2013: A year in review

It’s that time of year when we start looking back over what has passed and what is up next on the list.  New year’s resolutions, absolutely hate them.  But, at the same time, we need to constantly make goals in our lives and push to attain them.  Just about a year ago, I set up some extremely aggressive goals for myself, trying to make 2013 a year of drastic but positive change.  Let’s take a look at how I did:

I'm pretty sure I'm the guy on the right here

I’m pretty sure I’m the guy on the right here

1.  Positive Net Worth – Technically, I hit this back in August.  Around the same time, I also made the decision to purchase a big shiny thing.  That set me back a bit unfortunately.  It ate into my savings and some of my investments but overall, totally worth it.  I’m going to have a positive net worth after January most likely (less than $1k to go) and should be easily growing this month after month from here on out.

2.  Begin really saving for a house – Well, I’m saving money.  I guess we can say it’s for a house.  But most likely, it’s for a wedding.  An overly expensive wedding!  Bah humbug to spending money.

3.  Pay off half or all of my car loan – Hah, this was crazy talk.  I paid off about 20% of my car loan this year.  I got it refinanced and started paying a bit extra.  Overall though, I decided that investing was a better use of my money than just paying off the loan.  It’ll be gone eventually, sooner rather than later, just not as aggressively as what I originally thought about yesterday.

4. Take better care of myself physically – Yeah, I think we all know how this is going.  I have started to eat better and work out more but hurting my back has definitely thrown me for a loop.  It’s bad enough that it’s going to take another few weeks for me to get back to being able to move heavy objects around but hey, it’s a marathon not a sprint.  As long as I can get back to it, I’ll be fine.

So, if we were to make a count here, I’d say I hit 1/4 of the above goals.  Not good at all, although with two of them changed midway through the year to something entirely else.  Hopefully, I can make some adjustments in 2014.  Right now, I think 2014 is going to be a great year with big events and big changes.  How did everyone else do with their goals in 2013?  Hopefully everyone accomplished some of them!

The B of A experience: Resolved

Last week I posted about how Bank of America seemed to be messing with me.  It was more frustrating than usual and I honestly was about to take my business elsewhere.  I decided that rather than spending time in the brick and mortar branch nearby, I’d call up, have them transfer cash from my checking into the savings to give it a zero balance and then close it.  I figured that this would probably save me considerable time and paid, as opposed to getting them to refund the fees, admit they were crazy, etc.  It was less than ten bucks so overall, not too much money to lose to get rid of an extreme hassle.

Turns out, I was a bit wrong about Bank of America’s customer service reps.  When I called in (to the same number that previously had me speaking with someone for an hour just to get nothing accomplished) I got an extremely helpful representative, Alex, who was able to fix the problem in less than ten minutes.  Less than ten minutes!  In fixing a problem with an account at a major bank.  I was never even on hold!  Consider the fact that Bank of America also has issues related to the recent credit card fraud at Target and has a call volume going into their centers that is way above average and it makes it that much more amazing that I spoke with an amazing representative and was never once on hold.

Because she took care of the problem so quickly and efficiently, spoke to me like she actually cared (as opposed to script reading) and just made me like the bank a little bit, I actually had her transfer me to her manager.  Now, I never do this.  Even if I’m having a bad time, I usually refrain from talking to the manager because it is rarely the fault of the person on the line.  And since a great experience while calling into a help line never happens, I’ve never had the opportunity to speak to a manager for positive reasons.  So, Alex transferred me to her supervisor and I told him how she did a great job, how the last time I was on the line for an hour and nothing was accomplished and that I really appreciated her work.  At this point, he told me something I didn’t expect: she was going to get a small bonus because of my positive comment.  Apparently, when people get positive comments to their managers (and she never even solicited me for an opinion or a survey, this was me doing it on my own), the reps can get little bonuses, gift cards, etc.  I was so psyched that my comment was going to ensure that someone got a little something extra right around the holidays.

It’s rare when dealing with banks that we have good experiences.  Most times you just see people writing about awful experiences (like me) and never about the good.  But it’s important to remember that when we do have the good experiences, we need to acknowledge them and the people that help make those possible.  If we don’t, then those people won’t be rewarded for helping and we’ll be left with the dregs of the customer service world.  And that is absolutely something I don’t want.

Just to give everyone a heads up, there will be no post on the 25th.  It’ll be Christmas and I’ll be sleeping in.  But stop by on Friday, as we will have a recap of the past year and how we’ve done on our goals.  Happy holidays everyone!

Opinion: Bank of America may be screwing with me

Ah, Bank of America.  My old nemesis.  Always trying to best serve browbeat its customer base.  And of course, with me being laid up, hurting, busy with the end of the year rush, they choose now as a time to really mess with me.  Just in time for the holidays!

You can't fool me with that patriotic spirit!

You can’t fool me with that patriotic spirit!

You see, back in August I decided I wanted to simplify my bank accounts.  I had a checking (chequing?) account with B of A, a savings account with them and a savings account with ING (now Capital One 360, affiliate link!).  The checking account and the ING account were both fine and well.  No fees, served a purpose.  But the B of A savings account was rubbish.  The interest rate was 0.02% and I had to maintain a balance of $500 in order to not be charged a $5 maintenance fee (what exactly went into maintaining an account where they got free money?).  Like I said, rubbish.  So I went to the bank, filled out some paperwork and got it closed.  They transferred everything to my checking account and the savings account disappeared from my online account setup.  That is, until Saturday.

On Saturday, I signed on to the B of A website to check my transactions, some transfers that needed to be made, etc.  And lo and behold, there was my savings account.  The one I closed four months ago!  With a negative balance from four months of fees!  Well, what do we have here?  I immediately called the help line and spoke to someone who tried his best to be really helpful.  As it turns out, I originally had this thing called “keep the change” with B of A.  When I would use my debit card, it would round the transaction up to a whole number and send the difference (the change) to my savings account.  When I closed my savings account, they canceled this program.  Since I wouldn’t have a savings account, there was no way the program could work.  Or so I thought.

Even though we canceled the program, some parts of it, somewhere in their system, were accruing and just waiting.  Last weekend, the $3 that had been just sitting around forced its way into my closed checking account, reopening it and causing it to be hit with numerous fees.  Fees for having a negative balance, maintenance fees, not fixing the negative balance in a timely manner fees.  Fees, is what I’m getting at here.  There were some.

So when I called in, I obviously wanted these all taken out and the account closed.  Like I said, the person helping me (Customer Service Rep ZK6F1SX, they have numbers to identify them) was awesome.  We went through what happened, figured out the problem, and tried to fix it.  Except, nope, couldn’t be fixed over the phone.

Apparently, the phone reps are only allowed to make changes to things that have happened in the past 30 days.  This is to help protect Bank of America from fraud.  It means you have to go into an actual branch office and talk to a real person to get this sort of stuff fixed.  To be honest, I actually understand this.  They want you to sign some stuff in person, get to know you, try to build a professional relationship.  Here’s the problem: my back arggggh pain.  While this can be fixed (and it will) I’m still just extremely frustrated that I have to go back to B of A to try to close this account.  Again!

Who else out there has had problems with their bank?  I know that some banks are better than others and some are downright crazy.  Let’s hear some of your stories!

 

Picture courtesy of Adam Fagen

So I threw out my back

I just turned 27 a few weeks ago.  Apparently, my body decided to follow up this milestone by putting me in excruciating pain.  Yup, I threw my back out moving a Christmas tree.  Because hey, it’s the holidays!  Why not right?  This isn’t the first time this has happened.  I hurt it once in college and again about two years ago.  But this time it’s way, way worse.  Both of those times it was a tweak.  Sharp pain but I was still functional.  This time is really, really bad.  Yesterday, when it happened, I actually couldn’t walk without assistance.  The pain was at a 10 all day.  Today, I’ve been slowly working my way back.  I’m able to move, I’ve been doing very slow stretches and I’m drinking a ton of water.  I also went to the chiropractor.

Ah yes, the chiropractor.  A whole new place for my money to go.  Unfortunately, the chiropractor isn’t covered by insurance.  Also unfortunately, the chiropractor costs $75 an hour and has already asked for me to come back in this week.  Jeesh.  It looks like I’m giving myself a $150 Christmas gift here.

The bad thing about all this is that, while yes, it could have been prevented if I bent my knees more, it’s not like I’m in bad shape.  I’m not in amazing shape, don’t get me wrong.  But from a strength level, my core is actually pretty good.  Or was pretty good.  Really though, this just was a terrible thing and it happened at a terrible time.  With the holidays around the corner, long drives for some work events and my mother and sister out here for a week, I’ve got a lot on my plate coming up.  Being fairly incapacitated is definitely not going to help the situation.  Hopefully I can push through this and get better much quicker than anticipated.  On that note, I’m off to stretch, put some heat on my back, and hopefully not be in excruciating pain.  Until next time!

Peer to Peer Lending: I kind of love it

I’m in the early stages of building out a Lending Club portfolio and I freaking love it.  This is seriously a great concept.  I know a couple people who have used it from the debtor side to refinance credit card debt and it seems to really work!  If you’re on the investment side, it’s absolutely awesome.  Sure, there is risk of defaults and losing your principal but overall, I’m really impressed so far.

Right now, I’ve had $1000 in my Lending Club account for just over a month.  In that time, I’ve earned $8.25 in interest.  Significantly better than my Capital One 360 account (Affiliate Link! Open an account and I will in fact get paid.) but significantly more risk.  My savings account is FDIC insured while Lending Club loans are just that, loans.  What’s more, they are unsecured loans.  This means that if the customer goes bankrupt, Lending Club and the investors in the loan cannot go and try to take any specific assets from the debtor.  You see, there is a hierarchy of loans.  The secured loans, held by a bank, are typically first.  The bank holds a the mortgage on your house or the loan of your car.  That means the loans are secured by those debts.  Credit Cards, like Lending Club, are unsecured debts.  This is one of the reasons for the super high interest rates on credit cards, as well as some of the higher interest rates on Lending Club.

So Lending Club is pretty risky.  You’re basically reviewing individuals credit scores, work history, incomes and trying to figure out if they are going to be able to pay or if they are going to default.  The lower the credit grade from Lending Club, the higher the likelihood that the loan will default.  It’s one of the reasons you could build a portfolio of loans that are all at 20% but Lending Club will estimate you’ll actually only make 12% (still a fantastic return in the long run).  But there are ways, of course, to make a better return.  If you’re up for a challenge, you can download statistical data about every loan Lending Club has ever disbursed.  It will tell you everything about the borrower and then what happened to the loan.  You can search the parameters and find certain high interest rate segments that tend to not default, giving you a better long term rate of return.  It’s kind of like a game, except you make money off it.  Who ever said that degree in Economics and the passing grade in Statistics was never gonna be useful???

Ohhhh Pens!

Ohhhh Pens!

Before you get into actually investing in Lending Club, here are a couple of things you should know:

1.  Never put more than $25 into a loan.  The minimum amount you can directly invest in a new loan is $25.  It’s my personal opinion that you don’t invest more than that. If you do, it’ll make it more difficult to potentially sell on the open market, FolioFN.

2.  Never buy multiples of the same loan.  In loan portfolio theory, you want good diversification among loans and credit scores.  If you buy multiple loans from the same source, the expected default frequency (EDF) of your portfolio will go up, potentially decreasing your returns.

3.  Don’t buy only the low grade notes.  I’ve seen some people make this mistake and ultimately get burned for it.  While my portfolio is pretty heavily skewed towards the higher interest rate loans, I still have about 40% of my portfolio in high grade loans that yield between 6% and 9%.  The reason for this is protection.  If I only had the worst rated credits in my portfolio, I could expect a default rate of probably 20%.  Instead, I’ve weighted it using certain criteria, as well as some advanced statistical analysis and backtesting, so create a portfolio with a less than 4% EDF.  The yield of the portfolio, even with this EDF, will be about 15% when it’s all said and done, giving me a good rate of return even with 40% of the portfolio in high grade notes.

4.  Always look at the story behind the loan.  Does it seem believable?  Are they refinancing their credit card or are they building an addition on their house?  Is their income verified?  Do they have a job?  How long have they had the job?  You should know all of this before you purchase a loan.

I think that Lending Club is going to become a fun segment of my investment strategy.  It’s a bit more active than some of my other investments and, oddly enough, I really enjoy it.  If you want to start out but aren’t sure what to do, feel free to send me an email. I can walk you through the setup process or point you in the direction of some good literature focusing on the topic.  Until next time!

 

DISCLAIMER:  This post and any comments are not legal, investment, or professional advice.  Depending on which state you’re in, this post may be useless to you and will probably suck to read (sorry Texas).  You’ve been warned

Why are weddings so expensive?

So it turns out weddings are super expensive.  We’ve already talked a little bit about why wedding planning sucks and the average cost of weddings in the US but now that I’m fully ingrained in the process, I’m seeing a bit more of the nonsense than before.  In this day and age, I’m used to looking up the prices of whatever I want online.  Want to compare prices of surf lessons?  Not a problem.  Skydiving quotes?  On it.  Cost of wedding venues?  Hah, forget about it.  Most wedding venues do not put cost information online.  Neither do caterers.  Why is this?  Why wouldn’t they want people to be able to find out more about their costs?

Because we’re young, dumb and in love!  That’s why.  The wedding business is a big business, $50 Billion a year in revenue, and thrives on the lack of information and efficiency.  Most of these places don’t want people to be able to know the itemized costs without meeting them.  Some places like to adjust the costs based on the people that are getting married.  Some places even make you fill out a form that includes your yearly salary.  All of this so that they can size you up and figure out how much you may be willing to pay.

Now, I’m not saying that all wedding venues are bad.  The truth of the matter here is that the wedding industry has one fantastic advantage over other industries that stands out among all else: almost everyone is a first time buyer.  You may be a great negotiator but if it’s your first wedding (and it likely is), then you don’t know where the best areas to push people are.  Maybe it’s the flowers.  Maybe it’s the chairs.  Maybe you need to hire a coordinator (more money) and let them deal with the vendors to get the best prices.  Everything costs something.

Another big problem is just random fees that seem to appear.  Maybe a caterer charges $40 per head for food, plus tax, plus service charge, plus gratuity.  So $40 a head can quickly turn into $60 a head (although a good budget SHOULD account for tax and tip.  Who knows what this service charge is).  Maybe the place is great, has a food and drink minimum that’s in your budget, great band, perfect view.  Then, boom, rental fee.  Some places charge a separate fee for the location.  Normally, this is fine.  I’ve seen them range from $500 to $2000, all of which makes sense to me.  It’s your place, might as make some extra money!  But sometimes, sometimes, the fee is outrageous.  I’ve heard of some places where the food and drink minimum can be north of $25K with a rental feee over $10K put on top of that.  At that point, things are starting to get ridiculous.

All I really want from any of these vendors is a list.  An itemized list of costs.  How much do the forks and knives cost?  Are linens included?  Is there cake (the answer best be yes)?  These are simple wishes and demands and as I trudge along, looking for a place that won’t send me to bankruptcy, I’ll be sure to keep you all informed.  I know that at least a couple of you are enjoying the oncoming insanity that seems to be brewing!

I'm just saying, Vegas wedding...

I’m just saying, Vegas wedding…

 

Photo courtesy of Andy Baker

No one is perfect

This year has been a pretty good year for me.  I managed to save up a good chunk of money, got a raise, bought an engagement ring and am on the right track financially.  So I’m feeling pretty good about myself.  Then I decided to do a bit of a comparison on my expenses in Mint.  Oh man, was I wrong.  In virtually every major category, I spent more money.  Every one of them!

Don’t get me wrong, I track my expenses.  I track every movement of my checking account, savings, etc.  What happened was lifestyle creep.  I just let things get away from me that really took a lot more out of me than I should’ve allowed.  Since we’re moving towards the end of the year and getting into goal setting mode, I think it’s time to take a look at the biggest problems with the budget last year, where we busted it the most and how this is going to change in 2014.

1.  Food and Dining

The year isn’t even over yet and I surpassed the amount spent in 2012 by over $2K already.  Dammit.  Almost $1500 of this was an increase in just going out to eat, despite trying hard to reign in that sort of spending.  The remaining $500 was all in groceries, likely due to my proximity to Whole Foods and all the awesome meats in the butcher there.  I guess there is a reason they call it Whole Paycheck after all.

So expensive but so good.  Decisions decisions

So expensive but so good. Decisions decisions

2.  Travel

I spent almost $3K more on travel in 2013 than 2012.  This is another super frustrating area.  Even though I know that I got good discounts on rental cars, flights and hotels, it pains me to see how much money I spent here.  One of the things I’m vowing to do going forward is to never pay for a flight if I don’t have to.  I’ve been following an amazing website, milevalue.com, for a while now and it’s absolutely incredible.  This guy basically figures out the best way to get miles for airlines without having to actually pay too much for them.  I’ll write more about this someday but yeah, I’m never paying for a flight again.  In fact, the Fiance and I are traveling to Dallas next month and, lo and behold, we used miles for our trip.  I had to do a bit of finagling to make it work but our flights ended up costing us $10 total.  Since we’re saving for the wedding, I’m hoping I can keep this category down a couple grand next year.

3.  Shopping 

So it turns out that, without having bought all my Christmas gifts yet, I have spent $2k more out shopping.  Normally, I would think this is deplorable BUT $1500 of this came from the purchase of my new laptop after leaving my old job.  You see, I only had one laptop (a work laptop) and had to give it back.  I really enjoyed the Macbook Pro and decided to get one for myself.  I know it will last a while and I can amortize the cost over a great while.  Additionally, the money for it came out of the vacation time I was paid out.  I know these are just excuses but, still, I did need a computer.  Wouldn’t be able to do any of my consulting or other online work without it!  The other areas that grew, well, no justification.  It may be time to turn off one click purchase at Amazon.  That’s all I’m going to say about that!

These three areas all blew their budgets big time in 2013.  Next year, I will have to be even more diligent about how I spend my money.  No more trips to Hawaii, no rental cars if I can borrow one, no new laptops.  By just by cutting out the excess spent this year I can save almost $7k next year.  If I can attack the base, from 2012, I could maybe save a total of $10K next year.  That’s half of the budget of the wedding!  While this isn’t a new year’s resolution, this is definitely in the mix for being one.  Until next time!