Friday, April 28, 2017

First Quarter Investment Results

Taking quarterly stock of your investments seems to be a common thing among financial bloggers, so I'll play too even if I'm a little late.

Vanguard:

My husband and I have Roth IRAs and regular IRAs, and a taxable account.  We did not contribute any money this quarter but the value of the accounts increased by $12,674.  The combined dividends from these accounts totalled $1317.00.  These accounts consist of a variety of mutual funds purchased for us by our ex-financial advisor, along with Vanguard's International Bond Index Fund, Total Stock Market Index Fund, 500 Index Fund, Total Bond Market Index Fund and REIT Index Fund. In the last year, our rate of return has been 11.5%.

MFS:

My 401k has a year to date return of 5.74%, and the account paid dividends of $421.85 this quarter.  It is invested in Janus Triton,  Oppenheimer Int'L Small Mid Co A, MFS Government Securities Fund-A , Pioneer Fundamental Growth Fd-A,  and Delaware US Growth Fund-A.  My firm contributes 5% of my salary, and I contribute 6%.  

AXA:

My husband's 401K is with AXA and it has increased in value, though not a lot.  He puts in the minimum necessary for employer match.

Motif:

The inital investment in this account was $7,000.  It began the quarter at $7777.09.  Even though we've withdrawn interest payments, it ended the quarter at $8,176.26,  So far this year the account has paid $42.94 in dividends.  I have invested in "Motifs" or baskets of stock with a variety of themes including dividend payers, things I like and online gaming.

Lending Club:

My returns have been steadily dropping.  Accounting for expected defaults, Lending Club estimates my return since I began the account at about 5.68% annually, which is the lowest it has been since I opened the account.  From what I've read in various places, I'm not the only one whose returns have dropped.  We've needed money for tuition so this is where we are withdrawing it as notes are paid.

Prosper:

My returns here have dropped as well, but not as drastically.  Right now my annualized net returns are still over 13%, and my "seasoned" returns--the returns on notes that are more than ten months old are also over 13%.

Loyal3: 

Overall my account is up 10% since purchase.  I've been buying in dribs and drabs, often using dividends paid by Motif.  Unfortunately Loyal3 is going out of business and we have to either sell or transfer our money elsewhere.  More on that in another post. 

Robinhood:

This is another place I've invested a few dollars in stock, and I'm in the black so that's a good thing.  I may be putting more money here in the near future.

Kickfurther:

I've moved from being in the black to being in the red.  I'm in the process of withdrawing my money not only because I'm in the red (an expected risk of investing) but because I've become convinced that Kickfurther is going to fail.  They have too little business at this time and while they have tightened their contracts and changed their business model somewhat, I've just seen too much incompetence to believe that the investment risk is the only risk I'm bearing and the returns have not justified the risk.

All in all, the first quarter of 2017 was a good one investment wise; however there will be changes in the second quarter.
*Part of Financially Savvy Saturdays on brokeGIRLrich.*

Tuesday, March 28, 2017

My Goals: A Quarterly Review

The beginning of the year is a common time to set goals, so I shared mine.  Now that the year is one-fourth over, I'm going to take a look at my progress.

Pay High School Tuition From Checkbook, Not Savings

Since I set this goal I have learned that tuition is due a month earlier than what I thought.  Also, we've had some unexpected medical expenses.  So, we've been pulling money out of the Lending Club account as notes are paid.  Also, we are reducing our exposure to Kickfurther for a lot of reasons, and instead of reinvesting that money elsewhere, it is going toward tuition.

Once I pay this year's tuition, I'm going to open a separate savings account and deposit money monthly so that next year it is there when the bill comes. 

Continue 401(k) Contributions at Current Level

Luckily this is a "fix it and forget it" goal.  The money comes out without us thinking about it. 

Work On Monetizing This Blog

I've done one sponsored post this year and was paid for it.  I added Myfinance ads to the blog, but so far I haven't seen any return.  I'll give them another few weeks and if I don't see any return, they'll be gone.  

Buy at Least One Share of Stock Per Month

This goal got pushed to the side due to tuition.  

Continue My Freelance Writing Jobs and Selectively Try to Find More

One of my regular customers has decided to put her blog on hiatus for now.  She says she may contact me later.  I've applied for a couple of jobs on Upwork but without success.  Most of what I see there doesn't interest me--too much work for too little money.  

Add $4,000 To Our IRAs.

Hopefully my college girl will get a job before the end of the year and start paying rent (or at least her own car insurance).  Otherwise, this isn't looking good, unless you count the transfer of money from a non-IRA savings account to an IRA account to reduce our tax bite.  

Cut Spending On Food

I need more cooperation from the peanut gallery on this one!

Home Renovations

I've got to get in touch with the IRS and try to track down my Dad's final tax refund.  They should have paid me already and then I could distribute the rest of the money in the estate and start working on the house.

We are going to paint this year.  My firm has decided to change the sick leave/vacation policy so that those of us who have a bunch of leave saved up have to use it over the next two years.  I'm getting five weeks off this year and will spend at least on of them with a paintbrush in hand.  
Disease Called Debt

Friday, March 17, 2017

Blog Giveaways--Free is a Nice Price


When you think of retirees you think of people who have time to engage in hobbies.  For many people it is also a time when money can get tight. What if there was a way to get items to use, sell or give as gifts, and all it took was a few minutes of your time?

Many of my  "Kickfurther Merchant of the Week" posts  include a giveaway--and there is a reason for that.  Giveaways attract readers, which makes both me and the company about which I am writing happy.

Like most online giveaways, mine ask entrants to visit the sponsor's webpage and/or facebook page, to follow me and the sponsor on social media and to spread the word about the giveaway.

How to Find Giveaways

It's great if a blog you follow regularly is offering a giveaway, but how can you find the really GOOD giveaways?  Well, first of all, you have to define "good".  Some people are looking for high-value prizes, but the reality is that giveaways of high-value prizes attract hundreds if not thousands of entries and generally allow multiple entries per person. In short, while the value of the prize may be high, the chances of winning are low.  On the other hand, there are plenty of giveaways in the $10-$30 range that take only a few minutes to enter and which attract few enough entrants to give everyone, particularly those who are willing to take time to earn all the entries, a decent shot at winning.

General Giveaway Link-ups:

Link-ups are a popular way to publicize giveaways.  Below are some link-ups that accept links from any giveaway.  They help bloggers get more entrants for their giveaways and help readers find more contests to enter. 


Low Entry Giveaways:

If you only want to enter contests you have reasonable odds of winning, check out these link-ups.  They only allow contests that have fewer entries than their rules allow, and some only allow contests ending within a week.  




Don't forget Google:

I just decided I wanted to win an I-Pad.  I Googled "I-pad giveaway" and sure enough, I found some.

Twitter

Many giveaways required entrants to tweet about the contest.  Go to Twitter and search for #giveaway or # contest 

Your Feed Reader

You are using a feed reader to follow your favorite blogs, aren't you?  My favorites are Bloglovin and Feedly, but there are others out there.  Feed readers allow you to subscribe to your favorite blog and then view the title and first few lines of posts on the reader app or website.  If you find a blog that offers a giveaway that interests you, subscribe to it.  Feed readers allow you to skim through a lot of blogs in a little time, and when those giveaways hit, you can follow the link to enter. 

How to Enter:

Many online contests use either Rafflecopter or Giveaway Tools.  Both offer bloggers either free or paid versions, and of course you are able to do more with the paid versions.  However, on either one, a blogger creates a contest and selects one or more entry methods from the offered choices.  

There are a lot of high-dollar contests what start on one blog, but invite other bloggers to participate, either for free or for a fee.  This can result in giveaways where you can earn dozens of entries by following various bloggers on various forms of social media, by commenting on various blogs and completing other assigned tasks.  

On the other hand, some bloggers simply ask you to leave a comment on their blog in order to enter.  

What Have I Won?

I don't spend a huge amount of time entering blog giveaways because the blogs I frequent don't offer them frequently and I don't have the time to spend a lot of time looking for giveaways.  However, I have won several book giveaways over the years. While most were for individual books, my biggest win to date got me a huge haul. I have won holiday decor and snack samples as well.  Unfortunately, I have not won an I-Pad, yet.  

Which Ones Should I Enter?

It depends.  If you see a prize you'd love to have, enter.  If you see a prize that you know you could sell for substantial money, or that you know a loved one would enjoy, then enter.  However, the more valuable the prize, the longer entering is likely to take and the lower your chances of winning.  I have had my best luck with niche prizes (like a boatload of Catholic reading material) or simple inexpensive prizes simply because few people enter those contests.

Any Other Tricks?

Many people who enter a lot of contests have email and social media accounts just for that purpose.  If you have a Twitter following that cares about financial planning you may not want to innundate them with "enter this contest" tweets, but tweeting is a common way to earn entries in most giveaways.  You may like to keep your Pinterest feed very curated, but many contests ask you to pin things or follow people.  If you have accounts solely for giveaways, you don't have to worry about losing hard-earned followers because they don't want to follow contests.  

Entering blog contests can be time-consuming but it isn't rocket science.  It is something you can do while watching TV or for a few minutes here and there as you surf the web.  Who knows, you could end up winning something really great, and you can't win if you don't enter. 

Leave a comment and let us know if you've won any giveaways!
*Part of Financially Savvy Saturdays on brokeGIRLrich.*

Friday, March 10, 2017

The Perfect Obamacare Replacement

One big promise of Donald Trump and the Republican Party was to repeal the ACA a/k/a Obamacare.  Recently the Republicans introduced their "ACA" or American Care Act.

The Perfect Healthcare Plan


Just in case anyone was wondering, I have the perfect plan in mind.  Just take these ideas, turn them into legalese and send it to Congress.  Then we will have perfect healthcare:
  1. Don't charge me more than I can comfortably afford--I guess no more than cable TV or Netflix costs me each month.
  2. Cover me at 100% for any condition that remotely resembles sickness or lack of health or relating to the body or mind in any way.
  3. Cover me whether or not I choose to buy insurance before this ailment struck.
  4. Make sure I can see any doctor at any time and get any tests or treatments (proven or unproven) that I or my provider of choice (M.D., Chiropractor, Naturalpath, Homopath, Witchdoctor, Esthetician or Mother-in-law) think I need.
That's really all we need, right?  Unfortunately, when worded the way I worded it, anyone with a brain in their head will know that my proposal is impossible.  However, when reworded to
  1. Make premiums affordable and co-pays reasonable
  2. Cover all illnesses
  3. Don't discriminate against those with pre-existing conditions
  4. Allow patients to pick their doctors and cover the treatments ordered
it sounds so reasonable, so right, so much like what we as a county ought to be able to do for our people.

How Much Does Healthcare Cost?


We spend a lot of time complaining about the cost of health insurance, when the real problem isn't the cost of health insurance, it is the cost of healthcare.  The average per-capita cost of healthcare in the US today is over $9,000.  Under the ACA, plans have to pay out 85% of what they collect in premiums or they have to refund the premiums.  While eliminating insurance companies may reduce that 15% figure somewhat, someone is still going to have to push the paper and the paperpushers, whether employed by an insurance company or by the government, will have to be paid.

We don't all spend $9,000--in fact most of us don't have healthcare spending anywhere near that amount.  In fact, according to this study, over half of our lifetime medical expenditures will come after age 65, when we are covered by Medicare, not private insurance.  The study also says that about 8% of our lifetime medical costs are between birth and 19; about 12 percent between 20 and 39 and about 33 percent between 40 and 65.  Put another way, if the average per capita is $9,000 in today's dollars and you live to 85, the average lifetime healthcare expenses, at today's levels, would be $765,000, distributed like this:

  • $61,200 of that would cover you between birth and 19 ($3060.00 per year)
  • $91,800 would cover you between 20 and 39 ($4,590 per year); 
  • $252,450 to cover you from 40 to 65 ($10,098.00 per year); and
  • $359,550 to cover you from 66 to 85, when you would die ($17,977.50 per year)

How Much Does Health Insurance Cost?

According to the webiste above, the average cost of a family insurance plan through an employer in 2016 was $18,142.00.  I daresay few employees pay close to that; employers pay a major portion.  If you assume 15% of that was insurance company overhead, you are still looking at costs of over $15,000 per year, and you know that people are still going to have co-pays and deductibles.

 While the ACA subsidizes insurance for people whose income is below a certain point, the fact that plans  have to cover so much, accept anyone and not charge sick people more, or old people too much more, makes them very expensive for those who do not have subsidies.  My family makes too much for a subsidy.  We have 2 people between 40 and 65, one between 20 and 39 and one under eighteen.  Using the figures above, our average medical costs per year should be $23,256.00.

A search of Healthcare.gov showed that average Bronze plan offered there would cost $25,000 and the lowest priced one, $18,000--and we'd still have to pay most of our medical bills.  While there are a lot of people out there who make less than we do, neither my husband nor I are high earners.  Those policies would make a severe impact in our standard of living.  Right now, because of employer subsidies, we are paying about half that for better coverage.  

Why Don't Other Countries Pay as Much?

What is the answer?  I wish I knew.  Other countries don't spend as much.  Why? Some reasons:

They Limit Supply


Well, some, like Canada, limit the supply.  I can give you the names of four places within a fifteen minute drive of my suburban home where you can get a $1500 lumbar MRI, and my guess is that most of them can see you this week, if not tomorrow.  In Ontario Canada, the average wait is close to a month.  That can save money in two ways:

  1. The machine has less down time, meaning the per use cost is less and
  2. There are people whose back pain would resolve within that wait time and would no longer need the MRI.  Of course, if you are in pain and trying to pursue treatment, that wait is thirty more days you will be in pain. 

I read somewhere that if you compared American couples who were referred to fertility specialists, with Canadians who were referred to fertility specialists,   after six months twice as many Americans were pregnant.  That sounds like American treatment is much better; however it doesn't mean that at all--the Canadian couples were still on the waiting list, so on average, half those American women who underwent (and paid a small fortune for) fertility treatment really just needed more time.  On the plus side for the Canadians, once they cleared the waiting list, their treatment didn't cost them much, whereas most Americans sustained substantial costs for infertility treatment until coverage was mandated.

They Control Prices or Don't Allow Certain High-Priced Treatments

Many countries set the rates of reimbursement (payment) to doctors and hospitals and for medications.  They consider price when deciding whether particular treatments will be available. That's one reason you will find a wider variety of drugs and treatments available in the US than in many countries--here a drug can be offered for sale if it is proven safe and effective--and for some drugs, "effective" can mean they add months to life of the average cancer patient.  The negotiating power of one government is stronger than the power multiple insurance companies, which is why it is less expensive to buy drugs in Canada than in the US.  

England's National Health Service requires referral by a primary care physician in order to access specialist care and the NHS has waiting lists and a reputation for being an impersonal bureaucracy.  England's system is two-tiered; everyone is entitled to use the NHS system and those who can afford to do so have access to a private system as well.   

What Should Health Insurance Do? 


One big problem I see with any healthcare solution is that different people have different needs.  I'm a middle-income person who is  not living paycheck to paycheck and teetering on the edge.  Reality is that much as I may dislike it, I can afford a $150 doctor's visit. 

Reality also is that there are a lot of people out there who can't--that $150 will throw a major crimp into their lives, make them late on other bills and so forth. 

I need my health insurance to protect me from the major problems, not the day to day normal expenses of life.  Someone living on the edge may choose to forgo necessary treatment because of lack of financial resources; they need a healthcare plan that allows them to see a doctor when needed without worrying about it throwing them into financial ruin.

On the other hand, I've worked a lot of Medicaid fraud cases that couldn't have happened (or would have been a lot less likely) if the "patients" had to pay something out-of-pocket for care.  All of us are more careful about spending our money than spending the insurance company's money or the governement's money.  How do we balance meeting people's needs without encouraging waste?  


My Problem with Both "ACA" Plans

My problem with both the Affordable Care Act and the American Care Act is that they don't address the real problem in any real way.  The real problem isn't the cost of insurance, it is the cost of healthcare.  The Affordable Care Act was clearly an act of cost shifting.  The employer mandate shifted costs from the employee to the employer, if the employer wasn't already providing insurance.  If shifted costs from the individual to the taxpayer if the individual's income was below a certain point.  It shifted costs from the sick to the healthy and from the old to the young.  

Controlling Costs

The sad economic reality is that there are two ways to control costs.  The first is to reduce demand, the second is by government containment.  

The law of supply and demand says that if the supply of something outstrips the demand, the price goes down.  If the price of something is too high, the demand for it goes down--even if people want it.

The cost of houses in my neighborhood fell a few years ago.  Why?  It wasn't because fewer people wanted houses this size.  It wasn't because it cost less to build.  It wasn't because the neighborhood went down.  The price of houses in my neighborhood fell because the cost of insuring them increased substantially.  People's housing budget is limited and the increased cost of insurance meant that fewer people qualified for a mortgage in the amount needed to purchase at what was the going price.  Some people who had stretched to buy when the market was at its highest found themselves strapped to pay both the mortgage and the insurance and had to sell or face foreclosure.

Contrast that with healthcare.  The largest purchaser of healthcare in America today is one that will never run out of money--the government, via Medicare, Medicaid, the VA and Tricare.  While people may choose to forgo small routine medical expenses due to cost, health insurance paid for by someone else pays so many of our expenses that for most middle-income Americans, "I can't afford it" isn't part of the discussion with the doctor.  Lack of purchasers is not going to push the price of healthcare down unless we radically change the manner in which we pay for healthcare AND are willing to see our friends, neighbors, family members and even ourselves do without needed or wanted medical care due to price.

Other countries use the authority of the government to rein in prices.  The government either directly negotiates rates with providers or it sets a global budget and when the money for the quarter or year is gone, it is gone.  This government interference in the market can limit supply, but it keeps the price of the supply lower.  Generally speaking governments that control the price of healthcare also assure that all citizens have access to it, something our government does not do.  

In my opinon one reason we have runaway costs is that we are unwilling to use either system to control costs.  We have such safety net and so much money spent on the middle and upper class that the demand for healthcare is not moderated by price.  I suspect that if you passed a law tomorrow outlawing health insurance that had less than a $20,000/year deductible, the price of healthcare would drop because people would start looking for less expensive doctors, choosing less expensive medications etc.  We aren't willing to do that because many people would be hurt and forced to choose between medication and food.  

We are also unwilling to give the government the power to control prices charged by private businesses.  Because of the high prices we are willing to pay, we have higher survival rates when serious illness strikes.  

So What IS the Perfect Replacement for Obamacare?

Sorry, I'm not smart enough to know the answer to that question, and frankly neither is Donald Trump.  Obamacare has its problems and as a conservative, I have problems with the cost shifting and the way it has hastened our country's move to one with well-paying middle class jobs that provide health insurance and low paying unskilled jobs that not only do not provide health insurance but also do not provide fulltime hours, specifically to avoid having to pay almost  as much in health insurance premiums as in wages.  As a Catholic I don't like the way Obamacare has mandated that employers purchase contraceptive coverage even if they believe it is immoral.  

One idea I have is to eliminate employer-sponsored health insurance.  Why should the managing partners of my firm get to pick my health insurance?  I'm smart enough to do that on my own.  Give me the money and let me do it--and make the premiums non-taxable, just as they are when purchasing through the employer.  

I like the idea of a payroll tax on both employers and employees, for both fulltime and part time employees, coupled with tax credits for the purchase of health insurance or paying healthcare bills.  

What we have isn't working for more people every year.  Obamacare helped more people get insurance, but it hasn't been around long enough to say whether it allowed more people to access healthcare and it certainly hasn't done anything to bring costs down.  







Disease Called Debt

Wednesday, March 1, 2017

Kickfurther Merchant of the Week: Mirage Pet Products

This week's Kickfurther Merchant of the Week is Mirage Pet Products.  For those of you who aren't familiar with Kickfuther, it is an online investment platform through which ordinary people can help businesses finance inventory purchases.  Instead of lending money to businesses, the Kickfurther model is a "consignment sales agreement".  Basically, investors pre-purchase the inventory and then give it back to the business to sell on consignment.  As the inventory sells, investors are repaid, with a profit.  Mirage Pet Products is one of those businesses.

Q:  Tell us a little bit about Mirage Pet Products. Where is the company based?

A:  We are based in Aurora, Mo

Q:  When was it founded? Your website mentions a legacy of six generations in the pet industry. Tell us about that.

A:  My great, great grandmother was a dog groomer back in the heyday of the Standard Poodle and fancy cuts. My grandfather worked in a belt factory that transitioned into a dog collar factory over the years. He bought it in El Monte, California, and moved it out to Missouri. My great-grandmother worked in the factory, helping her son and daughter-in-law for decades before retiring.

In 2004, with my husband fresh off of active duty from Operation Iraqi Freedom, we started Mirage. We were 19 years old and just knew that working for ourselves was what we wanted to do. We were inexperienced and crazy but here we are still today! We had a lot of mentoring and help from my grandparents and great uncle. After so many years in the industry, they were able to guide us through quite a few changes in the economy (including the 2008 recession) and changes in demand. I will always cherish their assistance.

Q:  It is wonderful to have family support behind you, and thank your husband for his service.  Your website says that most of your products are manufactured in the US. Where are they made? Do you have your own manufacturing facility or do you buy from manufacturers?

A:  Most of our products are made here in Aurora, MO. We have a tight knit production crew working for us, they are amazing.


Q:   I'll be the first to admit I'm not a pet person and that I don't keep up with the latest in pet fashions or needs. However, I have noticed more and more pets wearing clothes, particularly in the winter. Are clothes for the pet or for the owner?


A:  It really depends on the breed of animal! A lot of owners dress their short-haired dogs for outside adventures to keep them more comfortable during the winter. For the most part though, clothes are fun and for the owner :-)


Q:  I notice you have a lot of Mardi Gras wear for dogs. I live in the New Orleans area and wish to compliment you on your good taste. Do you sell much of that line to people outside the New Orleans/Louisiana/Gulf Coast area?

A:  We do! Mardi Gras is becoming a larger holiday nationally and we are definitely seeing this trend reflected in our sales!


Q:   Do sell wholesale, retail, or both from your website?

A:  Both now.


Q:  Your dog treats are adorable! If I want custom colors or designs to match my party, are they available?

A:  Absolutely! We can custom make treats with anything on them!
Happy Birthday Sweetie Dog Treats - 12 Pack
Q:  How did you learn about Kickfurther and why did you decide to use them?

A:   I don't remember who it was but one of the KickFurther staffers sent us an email invitation and we decided to sign on! I'm so glad that we did, it's been a great experience!

Q:  As an investor, I'm glad you feel that way.   You finished your first Kickfurther offer ahead of schedule, and your second a little behind schedule. What was the difference?

A:   The second one included us pre-selling merchandise and offering customers long-term credit which really did not work in our favor over the slower summer months.

Q:  From your perspective, how does Kickfurther compare to other sources of financing. Put another way, you are now on your third offer; why do you keep coming back?

A:  We love the community!

Q:  To what type of business would you recommend Kickfurther?

A:   Because KickFurther has made some disappointing changes to their platform (at this point we won't be back for a fourth round) we won't be recommending KickFurther going forward. We used to recommend it to every business owner we talked with about funding/financing issues.

Q:  You must mean Kickfurther's decision to only finance businesses that have purchase orders for their products.  I can see how that could be disappointing to a company that fulfilled its promises on prior consignment sales agreements.  However, enough businesses were not meeting their obligations such that many if not most investors have lost money at this point.  I know I have.  From the message they sent investors, I think they will re-open the platform to businesses like yours once they re-tool some of their contracts and vetting procedures. 

 Have you tried Kickfurther from the investor side? Would you recommend that friends or family invest via Kickfurther?

A:   I would've before the changes! I haven't had a chance to use it from the other side.

Q:   Do you have a giveaway for us?

A:  Yes! We've got two gift certificates for $25 each.

Q:  Thanks.  I'm sure two of my readers will enjoy them! They can buy something cute like a sparkly dress and a new seasonal collar.   Anything else you'd like to tell us?

A:  Thank you to those who have invested in us, it's been a pleasure to work with you!!

It has been a pleasure getting to know you!  Mirage Pet Products can be found on Amazon or on their website.   You can follow them on facebook or on Pinterest.   Now, on to the giveaway!

Friday, February 24, 2017

Book of the Month: Blogging: The Ultimate Guide on How to Replace Your Job with a Blog

Blogging, monetizing, work at home,


Summary

Are you trying to start a profitable blog?

This book will show you exactly what you need to do to start a profitable blog today based on what top bloggers are doing. If you follow the instructions you'll have an amazing looking and profitable blog in no time at all!

  • Here Is A Preview Of What You'll Learn...
  • How to Build a Blog
  • How to Choose a Niche
  • How to Design Your Blog
  • How to Start Creating Posts
  • How to Create Valuable Blog Content
  • How to Generate Traffic
  • How to Monetize Your Blog
  • Much, much more!

Readability

The Ultimate Guide is short, easy to read and reads (and looks) like a blog post with lots of white space, headings, and first person text.

Is The Ultimate Guide Worth the Money?

The Ultimate Guide on How to Replace Your Job with a Blog is available as a Kindle download.  The Kindle price is $0.99 (this review was written in early January, 2017), which I think is a reasonable price for the size and quality of the book. A paperback is available for $18.99; I definitely do not believe it is worth that--for one thing it is only 53 pages long.

Rating of The Ultimate Guide on How to Replace Your Job with a Blog

You can check my book blog to get a better idea of what my ratings means.  I'm giving The Ultimate Guide on How to Replace Your Job with a Blog a B-.  It had some information I consider valuable, primarily dealing with affiliate income; however, the writing quality was not professional.

Source of The Ultimate Guide on How to Replace Your Job with a Blog

This month I am a Kindle Unlimited  member andThe Ultimate Guide on How to Replace Your Job with a Blog is one of the books available to members under their pay one price monthly membership.

Take Action

The books I review on this blog will all focus on some aspect of personal finance.  Part of my review process is to find at least one new-to-me, or previously untried thing in each book to put into action to improve my personal/family financial situation.  I will then blog again a month after the review to let you know what exactly I did and what results (if any) I have had from that action. 

As a result of reading this book I am going to:
  • Set up an email list.  I've never really seen the point--I want people to read my blog (and see the ads which are my source of income); not read a newsletter.  The Ultimate Guide suggested a newsletter containing affiliate links.
  • Look into ClickBank and Jvzoo

The book links in this post are Amazon Associate links.  If you click them and purchase from Amazon, I get a small commission but you do not pay more for  your product.

*Part of Financially Savvy Saturdays on brokeGIRLrich and Super Saving Tips*

Wednesday, February 22, 2017

Tax Time: How to Prepare Your Tax Return

By this time of year,  many people are ready to file their tax return and (hopefully) get a refund.  Let's take a look at the alternatives available for filers:

Complete Your Return Manually

Seriously, if you are single with no children, all your income is from employers who issued W-2s and you don't have any investments or retirement accounts, you can probably complete a 1040 EZ manually in less than 30 minutes.  The only problem with this is that you'll have to file by mail, which will delay your refund.

Use Online Software

There are a variety of online programs that allow ordinary people who are not accountants to accurately complete most tax returns.  If your adjusted gross income is less than $64,000, you have access to a variety of commercial programs via IRS Free File.  You must enter the program via the IRS website, not the program's website, in order to use them at no cost.  The companies may (will) try to "up sell" you but the basic return will be free.

If your income is more than $64,000 or you need specialized forms you may need to upgrade to paid versions of the programs.  Nevertheless, unless your financial situation is extraordinarily complex, you should be able to complete your own return with online software.  

Besides price, the main advantage to completing your own return is that by the time you are done  you have a clear understanding of where your money is coming from and how it is being taxed. Some very intelligent people have told me that their mortgage payment is tax deductible and that's why they keep making it, rather than paying off the house.  The mortgage payment isn't deductible, only the interest is--and it is only truly deductible if it and your other deductions are more than the standard deduction of $12,600 for a married couple who files jointly.  

If you do not qualify for IRS Free File, different programs have different costs and features.  Turbo Tax is the most robust package and in fact your W-2, 1099 or other tax document may have their logo on it along with a data entry shortcut.  Turbo Tax allows you to take photos of many forms and import them, possibly saving you time on data entry.  Turbo Tax is also often the most expensive program.

On the other end of the spectrum is FreeTaxUSA which never charges for federal returns and charges only $12.95 for a state return.  The interface of FreeTaxUSA is not as fancy and it lacks Turbo Tax's import features.


The main thing to watch out for with the online programs is the up-sell.  Many of them lead you though a long and involved interview/data entry process which prepares the proper forms.  However, the "free" return you signed up for does not include many of your forms and you only learn the true cost of your return when you go to save or file it.  They are betting that you won't want to do all that work again and will just pay the money.  

The online packages all offer e-filing as part of their service. 

Use Packaged Software

TurboTax Deluxe 2016 Tax Software Federal & State + Fed Efile PC/MAC Disc  [Amazon Exclusive]If you don't like the idea of  your personal financial information being on some company's website, you can purchase programs like Turbo Tax or one from H &R Block.  .  They can be downloaded or bought in a store on a disc.  The price may or may not include efiling.  

Before purchasing a package, review the contents to make sure the package you buy includes the forms you need. 

Once you have downloaded and installed the software, you don't have to worry about Internet connections so your may be able to move more quickly through unneeded screens. 

Most packaged software allows you to prepare more than one return per license so if you have multiple family members who need returns, they should be able to share the software.

 Use a Storefront Preparer

When many Americans think taxes they think H&R Block, even if they've never used H&R Block's services.  H&R Block and similar seasonal storefront tax preparation services hire relatively low wage help and train them to complete tax returns by using software similar to that listed above. 

While some of these people actually learn something about taxes during their training and tenure, according to Glass Door, the average seasonal hourly tax preparer makes $10-15/hour and at that rate, you aren't getting much expertise. They use a computer-generated interview to fill out forms.  If your taxes are simple enough to entrust them to H&R Block, Jackson Hewitt and the like, they are simple enough to prepare on your own computer for less money. 

Use a CPA or Enrolled Agent

If preparing your taxes takes real accounting, then hire a CPA.  The CPA will be able to compute your profit and loss for rental properties or business ventures.  He or she will be able to advise whether certain things are deductible, and will be able to give you advice about how to save money on taxes next year, even if he or she can't reduce this year's taxes.  

Enrolled Agents are non-CPA tax professionals.  They, along with attorneys and CPAs can represent you in front of the IRS.  

If all your income is reflected on tax forms issued by business or brokerage houses, a CPA is probably overkill, unless you just plain don't want to fool with it.  However, it has been my experience that the most time-consuming part of preparing your taxes is gathering the information needed, and you have to do that whether you are going to do your own taxes or farm them out to someone else. 

While there are people who have complex tax situations which require the advise of a professional, the vast majority of Americans are perfectly capable of preparing their own tax returns. 
*Part of Financially Savvy Saturdays on brokeGIRLrich and Super Saving Tips*

Thursday, February 16, 2017

Comparing ETFs and Mutual Funds: A Follow-up on Book of the Month: Step by Step Investing






This year I am doing a "Book of the Month" feature on this blog.  Besides the standard book review, since I am reviewing books dealing with finances, and since I by no means claim to know everything there is to know about finances, I am going to try to find at least one "Take Action" step in each book--one thing I can do to improve my knowledge, investment or blog.  In January, my book of the month was Step by Step Investing and I reviewed it here. 

One thing Joseph Hogue talked about was ETFs, which are exchange traded funds.  ETFs are the new "in thing" but I've never been able to figure out why they are preferable to mutual funds.  This month I decided to review some Vanguard mutual funds and their corresponding ETFs and see what the difference was.

Before I started that project, Janette left this comment on my post:  How to Lose Money on Your Investments 
My largest loss was a day that I realized the highly respected mutual fund, that had most of our savings, was going down. I put in the sell order immediately. I did not realize that a mutual fund only sells at the end of the day. I lost a LOT of money that day- and had to pay my broker $80 for the transaction.
I realized that by reading  Step by Step Investing:  A Beginner's Guide to the Best Investments in Stocks I had learned that had Janette's money been in ETFs rather than mutual funds, her sell order would have been executed immediately (however her broker defined that word), rather than at the end of the day.  So, presuming the share price was higher when she said "sell" than it was at the end of the day, Janette would have been better off at the end of the day.

How Are Mutual Funds and ETFs Alike?

Both mutual funds and ETFs are baskets of stocks.  They can be actively managed with a human (or more likely a team of humans) studying various companies and deciding which ones to buy stock in or they can be index funds where a computer buys and sells stocks to mimic an index of one sort or another.  For example, I own shares of Vanguard's Total Stock Market Index Fund which tries to mirror the U.S. stock market as a whole.  About 2.4% of the stock market consists of telecommunication companies so about 2.4% of that fund is made of telecommunications companies. 

Both ETFs and mutual funds are required to define a style of investing, publicize it and stick with it.  If you say you are running a small cap fund (one that buys companies with capitalization below a certain amount) then you don't buy stock in Johnson and Johnson, even if it is the dividend investor's stock of the week.  

How are Mutual Funds and ETFs Different?

Let's look at my very simplistic fund.  On a per share basis, it is 1/3 X, 1/3 Y and 1/3 Z.  Today, X closed at $10 per share but during the day it sold for as high as $12 and as low as $8.  Y closed at $20, which was its high point for the day.  For much of the day is sold close to $15. Z closed at $5, its lowest point in the day, but there were times during the day when it reached $6. 

 It just so happens in my perfect simplistic world that at 3:00 p.m. X was selling for $12, Y for $15 and Z for $6.  If my fund was an ETF and you bought or sold it at 3:00 p.m, your share price would be $33.00 per share.  If you bought or sold at the end of the day, the share price would be $35.00.  If my fund was a mutual fund, your cost per share would be $35 because mutual fund shares are only valued and traded at the end of the day.  

What Difference Does It Make?

Well, if you are in Janette's position, being in an ETF rather than a mutual fund can make a big difference, for good or for bad.  If Janette had been able to sell before the bottom dropped out of the price of her fund, she would have been better off.  Of course, if the price of the shares had bounced back up by late afternoon, selling at the end of the day would have been a good thing.  

But what about the day to day, for those of us who just invest our money and leave it sit?  This chart looks at two Vanguard funds which are available as ETFs, regular mutual fund shares or Admiral mutual fund shares (meaning you have more than $10,000 worth of that fund). You can see that in both cases the Admiral shares and the ETF had similar expense ratios that were noticeably lower than the Investor (regular) shares.  From what I could see, there was no minimum investment in the ETFs. 


Fund Name
Expense Ratio
Ten Year Fees on $10,000
Ten Year Value of $10,000
Vanguard Total Stock Market

ETF  0.05
MF  0.16
Admiral 0.05
ETF   $118
MF   $376
Admiral: $118
ETF  $20,104.24
MF   $19,884.58
Admiral: $20,103.24
Vanguard Value Index Fund
ETF  0.08
MF   0.22
Admiral 0.08
ETF  $189
MF   $516
Admiral  $189
ETF $17,827.93
MF  $17,593.47
Admiral $17,827.25

If you had invested in those funds ten years ago, you would have paid the fees listed in the second column and the final column shows the value of today of $10,000 invested ten years ago.  It appears that for small accounts, the fees on ETFs are less than the fees on mutual funds with the same assets and management.


Takeaway

We are thinking about investing in another Vanguard Fund, and rather than another mutual fund, it will be an ETF, since the initial investment will be too low for Admiral shares.

*Part of Financially Savvy Saturdays on brokeGIRLrich and I Am the Future Me*

Friday, February 10, 2017

Is Kindle Unlimited Worth It?


It is not uncommon for people who log onto Amazon.com to be greeted with an ad for Kindle Unlimited.  The question may have is whether Kindle Unlimited is worth it; whether it is worth the $9.99 subscription cost.  The answer, of course, is "it depends".

What Does Your Kindle Unlimited Subscription Get You?

A Kindle Unlimited subscription gets you access to a large library of e-books, which can be read on any device that has a Kindle app on it.  It also allows access to a number of current magazines and to some audiobooks.  

Kindle Unlimited members are limited to ten items at a time; with Kindle Unlimited, you are borrowing the items, not buying them.  In order to access the eleventh item, you have to return one of the previously borrowed items (and you are prompted to do so).  

Most of the books available via Kindle Unlimited are self-published ebooks.  While that does not mean they are not good books, it does mean that if you are joining Kindle Unlimited in hopes of having unlimited access to the latest best-sellers, you will be disappointed.

What Are the Alternatives to Kindle Unlimited?

  • Scribd is another ebook rental service which can be used for all devices except non-Fire Kindles.  It offers 3 books and 1 audiobook each month — plus unlimited access to magazine and news articles, sheet music, documents, and special select titles for $7.99/month.My perusal of their website indicates that they have more "big-name" authors' books available than Kindle Unlimited does, however, I did not find the latest books by the authors for whom I searched, nor were their complete catalogs available.
  • Your Public Library probably has ebooks available for download 24/7 at no cost beyond that of a library card.  In my experience, I am more apt to find the big name authors' books at the library than on Kindle Unlimited, but the latest books may not be available, or may have long waiting lists.
  • Prime Reading.  If you are an Amazon Prime member, one of your benefits is Prime Reading, which is the ability to access, at no additional cost, some ebooks and magazines.  While Kindle Unlimited offers over a million books, Prime Reading offers only about 1,000.
  • Amazon Freebies.  Don't scoff too quickly.  At any given time Amazon offers thousands of free books.  Some are free on a temporary promotional basis.  Established writers will make a back-list book free on Amazon shortly before a new release, hoping that those who read the freebie will buy the new book.  Often self-published writers have one or more books free on a permanent basis, again hoping that after you enjoy the freebie you will buy other books from them.  Finally a lot of classics which are not under copyright are free as well.

Is Kindle Unlimited for Me?

If you are considering Kindle Unlimited, I suggest going to Amazon's website (and I'd appreciate it if you would use the handy affilliate links in this post--I get paid and it doesn't cost you more) and searching for books you want to read.  Browse by genre, author, subject, whatever, and use the "eligible for Kindle Unlimited" filter.  Save the books to your wishlist.  When you have enough to keep you busy for a month, then sign up for Kindle Unlimited. 

 Re-evaluate your choice every month, and remember that you can stop your membership at any time, and rejoin at any time.  While you only get one free trial month per account, if you batch your reading into Kindle Unlimited months and other months you may be very happy with just three or four Kindle Unlimited months per year.  

Kindle Unlimited is like most subscription services--It is worth it if you use it and enjoy it, and can afford it.  Otherwise, like most subscription services, it turns into money that goes regularly into the pocket of a business whose services you are not using.  


Disease Called Debt

Saturday, February 4, 2017

How to Lose Money on Your Investments

As you move through life, you make mistakes.  Someone once told me, "Another name for something that hurts like hell is a learning experience".  Most of us remember the pain caused by our mistakes and while many of us try to keep our children from making the same mistakes, all too often, they, like we did, have to learn the hard way.

One type of mistake many people make is paying too much to the financial industry and/or the IRS due to bad financial decisions.  Let's take a look at a few such decisions:

Paying a Financial Advisor a Lot of Money for Very Little

I started this blog not long after receiving a substantial inheritance.  All of the sudden I had a lot (to me) of money to invest and I wanted to do it right.  While I started researching various options, the CPA who did our taxes convinced me that hiring him as a financial advisor would be a smart move.  As a result of saying "yes" to him, I learned about a lot of different costs:

The Tax Cost of Selling Investments

Most of the money we put with the financial advisor was in retirement accounts; however there was a sum of money in a taxable mutual fund account that had been there for over fifteen years.  When the financial advisor moved that money to his firm, he sold the mutual fund, creating a taxable event.  All that profit over all those years was now taxable income.

Before switching from one investment to another, consider the tax consequences and whether they are worth it.  If you lose 15% of your investment to taxes to gain 1% a year in gains, it will take over 15 years to make up what you lost in taxes.  

The Cost of Market Timing

While the fault of no one in particular, there was a lag between the day our old investments were liquidated and the day the financial advisor bought new ones, and because of market movement, it meant that we lost money.  In other words, the market was "low" when we sold, and then went up before our money was reinvested.  Shortly after that money was put in new investments, it went down again.  The money was invested in August, 2014.  A portfolio I put into Morningstar shows that, looking strictly at share price and not counting dividends, the mutual fund shares purchased that day are still worth 6% less that what we paid for them.  

If switching to a financial advisor or broker means liquidating a large amount of money and then reinvesting it all at one time, this is a real risk.  While it may not take you as long to recover as it has taken us, dollar-cost averaging is a proven way to reduce risk, and taking "all" of your money out of account 1 and moving it to account 2 means buying market risk.  Consider only giving the new company new money, especially until they have proven themselves.

The Cost of Mutual Fund Expenses

Mutual funds have expense ratios.  Someone has to pay the people who are running the fund, and those people are the investors.  I don't work for nothing and I don't expect others to work for nothing.  However, before investing in a mutual fund, compare its expenses with those of its peers.  While you may think it is worth it to be in the hot fund that is making money this year, the odds are that if not next year, then the year after that, the fund will find itself back in the pack.   

The Cost of the Financial Planner

As I said above, I don't work for nothing and I don't expect other people to work for nothing either.  However, I do expect people who work for me to produce value commensurate with the cost.  In order to evaluate the cost of a financial advisor you are considering, write down the following:
  • Why do you want a financial advisor?  I know it seems basic, but there is a reason you are considering hiring someone.  What is it?  If you tell me you want to fix up your house and I send a plumber over, that's great, if the pipes need work.  If you want someone to run electrical wires, then I haven't helped.  Do you want someone to pick investments?  Help you budget?  Give you tax advice?  If you don't know what you want, figuring out if you get your money's worth is tough.
  • Without consulting anyone about the cost, think about what YOU think that service is worth.  I'd love for you to come clean my house, and I'd be glad to pay you $10 a week to do it.  $100?  Nope.  The fact that it would cost closer to $100 per week than $10 per week for a housekeeping service is why my kids clean my house (I have to feed them anyway).  
When you interview a potential financial advisor, go through your "want" list.  Is that what s/he does?  If not, keep looking.  Tell them you have $X dollars to invest and ask what your yearly fee would be.  Ask in dollars and cents and if you get all sorts of ifs...percentage...variable, and can't pin them down to a number assuming a certain account value, move on.  Realize that 1% of $100,000 is $1,000 and ask yourself if you'd be willing to write someone a check for $1,000 for the service you are trying to buy.

Other finacial planners are commissioned sales people.  Again, give some if/then scenarios and find out what you will end up paying them and decide if it is worth it.

In my opinion, and I'm not a financial professional and you take my advice at your own risk (but you aren't paying for it either) most people should invest in a diversified mutual fund portfolio and if you don't want to pick that portfolio yourself, go to one of the big companies (Vanguard, Fidelity, T Rowe Price are three) and buy a target date fund.  This is a mutual made of mutual funds and is rebalanced to the level appropriate to your target retirement date.  

The Cost of Changing Your Mind

When we hired a financial advisor we did not realize how much it would cost us to change our mind.  When we moved away from using HD Vest to manage our investments, they charged us $90 per account to close our accounts, and we had three accounts with them (my husband and I each had an IRA and we had a taxable account).  Each of those accounts was invested in 22 different mutual funds.  

While I don't know what it would have cost to have HD Vest liquidate the account and send us the cash, moving the account, with all those mutual funds, to Vanguard means that we will pay $20 each to sell them--in other words, whether we sell those funds today, tomorrow or ten years from now, we will get hit with a $20 per fund per account fee.  In other words, it will cost us a total of $1,320.00 to get our money.  

If you want to move your invesments from one place to another, find out all the fees involved and see whether you are better off liquidating or moving securities.  Even better, before you put money somewhere, find out what it will cost to move it elsewhere.

Paying the Tax Man too Much Money

Your retirement savings belong in a retirement account--either your work-based 401(k), 403 (b) or other tax-deferred account or in an IRA. Keeping long-term savings in other types of accounts just means more income for Uncle Sam.  Keep these things in mind:

Roth IRA

The money you put into a Roth IRA is taxed before you put it in, but the earnings are tax free and you can withdraw your contributions at any time. If you are young, this type of account gives you the flexibility to save for retirement while still keeping the money accessible, if necessary for expenses like college tuition or a new car.  

Regular IRA or Work-Based Plan

These allow a current tax deduction on your contributions and allow investments to grow tax-deferred.  You'll pay taxes on this account when you withdraw the money.  In a standard account, if you buy a stock for $10 and sell it for $20, you pay capital gaines taxes on the $10 differences.  In an IRA, you get to reinvest the who twenty.  

Regular Account

For various reasons you may want to have some stocks or bonds in a regular account.  The trick to minimizing taxes is generally to minimize transactions.  Going back to the stock we bought for $10 and is now worth $20.  If you sell it, you create a taxable event.  If you have a good reason to sell, go ahead, but realize what you are doing, and the consequence.  

Some stocks are purchased because you expect a long term increase in value; others are purchased because they pay dividends.  Taxable accounts are better for growth stocks; you keep more of the income from income stocks if they are in a retirement account. 

Friday, January 27, 2017

Is Kickfurther A Scam or a Legitimate Investing Option?

I had a comment left on a post suggesting that I needed to re-evaluate Kickfurther and the posts I've written about it.  Since it has been a while since I looked at the platform as a whole, I'm going to take some time and do so.

What Is Kickfurther?

Kickfurther is a platform that allows ordinary investors to assist businesses who need money to buy inventory.  The Kickfurther concept is that rather than lending money to the businesses, investors pre-purchase the inventory, and then return it to the business to sell on consignment.  As the inventory sells, the business repays the investors, with a profit margin.

For example, Wanda sells widgets.  She buys them from the widget factory for $10 and sells them for $20.  Generally speaking she sells 500 widgets a month.  She comes to Kickfurther and asks investors to finance 1,000 widgets for six months, so she asks for $10,000 and promises to pay back $11,000 by the end of six months. 

Wanda knows it will take a month from the day she places the order until the widgets arrive at her store,so the offer is written so no payments are due for two months.  Then, every month, Wanda is supposed to pay for the widgets she sold that month.  How much she is required to pay per widget is determined ahead of time, and that is expressed at the Percent Sold for Return--so that if Wanda's contract said she had to give KF $15 for every widget the PSR would be 73%.  If Wanda only had to pay $11 per widget the PSR would be 100%.  Obviously a lower PSR is better for investors.

If production is delayed, or people decide they don't want widgets anymore, and at the end of six months, Wanda hasn't sold enough widgets to repay the investors, the investors are allowed to vote on whether to allow Wanda to continue, or whether to cancel the offer.  If the offer is cancelled Wanda can either pay off the offer or return the unsold widgets to Kickfurther which will then try to sell them.If investors vote to continue, then Wanda continues to sell the widgets but no additional compensation, in other words, no extra interest or late fees, is due to the investors. 

What Problems With Kickfurther Have Arisen?

The bottom line is that in more than a few instances, Kickfurther investors have not been paid.  This list tells you the current statistics.  Right now, if you do the math, the "average" Kickfurther investor who invested in a random sample of offers is in the hole.  Investors who lose money are not a happy lot.

The question is who is to blame for the failed offers.  The reality is that investing has risks and anyone who thought these deals were sure things isn't very bright.  However, I'm not convinced that the risk I signed up for is the risk that ended up getting me.

In reading the information on Kickfurther's website, I learned that KF owned the merchandise and that the businesses were selling it on consignment.  I assumed (and you know what they say about assuming) that KF had proper contracts and safeguards in place, so that the only real risk we had was the risk that those widgets wouldn't sell.  My personal appreciation of the risk was that we'd probably get at least some of our money back on all offers, that most would complete and that KF would end up with odd and ends of junk no one wanted to buy on some offers.

I was wrong.

First of all, it seems KF has no enforcement teeth.  They say their contracts have improved and that they are now filing UCC-1 statements on the inventory, but there have been many cases in which the companies have just disappeared so to speak.  They either never paid anything or quit paying and did not return the inventory.  In some cases lawsuits have been filed, but my guess is that they will be fruitless since one of the main things needed for a successful suit is a financially viable defendant.

There just does not seem to have been much due diligence on the companies. Kickfurther has recently begun pulling credit reports but that is a new innovation.  They have done offers for companies that it turns out don't really exist.  There are companies that admit to selling inventory and using the money for things other than repaying investors.  Right now I have 17 offers that have gone bad.  Of those only 2 have turned unsold inventory over to Kickfurther.

In short, as it as played out so far (almost two years), while KF bills itself as buying inventory that is sold on consignment, in reality, as I preceive it, though not billed as such, and specifically denied by Kickfurther, it is basically making unsecured loans to small business, which is a risky business.  Established companies that do it successfully charge higher rates and have tighter controls.

I added the text in red at the request of Kickfurther. I receivd an email that said
it's been brought to our attention that one of your articles is incorrectly labelling Kickfurther as an small business loan which is not part of our model.  I've been requested to ask that you update the article to accurately represent the Kickfurther model. ...please alter the text so that the copy accurately reflects the Kickfurther model.
At least one of the Kickfurther Merchants of the Week I interviewed referred to their arrangment as a "loan".  Kickfuther has had no way to guarantee that the invested money was spent on the backed inventory and no mechanism for tracking sales and making sure the sales matched the payments.  While the paperwork may have said "consignment sale agreement", you know what they say about ducks, don't you?

If it walks like a duck, and quacks like a duck, is it a consignment sales agreement?

Can Kickfurther Be Fixed?

Honestly, I don't know.  I don't know the realities of the business community.  However, some major problems I see:

No automatic payments on sales

I don't know the technological viability of the idea, though I tend to think it could be done.  Simply put, when one of our consigned items sells, Kickfurther needs to get notification and when the check for it hits the bank, KF needs to grab it.  Expecting a company that is having trouble paying the bills to pay us first obviously isn't working.

The overwhelming majority of companies, even companies which have paid as promised, have paid in a linear fashion.  In other words, if they had five payments due, they paid 1/5 in each payment.  I find it hard to believe that none of those companies sold more than what was necessary to remain in good standing with investors.

Clunky cancellation/collection procedures

Since payment is due only when a product has been sold, being late with the first payment, or having payment be less than the scheduled amount isn't necessarily a cause for alarm.  However, I have several offers that are quite late, without any explanation from the company.  In order to cancel the offer and make the balance due in 30 days, over half the dollar-weighted investors have to vote for cancellation.  My guess is that in most cases by the time that is done, the inventory is long gone and the money spent on the electric bill or some other pressing business need.  Any decent debt collector will tell you that the sooner you get onto a problem borrower, the greater your chance of success. 

I have one offer where the business owner admitted to selling some of the inventory and using the money to pay himself a salary.  Eventually, about six months ago, and after payments were eight months late,  the offer was cancelled.  KF just asked the backers to vote on a settlement agreement with this company, but they've given us no information on which to base a decision, despite requests on a private message board and email requests.  At this point I have no idea whether the offer we have is any good.

Some backers are pushing for a lawsuit, and if we have a viable defendant that may be the way to go.  However, the almount owed is under $20,000.  I doubt the contact calls for penalties, interest, attorneys fees etc.  Based on things the owner has said, my opinion as someone who knows something about lawsuits (but I'm not a lawyer and I don't give legal advice) is that we don't have a slam dunk case against him, which means to win the case we'll need to litigate, not just file suit and get a default judgment. Assuming we win, we'll then have a judgment, and collecting on those isn't necessarily easy, particularly when the defendant has few assets and could see bankruptcy as an alternative.

On the other hand, if businesses see that KF isn't willing to legally enforce its contracts, more will try not to follow them. 

Return is not commensurate with the risk

At this point, the average Kickfurther investor has lost money.  I'm in that number.  I'm not too far in the hole, but I'm there.  Clearly the reward isn't worth the risk.  Yes, if you managed to avoid the defaulting offers, you'd have a good return, but unless there are people out there who are more expert than I am, avoiding the bad offers is more a matter of luck than knowledge.  

Prosper used to let lenders bid on loans.  Unfortunately what happened is that the amatures doing the bidding bid the price down to the point that the defaults took the profits.  Early Kickfurther offers were often over 10% for 6 months.  When investors snapped them up in seconds, the returns dropped.  Now that investors aren't as quick to grab offers, returns are climbing.  However, I don't think they are up to the point they should be.

Kickfurther needs to develop some sort of rating and/or underwriting procedures and they need to price offers at a rate compatible with the risk. 

Too rich for my blood

Kickfurther recently switched to a "pack" system, where you buy the smallest possible portion of the consigned inventory, rather than contributing a certain dollar amount.  Going back to our widgets, If Wanda had only one type of widget then a "pack" would cost $10 and would consist of one widget.  If Wanda was buying 10 different types of widgets, then a pack would cost $100 and would have one of each type.  Recently there have been packs that cost several hundred dollars, and one that was over $1,000.  While there are certainly some KF investors playing with that much money, I don't think most of us are.  Given the luck I've had with KF so far, there is no way I'm putting subtantial money into any offer.

Update:

I started writing this post last night.  Tonight Kickfurther's CEO posted an update on reddit that stated that starting February 1, all offers would be backed by purchase orders and that Kickfurther would have tighter controls on the inventory and the money.  Further, he was hoping to raise enough money to pay out the failed offers.  You can see his message here.   I wish him the best, and I hope this new model works.  

Conclusion:

I've said before that Kickfurther is a place for money you can afford to lose.  I haven't seen anything that makes me change that opinion.  I think Kickfurther has potential but right now, on average, investors are not making money.  

I also think they are doing a horrible job with PR right now.  The CEO's post about improvments to the platform was a good thing, but then he asked for positive reviews at Trust Pilot (where I had previously written a cool review).  When folks went there, they found that Kickfurther's business development person had given Kickfurther a five star review.

I've given Kickfurther a lot of free and reasonably positive publicty.  Even before my red text addition above, I think it was clear to any reasonably intelligent reader that Kickfurther did not consider itself to be a lender.  Was it really necessary to tick me off by requesting that I change my post?

If you'd like to give Kickfurther a try, if you use this link, you'll get $5.00 toward your first offer.  If you have a business that is looking for a new way to finance inventory, use this link to see if KF will work for you. 
Disease Called Debt