Beating Broke

Why I Don’t Use an Online Financial Tool

January 23, 2013 By Shane Ede 6 Comments

I don’t use any online financial tools. And it’s not for the reason you’re probably thinking of. It isn’t because I’m afraid that my information is going to get stolen and some hacker is going to run off and steal all my money to buy the country of Dubai. It’s not that I don’t find them to be useful. In fact, I find them to be quite useful. For most people who aren’t me.

Actually, the reason that I don’t use any online financial tools is that very few (read: none) of them seem to connect to all of my accounts. I’m not a person who likes having only half the picture. I like to see everything all at once. Not half here, and half there, or one account here, and the rest over there. Everything. Part of this is my fault. I use all kinds of accounts. Most of them are online accounts and usually show up in any of the tools that I try and connect them to. But, I also use some local accounts. Those local accounts are usually the problem.

Ready For Zero

I tried using this not that long ago. They’re a sponsor of the Debt Movement, and have glowing reviews around the web for their tool. And, from what I’ve seen of the Ready for Zero tool, it does look like a pretty cool tool. It allows you to set up your accounts, get them set up into a payment plan similar to a debt snowball and then helps you optimize that plan for the best bang for your buck. Only one problem. My local Credit Union accounts aren’t linkable. If I can’t include a good portion of my debt accounts in the plan, it throws off the entire plan. How can I expect the tool to give me accurate information if it doesn’t have accurate account information to go off of?

Adaptu

Adaptu is a little bit like Mint. They both allow for linking all of your accounts (deposit and loan) and then their tool gives you a full overview of your finances. There’s more to both, of course, but I stopped investigating when I couldn’t link up all of my accounts. The culprit in both cases was, again, my local Credit Union account.

There are other tools, but every one of them I’ve tried has had a similar problem. In most cases, it’s the local CU that is causing the hiccup. Is that fair to the tools? Probably not. Really, it’s more of a poor reflection on the local institution than it is on the tools.

Yes, I could move my finances to another institution and probably start using some of these tools. But, I’m lazy. For a long time, I was forced to have an account there, so it made sense to just use it for all of my banking. Now that I’m not required, I find that I just don’t want to tackle having everything changed to a new institution. What a hassle to change automatic transactions, re-enter all my bill pay stuff, and then link a new account to the myriad of other places that I have accounts. It’s just easier to not do it.

Except when I want to use an online tool.

Do you use any online tools? Have you ever had problems with getting your accounts linked up in them? What did you do about it?

Are You a Patient Purchaser?

January 18, 2013 By Shane Ede 12 Comments

Conventional wisdom, at least in frugal personal finance circles says you should wait several days (or even weeks) before making most purchases. Especially large purchases.

Personally, I’m usually a pretty patient purchaser. I hate paying retail for most things. When I decide I need something (or even want it), I usually start my search on eBay. Only when the price on eBay is pretty close to retail, or when I just can’t get something at a discount will I purchase it through a retail outlet. And even then, I generally wait for a sale.

Patience is a Virtue

The main reason that experts suggest that you wait on a purchase is that, after thinking about it for a few days, most people will decide that they don’t need the item, or that they don’t want to spend the money on it right then. It also prevents spontaneous purchases. I seldom find that to be true. Well, not entirely, anyways. There have been a few cases where I’ve decided that I really didn’t want the item. I’m also frugal to a fault, and rarely make a spur-of-the-moment purchase. If I see something that I want, I’m off to research it and find the best price for it.

Limited Time Offers

LTOs are my downfall. Because of their limited timeline, I don’t have the luxury of waiting until I can do the same amount of research that I normally do. I still have a hard time purchasing the item, but have been known to buckle under the pressure and pull out my card. (That’s a debit card, thank you.) And, that’s the reason that retailers will have LTOs. Put under the pressure of a deadline, people will often put off doing the research they should and purchase on the spot to take advantage of a great deal.

How I Practice Patient Purchasing

Patient purchasing has probably saved me thousands of dollars over the years. Here’s the method that I generally use.

Decide on the brand and model that you want. This can be the super heavy duty research part of the purchase. I’ll spend time shopping for the item, and then looking online at retailers to find a brand and model that I like as well as get an idea of the average price of the item. e.g. when I last bought a pair of shoes, I first decided on the brand that I wanted to buy (New Balance) and then on the model. Deciding on the model took the most time as they have many models that are built for different strides, pronations, etc. I also found that the full retail for a pair was about $125, but that there were discount retail outlets that regularly sold them for about $100.
Set up a search on eBay. I like eBay. It gives me the ability to fine tune a search and then save it. I also very rarely find that the price that I can get something for on eBay is more than what I can get it for at a retailer. Most of the time it’s quite a bit less. I usually start with a pretty generic search for the brand and model of the item I’m looking for and then fine tune it based on the other qualifications I’m looking for. e.g. in the case of the shoes, I started with a search for “New Balance 757” and then refined the search with the shoe size, width, and maximum price I was willing to pay.
Exhibit Patience. This is the part that some people find to be really hard, but that I find comes pretty easily. I wait. I check the saved search every two or three days (auctions can be run in 1,3,7, or 10 day lengths, but I’m willing to miss a few of the 1 day auctions) and add items that look like good possibilities to my watch list. I then sort my watch list by the auctions that are ending soonest, and will place a bid on the first one for the maximum that I am willing to pay. That usually involves figuring out how much shipping will be, subtracting it from the max I’m willing to pay and then bidding the remainder.

Using that method, I can usually get an item that I want at a price that I want. Being patient is key though. Sometimes it can take me weeks to finally win an auction. In the example I used above (shoes), I think it took me about 3 weeks to get a pair of shoes that I wanted at the price I wanted. In the end, I paid just under $60 (including shipping) for a pair of shoes that I would have paid about $125 for at a retail shoe store.

Is the savings I got worth the time I put into it? If you break down the savings and figure out an hourly savings based on the amount of hours I put into getting the shoes, it would probably not be a very good rate. Below minimum wage for sure. But, for the most part, the time I spent on it is time that I likely would have wasted on watching TV or something anyways. In other words, it was non-productive time and therefore had little monetary value associated to it in the first place. I got a new pair of shoes, and saved money doing.

Are you a patient purchaser? What are your methods for buying bigger ticket items?

img credit:gemb1 on Flickr

Lending Club Update 4Q2012

January 16, 2013 By Shane Ede 6 Comments

Now that the year has ended, and the new one has begun, it’s time for another Lending Club Update. (Here’s the link to the 3Q2012 update if you care to read it.)

A couple of significant things happened in the final quarter of 2012. My account maintained sustainability and I stopped contributing to the account (temporarily). I’ll go over each in turn, but the first is a milestone that I have been waiting for, while the second was something that just needed to happen because of my personal financial situation.

Lending Club Account Sustainability.

What defines sustainability? For me, I’ve defined it as receiving in excess of $25 a month in principle and interest payments. My account first reached that goal in June of 2012, and has maintained it since. In August of 2012, it came close to dropping below that threshold, but managed to stay above. It seems to have settled in at about $30 towards the end of the quarter, so hopefully as that money is reinvested, that number will continue to increase.

The entire quarter saw the interest payments that I received rise to a little over $9 a month. I won’t likely get rich off of that, but it’s also not an insignificant amount on an account that has a total just under $800. The Net Annualized Return (NAR) that’s being displayed on the account homepage is up .4% to 14.48%, a number I’m happy with. There’s some argument over whether you should really use the NAR as a gauge of the account performance or not. I won’t pretend to understand most of it. 🙂 What I do understand though is that having exact figures is less important to me for this experiment than it is to have a standard metric to measure my results by. So long as the method of calculation remains the same, it should give me a general idea of how the account is doing. (I’m open to learning more about how some of this is calculated. Drop links in the comments!)

Contributions Stopped.

I stopped my contributions to the account in November. If you’ve been reading along with the site, you’ll know that we ended up having some financial difficulties at the end of October. As a result, much of the money that I was using to fund the account ended up getting transferred to my personal account to help dig ourselves out of that rut. It isn’t any reflection on Lending Club, but a reflection on my finances and the need to help keep the ship afloat. We’ve mostly righted the ship, now, so I’ll likely start putting some money back into this account sometime in the first or second quarter of 2013.

My Lending Club Portfolio

My portfolio remains strong. I still haven’t had any defaults. *knock on wood* While this experiment of sorts (it’s gone beyond that, I think) started in July of 2011, I’ve had my account at Lending Club since January of 2010. That’s a pretty long stretch to go without a default of any sort. You might recall that I sold a loan that had gone delinquent in the 2Q/3Q 2012 area. I also had a second loan that had gone late, but it eventually was made current. Currently, my portfolio has 42 loans in it. All of them are current. It also has 13 loans that have been paid in full. Of those, perhaps about half have been paid off in advance. That’s both good and bad. I like that they’ve paid them off in advance because it seems to show that the borrowers are perhaps getting their finances together. It’s bad, because I lose out on some income from interest when they pay them off early. One of the risks of this income stream.

I’m still not able to directly invest in loans, and still have to invest through the FolioFN platform. It’s still not ideal. But, until my state (North Dakota) pulls their head out, and starts allowing it, that’s what I’m stuck with. I’m not holding my breath. I’m not going to complain too much, as I do seem to have found a pretty good method for selecting my Lending Club notes, and it seems to be working.

How are your investments starting off the new year? How’s your Lending Club (or Prosper) account doing?