can You Not Do With Robinhood?

As with most things, a lower price means a lower level of service.  Some things you can do with a full service broker that you cannot do with Robinhood include:
  • You cannot buy or sell options 
  • You cannot short sell stocks
  • Robinhood's terms of service indicate that limits are in place to make the platform unsuitable for day trading
  • They do not guarantee instant execution of trades
  • They do not offer any research on companies or any investment advice
  • They do not currently offer retirement accounts
  • There is no website access; all trades must be accomplished on a smartphone or tablet app

Have I Used Robinhood?

I'm a Baby Boomer, not a Millenial.  I do not own a smartphone and don't particularly want the bill that comes with one.  I have a "blackberry" style phone which, to me, is easier to text on that a smartphone.  I have wanted to try Robinhood for some time but have been unable to do so because I lacked a smartphone.  However, my husband recently needed a new phone so we got him a smartphone (which he hates).  

I was able to register online and download the app with no trouble.  Getting all the needed information into the app was a bit of a pain---he has a small cheap smartphone and typing errors were common.  However once it was set up and money was in the account, trading was easy.  I put in market orders for two shares of AT&T and one share of Lending Club.  Those executed at the opening price the next day (I placed the orders after hours). 

Once that was done, I entered an order to sell the Lending Club stock if the price increased by 10% and to buy another share if it decreased by 10%.  So far those orders haven't executed and from what I can see on financial websites, those prices haven't been reached.  

How Does Robinhood Compare to Loyal3?

Robinhood offers far more choices and far greater flexibility than Loyal3 does.  It allows you to trade any US listed stock at no charge and to have control over the price you pay or receive.  

The only advantage of Loyal3 (assuming you are willing to trade via app rather than website) is that Loyal3 sells fractional shares, and therefore allows you to invest as little as $10 per company, no matter what the price of the shares.  While the lack of commissions makes it feasible to buy only one share of a company on Robinhood, the cost of those shares means that $50 is likely to only buy you part of one company, rather than part of five.  

Investors who want to buy stock in a variety of companies for a small amount of money may find they prefer Loyal3.  If you have several stocks on their list that you want to own, if those stocks are not very volatile and you want to invest as little as $10 per purchase, you may be happier with Loyal3 than with Robinhood. The fact that Loyal3 limits your choice of stock can be an advantage (limiting your choices generally makes decisions easier) or a disadvantage (if you want a stock not on their list). 

If you want to invest in volatile stocks and want some say over the purchase price, or at the least want to be able to push a button and buy "now" (realizing that "now" will have some lag), then Robinhood will better meet your needs. 

Have you used Robinhood or Loyal3?  What do you think?

If you want to try Robinhood, use this link and both you and I will get a free share of stock. 


Friday, November 18, 2016

Loyal3: An Introduction to the Stock Market

If you look at the top of my blog on my links bar, you'll see a link to my Loyal3 Lunch portfolio.  It was a gimmick I tried last year to reward myself for bringing my lunch to work rather than buying the mediocre food from the lunch counter downstairs.  I've pretty much dropped that idea--it wasn't changing my behavior all that much, and people weren't reading my posts about the portfolio--but I have kept my account and I have added to it.  I wrote about Loyal3 about eighteen months ago, so I thought it was time to take another look at it.

What is Loyal3?

Loyal3 is an online stock broker whose target market is people who are just beginning to invest in individual stocks or who do not invest a lot of money at one time.  

What Makes Loyal3 Different from Other Brokers?

There are a number of ways Loyal3 is different from other stock brokers:

Loyal3 does not charge sales commissions. 

Most brokerage firms make their money by charging a fee every time a customer makes a purchase or sale.  Generally they charge by the transaction so that the commission as a percent of the price goes down as the size of the transaction goes up--which means sales commissions are very high for small transactions.  Loyal3 does not charge sales commissions so when you buy $10 worth of stock,  you get $10 worth of stock.

Loyal3 does not offer the entire stock market. 

In fact, it only offers stock in about seventy companies, most of which are well-known household names.  If you want stock in a different company, you will have to look elsewhere. This is both a strength and a weakness.  It is a strength because it helps narrow the research field for new investors.  Too often people do not invest because they don't know what to buy.  The Loyal3 stocks, for the most part, are household names 

Loyal3 utilizes batch trading and does not guarantee any price.

 With most brokerage houses you can tell them you want to buy a certain number of shares of XYZ and that you are willing to pay up to $xx.xx per share--or you can tell them to buy (or sell) shares RIGHT NOW.  Loyal3 customers tell Loyal3 how many dollars worth of which stock they wish to purchase.  Once per day Loyal3 goes to market and buys the needed number of shares at the current price.  If they stock you are buying is very volatile, it may cost you significantly more or less than you anticipated. 

Loyal3 does not offer IRAs, Roth IRAs or anything but a basic taxable account. 

 Many people prefer to own stock inside tax-advantaged accounts.  Loyal3 does not offer those account.

Loyal3 sells fractional shares. 

 While the orders placed with most brokerage houses are for a certain number of shares of a particular company, orders with Loyal3 are made by dollar amount.  Since you can invest as little as $10, this means that you often by fractional shares.  

Loyal3 does not offer margin accounts.  

While most brokerage houses allow you to borrow money from them to buy shares of stock, Loyal3 operates strictly on a cash basis.  They link to your bank account and when you place a buy order, if you do not have cash in your Loyal3 account, they withdraw it from your bank, and once it hits their account, the stock is purchased. Recently I ordered some shares on 11/16.  They were purchased on 11/18, and judging by the daily price chart on Yahoo, it looks like there were purchased about 10:30 a.m.

Is Loyal3 for Me?

No business is the right fit for every customer.  Loyal3 is a terrific brokerage house for the beginning or hobby investor.  My Loyal3 account is a toy for me--I hope to make money but I don't have enough invested with them to cause any major problem if my investments lose money.  I firmly believe that for most people (including me) the majority of their assets should be in mutual funds.  However, to me, investing in the stock of companies I can follow is interesting.  Loyal3 allows me to invest a little money without having it eaten up by fees.

Loyal3 does not allow you to name the price you are willing to pay for your shares, or accept for them, if selling,  which, in my opinion, makes it unsuitable for investing large amounts of money at one time.  In fact, Loyal3 will not allow you to buy more than $2,500 worth shares per transaction or more than $5,000 per month per company. 

Loyal3 does not provide investing information or advice.  Since that information is freely available in many places, I consider that only a slight weakness.  The fact that they offer only a limited number of stocks makes it easy to set up watch lists or run Google Alerts on the companies in which you are interested.  


Friday, November 11, 2016

Should I Do the (Side) Hustle?

"Do the Hustle..."If you are of a certain age, that phrase brings back memories of disco balls and leisure suits and dancing with your friends at your favorite college bar.  Today, the term "side hustle" refers to a job you perform, usually as an independent contractor, outside of your usual job.  So, should you have a side hustle?

Do You Need the Money?

That's the first question.  Can you pay the bills every month, save for retirement, pay off any debts you have incurred and save for major expenses that you know you will be incurring in the near future on what you make at your regular job?  If the answer to that question is yes, then you don't need a side hustle, so you can decide if you want one.  If the answer to that question is no, if an unexpected expense has you paying interest on a credit card to pay for it,  then you either need a new full time job or a side hustle. 

Can You Meet Your Family Obligations?

As you have no doubt heard before, people don't lay on their deathbed wishing they had spent more time at work.  If you don't need a side hustle to make ends meet, you need to consider family time before taking one.  If your side hustle means that you regularly do not see your children when they are awake, you need to reconsider whether the side hustle is a good thing in your life.  If your spouse is complaining that s/he never sees you, the side hustle may cost you your marriage.  Just because you can have a side hustle doesn't mean you should have one.

Do You Like Your Side Hustle?

Maybe you have a side hustle that is more like a hobby that  work--one that pretty much functions to pay for your hobby.  Maybe you make quilts and sell them, making enough to pay for the materials for the next quilt and put a (very) few dollars in your pocket. Maybe you blog for review copies of books and a couple of dollars a week from AdSense.  Perhaps you love animals and pick up some extra cash walking the neighbor's dog.  Side hustles that you enjoy, and would consider doing even if they didn't pay, can be a great part of your life.  On the other hand, if you groan when your side hustle email box shows a new message, it could be time to pull the plug on it, or redirect your side hustle to another path.  

Are You Gaining a Skill You Can Apply to Your Career?

A side hustle can give you the chance to acquire and practise skills that can be valuable to your career, even if your side hustle is in a totally different area.  You learn to sell yourself, deal with clients, and perform the job tasks without a direct supervisor.  Those are skills it never hurts to put on a resume, and if you need them to move up at work, then sacrificing evenings and weekends to obtain them may be worth it.  On the other hand, if your side hustle isn't teaching you anything, then it is time to consider if you have one of the other reasons for keeping it.  

Are You Trying Out a New Career Path?

Some people start a side hustle in a field they are considering for a new full time job.  You may want to be writer, but not a starving artist.  If you can build up a freelance clientele by working evenings and weekends, then quiting your job to be a freelance writer isn't so scary.  Walking the neighbor's dog could grow into a pet care business.  While working full time and building a freelance business can mean some long hours, if you give yourself a deadline --I'll be making enough to quit my day job by (date) or I'll quit (or cut back on) the side hustle.

So, Should You Have a Side Hustle?

If you don't need one, then you should have a side hustle only if you want one, or have a good reason to have one.  You should regularly re-evaluate whether the side hustle is meeting your needs and the needs of your family (including the need for free time) and keep hustling only if it is good for you and your family.  
*Part of Financially Savvy Saturdays on brokeGIRLrich. *

Saturday, November 5, 2016

Quick Book Review: The Daily Telegraph Guide to Investing

About the Book:

The Daily Telegraph Guide to Investing is your complete guide to the reliable opportunities and exciting niches that could help you boost your bank balance and make the most of your cash pile. The world of stocks, shares and investments can seem intimidating but, with the right information at your disposal, you will be able to work out how best to protect and boost your savings.

Whether you're a total beginner or a more experienced investor keen to learn about some new options, this easy-to-understand guide covers many of the various asset classes and alternative investments that are currently available to you. Each investing opportunity is assessed for levels of risk and potential of returns, from the safer options (including bonds, equities, ETFs, gold and property) to the riskier (including buy-to-let, FOREX, cryptocurrencies, futures and options).

The Daily Telegraph Guide to Investing gives you the straight-forward advice you need to make sensible decisions about your hard-earned wealth. From the glamorous (including fine wines, whisky, classic cars) to the quirky (including lego, stamps, memorabilia), this guide will give you a firm understanding of investment principles and what to look out for. Technical terms and phrases are all made clear and full guidance is provided on the potential pitfalls, dangers and scams that can face investors.

My Comments:

UK readers will probably find this book more useful than US readers as it covers retirement accounts available there, rather than IRAs, Roths and 401ks.  Still there is a lot of general investing information and the book covers some investments like FOREX that you see on blogs but rarely in investing books.  

Friday, November 4, 2016

Prosper versus Lending Club: My Results

Prosper and Lending Club are both "marketplace" or "peer-to-peer" lenders.  Both allow people who want to borrow money to apply online.  Both allow small investors to buy portions of many loans and both make their money on application fees and servicing fees.  As an investor it is important to look at the differences between the companies before investing your money.  In the battle of Lending Club versus Prosper, who wins?

Friday, October 21, 2016

From My Reader

I thought I'd start a weekly habit of sharing some of my favorite blog posts of the week with you all.  Hopefully you enjoy them as much as I do.

The author of It Pays Dividends turned 30 and shared 30 life lessons with us. Smart guy.

The Conservative Income Investor reviewed Southern Company, a utility my high school economics teacher really liked.

This article reviews two stocks I own, VF Corporation and Target.

Kayln at Creative Savings writes about Amazon Prime.  I'm a member and I found benefits I wasn't using.

Monevator talked about education via MOOCs.

We don't generally itemize our deductions on our tax return since we have no mortgage interest, but we bought two cars this year and this article reminds me that we need to take a look at the sales tax we paid and see if it makes a difference regardin tax deductions.

Index funds are all the rage now (and they are where most of our assets are invested) but this article gives the potential negatives.

Passive Income Dude reviews his third quarter.

My Dollar Plan lets us know about a $60 credit available from Amazon.

Daily Trade Alert wrote about Health Savings Accounts.

Dividend Growth Investor writes about tax-advantaged accounts.

Any links you'd like to share?  Leave them in the comments.


Friday, October 14, 2016

I'm Co-Hosting Financially Savvy Saturday

Welcome to Financially Savvy Saturdays, the savviest personal finance blog hop on the planet, created specifically for personal finance writers! We welcome all things money here. Whether you've written anything from your net worth update to frugal ways to make dinner, you're invited to link-up. If it ties into personal finance, we want to read it! FinSavSat Banner
Racing Towards Retirement
This weekend we're excited to welcome back Ruth Ann from Racing Towards Retirement, where she writes about, you guessed it, life closer to retirement and how to prepare for that next step in life. Tweet about it. You can use #finsavsat when tweeting about the party! Concerns about SEO? Recently many bloggers have decided to stop participating in events such as Carnivals. If you're worried about how participating in this link-up could effect your SEO, I'd encourage you to check out this article. Interested in co-hosting? Co-hosting is fun AND easy. If you’re interested, you can email us via brokeGIRLrich(at)gmail(dot)com or info(at)diseasecalleddebt(dot)com with any questions. Or if you're ready to take the plunge, you can sign up on this Google doc. If you’ve co-hosted before and enjoyed it, please consider doing it again! If you’re interested but nervous about getting involved, please email one of us, we love talking to new bloggers and would enjoy explaining how blog hops work and getting you more involved!

Feature of the Week

As this week's visiting co-host, Ruth Ann has selected her favorite post from last week's blog hop to be this week's feature - What Is Financial Abuse? by Femme Frugality.
If you submit a post, you could be featured in next week's party!

We do have a couple of rules for participation. Those who don't follow the rules will have their link taken down.

1. Your post must be written in the past seven days, related to personal finance and not be solely a giveaway. 2. Be sure to include a link to one of your hosts by copying and pasting the html in one of the boxes below into your linked up post. You have the option of the button or a text link. 3. Follow your hosts. You can follow brokeGIRLrich on Google+, Facebook, Twitter, Pinterest, OR by subscribing to her RSS feed. Also, you can follow Racing Towards Retirement on Twitter, Pinterest OR Bloglovin. 4. Comment on at least one post before and after you that have joined the party. 5. HAVE FUN!

Please copy and paste this button into the post you link up:

Disease Called Debt

OR copy and paste this code for a text link:

 *Part of Financially Savvy Saturdays on
" rel="nofollow">brokeGIRLrich, and" rel="nofollow">Racing Towards Retirement*

Link Love: Some Blogs I Enjoy

I'm a blog addict; I have lot of blogs I follow through Bloglovin and Feedly and I'd like to share some of them  with you today.

Dividend Growth Investor talks about investing in stocks that pay dividends.  He talks about companies as well as techniques, resources etc.  For example, his latest article is about Interactive Brokers and why they are a good brokerage for dividend investors.

Dividend Yield--Stock, Capital, Investment is another blog about dividend investing.

Good Financial Sense covers a range of investing, retirment and financial planning topics.

ProBlogger talks about blogging; I don't follow much of their advice but I do enjoy reading about how the cool kids do things.

Passive Income Pursuit is another investing blog.

Daily Trade Alert has really good analyses of stocks.

Dividend Diplomats is another dividend investing blog.  Are you noticing a theme?

DivGroPro.  Yes, another one.

MoneyNing:  A general personal finance blog.

Motley Fool:  Includes stock tips and general investing information

Retire Before Dad:  General investment and financial planning info, including an analysis of the stocks available via Loyal3.

Do I read everything these folks publish?  No.  I follow them on Bloglovin and/or Feedly.  I open the app when I get a minute and scroll through the feeds and click through when they look interesting.

What are some blogs you read?  Do you use bookmarks, or a feed reader or ...?

Friday, October 7, 2016

Should I Hire a Financial Advisor?

A couple of years ago we decided that the answer to the question "Should I hire a financial advisor?" was yes.  I guess a more accurate way to describe the situation is that we allowed someone to sell us on the idea of hiring him as financial advisor, and if you read my prior posts on the subject, you'll learn that we fired the financial advisor, so in some ways I'm telling you here what the conclusion of this post will be--sort of--but stick around, it's not quite that cut and dried.

First, Decide Why You Want to Hire a Financial Advisor

As far as I'm concerned, there are three reasons to hire anyone to do anything:

  • I'm not able to do it.  That's why the electrician was here installing a ceiling fan, and why the dentist pulled my tooth.
  • I don't want to do it.  That's why my son cuts my grass.
  • I could do it, but you'll do a better job.  I could have painted the house, but the painter did a much nice job than I would have, and I don't have to think very hard to come up with a way I'd rather spend my weekend.
I think that if you are going to hire a financial advisor, you first need to decide which of those reasons applies.  Maybe you really know nothing about finances.  On the other  hand, you may know enough to know you hate fooling with it and gladly outsource the job.  Of course you may think that a professional will get better results that you would.  

Secondly, Decide What You Want from the Financial Advisor

Yes, I know, you want the financial advisor to take your dimes and turn them into dollars overnight--but you and I both know that's not going to happen.  The key to being happy in any professional relationship is having clear expectations and having those expectations met. You may love your doctor because he gets you in and out of the office promptly and always gives you a prescription for something (who knows or cares what) that fixes the problem.  I may hate the same doctor because he always rushes through the appointment and doesn't take time to explain the various options for treating my symptoms and he always just tried to stick a prescription in my hand without explaining what it is, how it works or what the alternatives are.  Our expectations are different.  The fact that I don't like him doesn't mean your doctor does a bad job; it means he isn't the doctor for me.

Back to the finanical advisor.  What do you want from him or her?  Part of this ties back to the reason you chose to hire one.  Do you see yourself offloading a chore that you could do, but choose not to?  Are you trying to find someone who knows more about at least some aspects of finance than you do?  Here are some things people want financial advisors to do:
  • Help them minimize taxes
  • Help them set out a savings and investing plan
  • Select investments, monitor their performance and move in and out of them at the proper time
  • Help them set up their finances  to account for long-term goals like retirement or the care of a special-needs child
In our case, what we really wanted was help developing a long-term plan to invest my inheritance and to decide how much to save for the rest of our working lives so as to fund our retirement and the long term costs of providing for my autistic son.  We also were in favor of minimizing taxes.  At the time we hired the advisor, we  had not been keeping up with the investments we had and really weren't up on what mutual funds were considered the best at that time, so having someone pick a portfolio for us didn't seem like a bad idea, but it was pretty low on the list.  Mostly what we wanted was a plan.  

The advisor we hired was our CPA--the guy we go to when I run into issues with our tax return.  If I don't run into issues, I do our taxes.  Like any good businessman, once we used him for one thing, he tried to sell us another and since we knew we were about to get a nice-sized pot of money, we bit.  For us, hiring this advisor was the wrong choice.   

We should have asked more questions up front and made it clear that we were looking for a plan, particularly a plan to deal with my son.  Unfortunately, it became clear after we were working with him that he had little knowlege about the programs for and laws about finances and the disabled.  That was strike one.

We wanted to minimize our taxes (doesn't everyone?). We had money in IRAs and money that wasn't in IRAs and both pots of money were invested in the same way.  I don't claim to be a tax expert, but it seemed to me that taxable accounts should invest in things expected to grow over time, but which do not throw off a lot of current income, and that if you are going to invest in something that throws off current income, an IRA is the place for it.  The only tax advise we got was to consider a Roth conversion but he wouldn't endorse any calculator we found that showed the likely results of doing so because he couldn't guarantee investment results.  Strike two.

Before You Shop for an Advisor, Consider What You'd Consider a Reasonable Fee for the Services You Want

Eveyone has to eat, and everyone deserves to be paid for their work.  However, all of us have to consider how much we are willing to pay for any service, and the best time to do that is before you start to shop.  You may have to change your number once you look around, but have one in mind.  I would gladly have paid someone $200/hour to develop the plan we were looking for and the same to yearly review our investments and savings and to advise us if we were on track.  I would expect this person to be up-to-date on the laws and programs regarding the disabled.  

Financial advisors charge in a lot of different ways, but it seems hourly is not a popular choice.  A percent of assets under managment is popular and with the size of our account, over about two years we paid over $6,700.00 for a computer to put us into that company's model portfolio for people of our age and risk tolerance.  We got little to no plan, just a projection like you could find on the website of just about any mutual fund company.  And no, they didn't earn their commission by the outsized returns--the money we managed ourselves did better.  Strike 3.  

If You Are Considering a Financial Advisor

If you are considering hiring a finanical advisor because you want to dump this problem in someone else's lap, and you understand the fee structure and consider it worth it, go for it.  Make sure the person you hire is competent and honest but maintain enough knowledge of the markets and finances to monitor what is happening.  

If you think a financial advisor is going to make you more money than a diversified portfolio of index mutual funds, ask the advisor to show you past performance.  Few mutual fund managers can beat the market on a regular basis; when you add the fees of a finanical advisor, out performing the market becomes very difficult.  

If you are looking for particular services, make sure the advisor offers them, and how.  I wish I had.

Friday, September 30, 2016

Quarterly Portfolio Review

The end of a quarter is a good time to review your investments, decide if they are perfoming as you think they should, and make any adjustments you consider necessary.  The thing to remember is that you need to have a plan, you need to remember that markets go up and down, and that you need to make rational decisions, not emotional ones.  Here are some factors to consider:

How Is Your Asset Allocation?

You need to determine what asset allocation is appropriate for you at this stage of your life.  If you aren't sure what that allocation should be, take a look at at the target date funds by Vanguard, Fidelity, or your favorite fund family.  Pick the one closest to your projected retirement year and then look at its composition.  Target date funds are usually superfunds made of other mutual funds, which give you an added layer of fees.  If you are able to spend a few minutes 2-4 times a year reviewing your portfolio, create your own target date fund and just rebalance it yourself.  If the stock market has gone up a lot so that you are way overweighted in stock funds, sell some and buy bonds or whatever other asset you need to round out your allocation and bring it back in line with your goals.

We will be selling some funds to get our asset allocation back into balance.  The stock market has been good to use this quarter.

Has There Been a Substantial Change to an Investment?

You are keeping up with your investments in the financial press and blogs, aren't you?  Has something changed with an investment that could cause it not to be useful to you anymore?  For example, marketplace lender Prosper has just announced that it is shutting down the secondary market for its notes.  If you were counting on being able to use the secondary market to liquidate your account if necessary, now is the time to get out.  Has your actively managed mutual fund just lost its long-term manager?  Did your rental house just flood?  When something big about an asset changes, investors need to consider whether they still want or need the investment.

Since we have other liquid assets, Prosper's change is not a great concern to me; however, it will make me think twice before adding more money to my Prosper account. 

How Are Your Assets Performing?

The general rule is that you own stocks for growth and bonds for income. Generally speaking, as the market goes, so do most stocks.  Different sectors of the market do well at different times and if we could predict which ones would do best in a certain time period, we'd be rich,  Still, the performance of most mutual funds can be compared to one index or another.  If the stock market is up, and your fund is down, do you know why?  Compare your funds to other funds that purport to do the same thing.  How are yours doing? It may be time to get out of one fund and into a similar one.  You are more likely to get burned than to make money constantly shifting from one hot fund to the next but don't stay with poorly performing funds out of inertia.  The research now shows that very few fund managers manage to beat the indexes long term; a low-cost index fund is the best bet for most poeple. 

We still  have a large number of mutual funds which were purchased for us by our ex-financial advisor.  There is a $20 per fund charge to sell the shares, and in general we have the same funds in three different accounts so we haven't been in a hurry to sell them.  We keep an eye on them and as long as they are perfoming close to their benchmark, we leave them alone. However we had four funds that were underpeforming their bencharks and the market as a whole by 5-10%.  We dumped them and will re-invest the proceeds in Vanguard index funds.  

What Are Your Plans for the Near Future?

Are you going to need money for a car?  Does college tuition start next  year?  Is retirement almost here?  Do you need to get more liquid?  Do you need more income?  Should you put money in taxable accounts or in retirement accounts?  

We'll finish with college tuition at Christmas, but high school tuition will start in June.  We just bought two new (to us) cars so we should be set there for a while.  We have mutual funds in a taxable account, but it doesn't look like we are going to need the money any time soon.  Unfortunately, with all the expenses this year, we haven't been able to fund our Roth IRA's.  However, we've decided to move some of that taxable money into our Roth's.  The rules on Roth IRAs will allow us to withdraw that money if necessary, but if not, it grows tax-free and that's a good thing.  

Smart investors make a plan, change it if necessary after logical reflection and then periodically determine if they are on the best path.  When is the last time you reviewed your investment portfolio?

Friday, September 23, 2016

Kickfurther Defaults

As those who read this blog regularly know, I invest some money via Kickfurther, a platform that finances inventory for businesses.  In short, a business creates on offer on Kickfurther that states what inventory they are purchasing with investor's money, along with the rate of return and time frame.

How is a Kickfurther Offer Designed?

Wanda's Wonderful Widgets might want to finance 1000 blue widgets, which cost them $10 each to make, and which they sell for $20.  They believe that once they have the money in hand, it will take two months to make the widgets, and then four months to sell them.  They write an offer asking for $10,000 for six months, with an investor profit of 10% (a typical return, though some companies offer more and some less).  By some process Kickfurther does not publicize, it is determined how much of the revenue, per widget, goes to Kickfurther and how much goes to the vendor.  That split determines the PSR--the percent sold for return.  Let's assume that for these widgets, there is a 70/30 KF/Vendor split.  For every $20 widget sold, Kickfurther gets $14 and Wanda gets $6.  That means that 786 widgets have to be sold to give Kickfurther their $11,000.  The PSR is about 79%.

How is a Kickfurther Payback Supposed to Work?

If things go the way they are supposed to, investors look at the offer and believe that it is in their best interest to invest, and do so.  The vendor then gets the money, pays for production or buys the inventory, and starts to sell it.  Once the lead time for production passes, the vendor starts repaying the investors.  The way it is supposed to work is that as the product sells, Kickfurther gets paid.  In the case of our widgets, if Wanda has sold 300 widgets when the first payment comes due, she is suppposed to pay Kickfurther $4,200 (300X$20X70%).  If she only sold 100, she only owes $1400.  Wanda is supposed to pay monthly until she has sold enoough to repay Kickfurther completely.  Obviously, the lower the PSR, the more room Wanda has to discount the product, offer samples or otherwise sell for less than the originally figured price.

What if the Widgets Don't Sell?

What if six months has come and gone and Wanda has only sold 200 widgets?  At that point the investors can vote (on a dollar weighted basis) to either let Wanda continue to sell the widgets, or to end the contract.  If they decide to end the contract, Kickfurther gives Wanda the option of purchasing the remaining inventory for enought to make the investors whole, or of turning the inventory over to Kickfurther, which will then attempt to sell the widgets.  

How Has This Played Out in Real Life?

Kickfurther is a relatively new platform that is learning while it is growing.  Originally vendors were pretty much on the honor system as far repaying backers.  Most who have repaid their backers have done so in a linear fashion--dividing the total amount due by the number of projected payments and paying that amount monthly, or until they wanted to do another offer.  There have been a number of companies who have not paid anything or who have paid so little that it seems hard to believe the sales did not require a larger payment (and in some cases the vendors have admitted to having sales but using the revenue for other expenses).  Kickfurther has said they have tightend up their contracts and, for new offers, will require reporting on inventory sold.  Suffice to say there have been times when backers should have been repaid more quickly, and I suspect some where they were paid with the vendor's money, just to stay on track.

Is Kickfurther Really a Consignment Sales Platform?

Honestly, at this point, I don't think so.  If Kickfurther really wants to enforce the consignment sale contract they need to 
  • Assure that money raised goes to purchase inventory.  There was an offer up this week from a swimwear company that said in the offer that part of the money raised would go to advertising, not inventory.  
  • Integrate into the vendors' sale system and automatically transfer KF's share of the revenue away from the company as payment is received.  Otherwise you are asking investors to make a decison on the credit-worthiness of the company as opposed to the saleability of the merchandise.  
As things stand now, vendors are on the honor system as far as paybacks go.  They have no incentive to stick to the contract if sales are better than expected and every incentive to not use other money to pay off the offer if sales are worse than expected.

  Also, getting action from Kickfurthe requires at 50% vote of the investors.  I have one co-op that is over 140 days late with their first payment and KF has done nothing because 50% of the investors have not voted "no-confidence".  I don't have a problem with the "no confidence" vote if a vendor is selling, paying and way behind schedule.  At that point it becomes a decison for investors: Do you think KF will do a better job of selling this merchandise than what the vendor is?  If you think KF will, then vote "No confidence".  However, when a company is clearly in breach of contract (or even apparently in breach of contract if they have all that merchandise and have been unable to sell it) then KF needs to step in legally while the business and/or its owners can still be found. 

In another case, the company was sold and the new company has refused to pay.  The "no confidence" vote is under 50% .  In that case KF did step in despite the lack of vote, and sued the new company.

I still think the concept of Kickfurther is good; the question is whether the contracts can be designed to be enforceable and whether the offered rates are sufficient to offer a profit to investors.  If you think you'd like to invest via Kickfurther, use this link and you'll get $5.00 towards your first co-op.  

Friday, September 16, 2016

Morality and Investing

About the Book:

Offering time-tested wisdom on the complexities of the investment process, this guide provides advice on how to invest in a morally responsible way. It provides information on how to screen and exclude companies according to a clear set of faith-based criteria: those who support or service the abortion industry, producers and distributors of pornography, and companies involved in embryonic stem cell research. Based on this set of guidelines, as well as the success of the Ave Maria Mutual Funds, the guide demonstrates that high returns are achievable without supporting companies that do not support similar values. Also included is insightful commentary on the current political policies affecting the country’s financial state.

My Comments:

Good Returns: Making Money by Morally Responsible Investing is written by the founder of the Ave Maria family of mutual funds.  The Ave Maria funds practice what they call morally responsible investing--they do not invest in companies that promote abortion or donate to its supporters, sell or promote pornography or which have policies supportive of homosexual or other non-marital sexual unions.  He contrasts "morally responsible investing" with "socially responsible investing" which generally supports left-leaning causes. 

While this is a book about investing and the economy; not about religion, the author, George Schwartz, does quote papal writings on the economy and a little scripture.  He sees free-market capitalism as a moral good and socialism as a moral evil.  The book is definitely pro-Regan, anti-Obama. 

Good Returns: Making Money by Morally Responsible Investing has its good points, and its weaknesses.  The first chapter, on money and morality is excellent.  The next two chapters were about Schwartz himself, and frankly, I wasn't that interested.  He then spends a couple of chapters talking about his investment principals, and about how investors think.  Those chapters were good.  Chapters 6 and 7 are highly political; my husband will love them.  They do serve the purpose of reminding the investor how politics affects the economy, for good and for bad--and how even good intentions, like  providing home ownership for those kept out by traditional lending practices, can have bad effects--like the housing bubble and its subsequent pop.  Chapters 8-11 are, in many ways, commercials for the Ave Maria funds. If you know nothing about investing or financial planning, there is good information there--and even those who read investment books may learn something about investing that they can use, even if they never buy Ave Maria mutual funds.

While most of us want to follow our values, most of us also invest with the idea of making money.  One question that came to my mind after reading this book was "How well do Ave Maria funds do?".  Ave Maria has a Rising Dividend fund which outpeformed the S&P 500.  Morningstar give it four stars and the expense ratio is 0.92%.  Their Growth Fund has also outperformed the S&P 500.  However their Values Fund and World Equity Fund trail their indexes.  Still, I don't think any of them are really bad investments and I do like the idea of investing in companies that share my moral values.  


Friday, September 9, 2016

Is "Debt" a Dirty Word?

In reading many financially oriented blogs, one would get the impression that debt is something awful, something to be avoided at almost any cost.  But is it?  Is debt something that is intrinsically bad or is it simply a tool?

I'm a Girl Scout leader and I teach kids to play with matches.  I always ask them if matches are dangerous and they all generally agree they are.  I then ask them if pencils are dangerous, and they all reply that they are not.  I then ask them if they want me to poke them in the eye with a pencil, and of course, they don't.  At that point I explain that matches and pencils are both tools.  Use them properly and they are useful; use them improperly and they cause pain.

So what about debt?  Is debt a tool or an evil?  Debt is a tool, but it is a tool that is often misused.  The misuse gives you bad results but those results don't make debt a bad thing any more than poking someone in the eye with a pencil makes pencils a bad thing.

Misusing Debt

What does it mean to misuse debt?  It is when you buy something that you don't need and can't afford.  It is when "debt repayment" is a major part of your budget for a long period of time and when it keeps you from saving for the future.  It is when the interest on debt becomes a significant expense. It is when it takes longer to pay for something than it takes to dispose of it.

Using Debt as a Tool

Debt is a way to obtain something now, and pay for it over time.  Sometimes you have no choice.  If you don't have health insurance and end up in the hospital, you will owe the hospital money for some time.  On the other hand, at times we do have choices.  If your uninsured car was just totalled, you need another one--but you don't need a new car.  The cost of your "new" car shouldn't keep you in debt for a long time and you don't want interest to make you pay for the car twice.

On the other hand, if you need new furniture, are buying furniture you can afford, and are offered 2 years same as cash, why not take it?

If you have the choice of cleaning out your savings to buy a car, or financing the same car at less than 2% per annum for three years and you expect the car to last ten years, I dont' think financing it is a bad idea.

While some super savers may be able to afford a home without a mortgage, for most of us, foregoing the mortgage just means more money thrown away on rent.

Like matches, debt is a tool. Like matches, debt can burn you if misused.  Like matches, debt can make life much easier.
Disease Called Debt