One Giant Leap Backwards

Well, as is my sporadic custom, I have decided to update you all on the state of my Networth and my Prosper Experiment.

Without further ado,


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And Prosper:


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On the positive side...

1. Prosper is humming along nicely. I have successfully deployed all of the available cash from the loan into higher yielding loans, at an average interest rate of over 23%.

2. My TSP, Roth IRA and FolioFN balances are doing well, thanks to regular contributions and a phenominal stock market right now.

3. Regular payments to mortgage, car loan and credit cards continue to reduce the balance due on those loans, and additional principal payments are helping to pay down these balances at an ever increasing rate.

On the negative side...

1. Balances on the "main" credit card have significantly increased since my last post, due to scheduled maintenance on Elissa's car (prevention being theoretically cheaper than a future cure) and the purchase of some large ticket items. Specifically, the 42" Plasma screen TV that we purchased because:

a. We (and by we I mean I) have always wanted a big screen TV.
b. Our current TV did not have the necessary inputs/outputs to work with the surround sound system properly (close-out deal on display model at Sears, last years model, marked down from $700 to $150).
c. It was a phenominal deal. Retail price for the TV was $1300. Bought a returned/opened item for $1170. Recieved 10% discount for using first purchase on a military star card (reducing price to $1052). Recieved CREDIT to star card of an additional 10% for no apparent reason (reducing price further to $945). Military star card also running promotion of 6 months, 0% interest on all electronics. I can totally pay off $945 in 6 months.

2. Account balances at TFCU have dropped to dangerously low levels (at least as far as my peace of mind is concerned). This is primarily due to the purchase of a new entertainment center and armoire to house the new (and old) TV's, as the existing entertainment center was inadequate to the new TV, and inappropriate for the old TV (now relocated). Still, this was a one-time purchase that will not have to be repeated any time soon. This furniture was also bought on clearance from Wal-mart for $440.

3. Elissa's savings accounts have dropped due to her birthday trip to visit her family. She bought lots of things for herself and generally had a great time...which is the purpose of saving up for vacations, so I'm not going to complain on this one. She did, however, spend $155 on an area rug for the new entertainment area of our living room, so I will choose to add that into the overall cost.


In the end, we got a 42" TV with all the bells and whistles, a 5.1 stereo surround sound system with 5 disk DVD player, HDMI cable, huge area rug, TV table, two media towers, an end table and an armoire which combined retails for about $2630 plus tax for only $1700.

I couldn't pass up that kind of deal...not when it's some things that I have wanted for 4 or 5 years now. So...even though it wiped out the last 4 months worth of progress towards becoming debt free....I still think it was worth it, because I got great VALUE for my purchases.

~A Reading from the Tao of Scott

Prosper January Update

Well, here we are...about a month after I first requested a Prosper loan for $1500.



As you can see, I've been doing my best to get the money deployed and earning interest. It hasn't been easy though. There aren't many quality loan requests out there, and even if I find good ones, it is taking FOREVER it seems to get a loan to go from "Winning" to "Pending Review" to the "Current" and earning interest category.

Still, it's nice to see that all 16 of my loans are "Current" right now. I've only had one hiccup so far, and she not only fixed the problem with her account, but made an early payment to make up for it. :-)

I'm still trying to stick to the $50 per loan guideline...but when you have $11 extra dollars left in your account from payments, waiting for another $39 to accrue isn't much fun. So, that's why I have one loan out there that is $53.86, and another bid on one that is $61.86...because I didn't want to wait for additional funds to be available.

I'll keep you posted!
~Scott

Establishing a self-sustaining Prosper loan ladder

Well, it's official. I've gotten the $1500 Prosper loan applied to my account, and I've managed to deploy about $900 of it so far on bids. Time will tell how many of them become winning bids, but for now, my screening criteria seems to be providing me with at least a few quality loans to bid on.

Right now, everyone is getting a bid of $50. This is going to be the default amount bid until I reach a point where I can't find enough loans to bid on for all of the income that is coming in from payments. I'm thinking I'll probably have a flurry of bids for the next two or three months until I get all of the money into play, and then it will settle down back to one or two bids per month again. The other consequence of bidding as much as I am now is that my average rate of return will probably drop. On the other hand, my risk adjusted rate of return will most likely rise, as I am now able to bid on a slightly more diverse range of credit grades. For example, I would bid on a "C" credit grade all the way down to 15%...but I'll probably get the loan at around 20%. That gives me a risk adjusted rate of 16%...4% more than my required minimum, and approximately 8% higher than the loan I took out from Prosper to re-lend.

I'd consider that to be pretty damn good. :-)