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Goals Update for End of November 2009

For most of 2009 I was completely healthy. In November I managed to get sick two separate times. That combined with an excess of work to do at work and a job interview, and my blogging has definitely slacked. On the bright side, I’ve made significant progress on my personal finance goals for 2009.

Personal Finance Goals

  • Fully fund 2008 Individual 401k ($8,207.00/$8,207.00) – Completed in March.
  • Fully fund 2008 Roth IRA ($5,000/$5,000) – Completed in April.
  • Fully fund 2009 Individual 401k ($4,583.62/$5,264.00) - I have enough cash above my emergency fund level of $10,000, but I will wait until I calculated the exact dollar value that will need to go into my individual 401k. As of right now I consider this goal completely funded. I was able to make so much progress this month because I sold my Target stock. I wanted to take my taxable investments and turn them into tax sheltered investments.
  • Fully fund 2009 Roth IRA ($5,000/$5,000) – Completed in November. My Target stock allowed me to complete this goal. I sold my Target stock at a level that was not much higher than the value when it was gifted to me, which ends up being my cost basis. The taxes I will have to pay on the minimal gain should be covered by my extra deductions for a full year of interest on mortgage payments.

Alternative Income Goals

  • Turn blogging into a source of income – In November, I earned $0.00 from Microsoft Pubcenter, $00.00 from LinkWorth and $00 from Commission Junction. My total in October was $00.00. As the year is wrapping up and I am finally being given more and more work to do at my 9 to 5, I have surprisingly less motivation to work on my blogging income. I will continue to post my monthly updates and any personal finance related information that I find interesting, but I will no longer be focused on monetizing this blog. If I earn a commission every now and then I will be happy. So far I have earned a total of $269.03 through affiliate marketing and text ads.
  • Increase monthly page views and subscribers – For now I will not be focusing on growing my blog. I will continue blogging about topics that I enjoy and posting my monthly updates. In the future, I do want to finish blogging about asset allocation as I change my current investments from target retirement funds, into a researched and tailered allocation. I suppose I will have to consider this goal a failure for 2009, but my interests have just changed since the beginning of the year.
  • Replace tutoring income through a company with my own personal clients – If tutoring opportunities come my way I will not turn them down. For now I will focus my efforts on developing ebooks for specific subject tests to provide references for when I do start tutoring. For now this is a dead goal unfortunately.

General Goals

  • Travel to two cities I’ve never been to – There are no new trips scheduled for this year. For work I should be traveling to Europe and/or Japan in the beginning of 2010, which should more than make up for the less than interesting cities I’ve visited in 2009.
  • Get in shape – The colds have hampered my running for the past few weeks, but I before the colds I had a nice workout schedule. I hope to get back to that schedule. I also hope to add in some swimming. Get in shape is such an arbitrary goal. I know I set a specific weight goal that I would have liked to get to in 2009. I will attempt to get to that weight in 2010. I also might set a goal to do a triathlon, which should really put me in great shape.

I can’t believe how quickly my interests have changed over the past month or two. I just haven’t had the time or motivation to accomplish everything that I wanted to. I am extremely happy with my personal finance goals, which were the most important in my mind. I will have to think long and hard about my goals for 2010 to avoid these dead goals that I have no motivation to fulfill.

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End of November 2009 Financial Status

November was a great month for my net worth, even though I was sure it was going to be a rough month. I made some pretty big payments on my credit card for furniture. I also wrote a check for a chunk of physical therapy sessions that will hopefully allow me to run freely. To counter those larger payments, I received a rebate for property taxes that I overpaid at closing. My non-retirement savings took a major hit as I took the first step towards converting it into tax-sheltered accounts.



November saw a major increase in my cash asset for a very specific reason. I cashed out my taxable Schwab account by selling my Target stock and requesting a check be mailed. I have yet to receive the check, but the money is no longer in my Schwab account to I left it as cash, even though I will invest it into my two Vanguard retirement accounts. My cash also received a boost of about $1,200 from the builder of my condo. I large chunk of my closing costs went into an escrow account for property taxes, and only a small portion of it was used to pay property taxes. The rest of it was sent back to me, which was a welcome surprise. Next month I hope to have all of my retirement accounts fully funded and my cash back at $10,000.


My retirement funds increased based solely on increases in the stock market. I was unable to invest the money from my Schwab account before the end of the month because it is taking forever to get the check. Once I get the check the retirement asset will increase substantially.


My non-retirement assets decreased substantially as I sold all of my Target stock to move it into a tax-sheltered account. Now my tax-sheltered assets consist of a US Growth mutual fund through Vanguard,Sharebuilder account, Lending Club account and a Prosper Account. I don’t foresee any major contributions to my non-retirement accounts. I’m going to start using this monthly post as a reminder to add $25 towards my Lending Club and Prosper accounts. I really like these peer to peer lending sites as a way to diversify my investments.


My car payment and mortgage decreased by the standard amount. Even though I’ve had my new mortgage for a few months now, it still feels great to decrease that liability by such a large chunk. It really makes me feel like I’m adding significant equity to my condo.

Net Worth

My net worth increased by 3.0%, even though I thought November would be an interesting month. Despite the larger than normal credit card payments and the physical therapy bill, I was able to substantially increase my net worth. The stock market helped a bit, but it was mostly the unexpected check from my property tax overpayment. Next month in addition to my monthly financial status update, I will do a annual financial status update. Sometimes it’s good to take a step back and really look at your finances on a larger scale, especially since the ultimate goal of retirement is on such a grand scale.

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How To Create A Personal Finance Plan In Twenty Minutes

Recently, I was asked to help somebody very close to me to get their personal finances in order. They didn’t know what to do with the money building up in a checking account. They didn’t know what to do about retirement saving. They didn’t know what to do about paying off liabilities. I was very happy to help. I enjoy planning personal finances and creating plans. I’ll walk you through how I created the personal finance plan in about twenty minutes.


The first step is to make a list of your assets. I’m partial to excel, but it’s also possible to do it with quicken online or pen and paper. I listed out all of the assets: checking, savings, brokerages and retirement accounts. The assets list is below.


The checking account is at a major bank with ATMs and branches all over. The savings account is a money market fund earning 0.02%. The IRA account is a traditional IRA that was a 401k rollover. The brokerage account is at the same bank as the checking account and is 80% bonds, which is ridiculous if you’re young (and old in my opinion). The municipal retirement is similar to a pension, where money is pulled out of your account and if you work for a certain number of years you get a pension. Otherwise, you get the money you put in back. The municipal retirement fund is mandatory, which is nice if you reach the number of years, but crappy if you don’t


The next step is to list your liabilities and the associated interest rate. Below are all of the liabilities:


The computer liability refers to a credit account charging 16.74% interest that a computer was purchased with. The interest on the student loans is on hold as a masters degree is  being pursued. Finally, the remaining car liability comes with a 4.90% rate.

Immediate Steps

After listing your assets and liabilities, it’s important to understand your goals. Do you want to maximize your net worth? Do you want to eradicate all debt. Do you want to focus on retirement savings? Do you have more immediate savings goals? Below is how I would first start out shifting funds around. This first part should be done in the first week or two.

Personal Finance Plan

As you can see I paid off the computer credit card first. The 16.74% was just ridiculous. Otherwise, I didn’t touch the liabilities. On the assets side, I transferred the savings account funds into the checking account. Earning 0.02% is worthless, you might as well have it in a checking account to have immediate access to it. I also opened a Roth IRA at Vanguard. I took the funds from the taxable brokerage and moved them into the Vanguard Roth IRA for a 2009 contribution. Finally, I opened a high yield checking account that earns 4.15% and moved all of the funds into it except for $1,000. This money is going to act as an emergency fund, an ATM fund and an easy way to deposit checks. The high yield checking account will be set up for direct deposit and most everything will be paid with this account.

Future Plans

I always recommend determining what your going to do with your excess money at the end of each month. For example, in the above example I set up the following future plans:

  • Save $5,000 for 2010 Roth IRA contribution in January 2010.
  • Keep $5,000 in Checking account for emergency fund, traveling, etc. (that puts $10,000 in high yield checking account until January)
  • Anything over $10,000 ($5,000 after January) in the checking account goes towards paying off the car. If you have $11,000 in the checking account at the end of the month, you make a $1,000 payment towards the car.
  • Once the car is paid off, excess money goes towards the 5.0% student loan.
  • The next step is debatable, if you really dislike debt, pay off the 1.63% student loan, otherwise go to the next step.
  • Retirement savings – Roth is already funded in full, so that leaves a 401k or a 457 for municipal workers.
  • Finally, if you’re fortunate enough to pay off all debts and fund all retirement options, you can invest in taxable accounts.

List your assets, liabilities and future goals then use that information to develop your plan. Your first stab shouldn’t take more than 20 minutes. The next step of opening accounts, closing accounts and transferring funds takes a week or two. Afterwards it’s a month to month grind to work towards your goals. You’ll be surprised how quickly you can achieve your goals once you’ve developed an appropriate plan. Good Luck.

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Prosper – Peer To Peer Lending


Peer to peer lending ( p2p lending) is gaining traction as a legitimate investing vehicle. All of my favorite investing books break investing down into stocks, bonds, CDs, mutual funds, etc. P2p lending is carving a niche for itself. P2p lending allows individual investors to borrow and lend money without the help of a financial institution.

Instead of the bank taking my money and lending it out while I earn a small interest rate, I can lend my money directly to another individual. P2p lending does involve more risk to the individual. The two major p2p lending sites are Lending Club and Prosper.


Prosper claims investors can earn between a 7% and 13% return on invested money. Similarly, as a borrower, Prosper claims you can secure a fixed rate loan for as low as 7.5% APR.

As a borrower, you can list a loan for an amount between $1,000 and $25,000. The borrower then sets the maximum rate they are willing to pay and writes a story about why they want a loan.

As a lender, you decide the amount of money you want to lend and the minimum interest rate they want as a return. The lender then uses criteria like credit history (minimum 640 credit score), combined with the borrowers personal story to pick loans to bid on.

Prosper takes the bids with the lowest rates, does some sort of combinatorial magic and lumps all of the loans into one easy rate for the borrower. Notes are then awarded to the winning bidders. Because Prosper uses an auction system, the borrower ideally gets to watch the interest rate decrease as more people bid on the loan.

Prosper services all of the collections from borrowers and makes payments to the lenders. Prosper charges a lump sum fee up front on the borrower and a servicing fee of 1% to lenders.

Sign Up to Prosper


It really is as simple as that. It took me 10 minutes to set up my account. They ask for all of the standard account opening information and even assign you a random screen name (mine was liberty squirrel). If you sign up now, for a limited time, Prosper will give you $50 to start.


My Experiences

So far I have two bids that are waiting for the auction to end. The process for finding loans was extremely easy. I used the advanced search to find AA borrowers (borrowers with the best credit score) with a low debt/income ratio. I then looked for a rate around 10.00% with an interesting story.

Currently, I bid on a loan to somebody who is raising money to pay for a medical procedure for his wife. He is setting aside $2,500 a month as it is to fund this surgery, and requires the loan to have the surgery earlier. They should be able to easily afford the monthly payments if they were putting away $2,500 a month.

Also, I bid on a loan for a budding web entrepreneur who wants to hire a web publisher. They are already making enough money through Adsense to cover the monthly payment. They believe the addition of a publisher will help the web site grow exponentially.

The bottom line is I bid on two loans that could earn me 10.00% when both of the borrowers appear to be able to easily cover the monthly payments.

I highly recommend p2p lending as a part of your investment profile. I’ve mentioned adding $25 a month to my Lending Clubaccount and may decide to do the same to my new Prosper account.

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Tracking My Monthly Spending – October

Last month I posted my monthly expenses for the first time. I want to post my monthly expenses to force myself to understand just how high my expenses are. October was a very interesting month with all of my work traveling. When I travel for work, all of my food is expensed. Whenever I have a rental car the gas is expensed, however, when I use my own car, I don’t get to expense my gas. Instead, I get reimbursed $0.58 for every mile I drive, which is supposed to cover all car expenses.

My expenses for October are as follows:


  • Home (+0.0%) – consists of my mortgage payment, association fees (water, trash removal, heat, gas, etc), electricity, cable/internet and condo insurance. Some of these expenses fluctuate monthly, but not enough for me to bother tracking.
  • Car (+5.4%) – consists of my car payment, auto insurance and gas. I ended up spending more on gas in October because of my trip to Indianapolis. I drove down in my own car and will be reimbursed. Basically I filled up three times instead of twice. I have less than a year remaining of car payments. When I complete my car payments this category will drop by more than half. I’d also like to change my car insurance and drop that payment.
  • Food (-48.6%) – consists of groceries and going out to lunch during work. My groceries will fluctuate a lot from month to month. I don’t go to the grocery store consistently and I tend to buy food that doesn’t expire quickly. This month I only went twice and one of the times was for only $12. Also, with all of my traveling I was able to expense a lot of my food for the month.
  • Luxuries (+0.0%) – consists of my netflix and zune subscriptions.
  • Phone (+0.0%) – consists of my cell phone. There are some minor fluctuations in the monthly bill for my phone, but not enough for me to bother tracking.
  • Free Money – I was able to push my free money up over $1,000 in October, which is good because I bought just about that much in blinds and furniture for my condo. I also spent nearly $1,000 for about three months of physical therapy that will help me run pain free.

I don’t know how boring it is for you all to read about my expenses, but I find it a very useful exercise. I recommend doing some sort of expense monitoring if you don’t do a formal budget.

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