The silver lining

I haven't had a cashflow update for awhile, and there's a good reason for that. I'm moving to a new place, and I had to tap into my savings to come up with last month's rent, broker's fee, and new furniture. Needless to say, I must have shaved off $3.50 off my monthly passive income cash flow. Propser is still on hold as they go through some filings to open up a secondary market for their loans. I have 7 loans active, with 1 late (some real estate flipping loan...go figure), but my return is still pretty high there. There's $56.00 in cash, but I can't loan that back out because of that filing thing. So the only thing I've been able to mess around with is my Sharebuilder account.

I've made some bad decisions here and there. I bought 150 shares of Freddie Mac (FRE) when they were still going down. Lost quite a bit there. Bought 100 shares of Sirius XM (SIRI) since I thought the merger would be good for them and they are the only satellite radio company out there. Besides, they have that partnership thing with GM. But we know what happened with GM, and Sirius just isn't pulling in enough subscriptions. They have some debt coming up, too. So even though I bought cheap, I still managed to lose 75% of my investment there.

I have since made some longer-term investments. Bought 13 shares of Western Digital (WDC) with my BUD proceeds. So far that investment is paying off, but with 13 shares it's not a lot. Accounting for my commission costs, I made $12. I know...riveting. I also bought 50 shares of Fairpoint Communications (FRP). I think the company is pretty promising and I'm pretty excited about their business in Q1 of 2009 when they finish taking over Verizon's landline business up north.

Anyhoot, while watching the market and reviewing my holdings, I suddenly remembered that I had some stocks paying dividends. I didn't pay much attention to it before since I had some pretty measly holdings, but now I have 320 shares of stocks. So I did a quick look into my holdings and I'm quite pleased. FRE and FRP both pay about quarterly dividends of $0.25 per share. I'm not sure if FRE put their dividends on hold (I think GM did), but if both are still paying, I'm due for $50.00 per quarter. So even if my my shares aren't making leaps in gains, I can at least get some cash flow out of them. There's that silver lining.

FRP announces fourth-quarter dividend!

So after a bit of a hit with Freddie Mac (FRE) and Sirius XM (SIRI), I've been a bit more selective about what I put my money into. With the sale of Anheuser-Busch, my shares of BUD were liquidated without anybody telling me. Seeing how I didn't want my cash sitting there while the market was down. I threw the cash into Western Digital (WDC). They are a pretty solid company with good product offerings. Tech has been a bit volatile lately, being affected by the weak retail sales, but I foresee WDC holding its own for a bit. Solid-state drives haven't caught on that well, so HDD should be fine for now.

A while back, I had some meager shares of Verizon Communications (VZ). Somehow, when they spun-off their northern New England business into Fairpoint Communications (FRP), I was given a fraction of a share. A few days ago I noticed some movement, and after some research, I found that they are about done with their transition of business away from VZ to FRP. The price was low, so I went in for 50 shares. Barring any hiccups with the final stages of the transition, FRP should be fine in the short-run. They also just announced a quarterly dividend of $0.2575 per share. So holding FRP will give me $12.88 dividend income per quarter. Not too shabby, while I wait for their business to settle in. Volume on the stock is pretty low at around 120K, but FRP is still relatively unknown. It did make the biggest movers list on Motley Fool a few days ago, though!

Some thoughts on P2P lending

So I've been doing a bit more research on peer-to-peer lending sites, mainly Prosper and Lending Club. Basically, they are both pretty similar, but how they go about with the lending process is different. Prosper relies on an eBay style process with borrowers posting a listing and starting interest rates. Lenders bid and lower the interest rate until time runs out. Decisions are based on info borrowers submit to Prosper. Lending Club reviews information as well, but their lending process is different. Borrower listings are assigned a credit grade based on information that includes their credit rating, DTI, etc. Then an interest rate is assigned. No bidding. Kinda more of a Buy it Now approach.

There was an article out there talking about the differences. The author had some investments with Prosper, and although Prosper uses a different approach in terms of the borrowers' credit rating, he attempted to figure out what interest rate he would've received if he invested in a similar loan on Lending Club. He concluded that lenders would probably receive a higher interest rate at Lending Club, while borrowers can take advantage of the larger lending base at Prosper and receive a lower interest rate.

Now does that mean I should stop my investments at Prosper and move my money to Lending Club when it gets back from the loans? I don't know. Maybe I'll do better at Lending Club. Or maybe I won't. But right now I'm averaging at least 20% return with my 7 loans. So far Prosper doesn't seem to be going down yet, and there is an abundance of loans to bid on there (although things are locked while Prosper tries to get registered to offer a secondary market for their loans). Also, cash that gets repaid and haven't been reinvested is held for me at a Wells Fargo account with FDIC insurance. So, I hear some bad things out there, but I haven't been burned yet. I think I'm gonna stick around on Prosper and keep feeling things out.

Good news/bad news about Prosper

I got an email from Prosper yesterday telling me they are registering their promissory notes with the appropriate parties so that they can create a secondary market for their lenders. What this means if this passes is that lenders can sell their portions of a loan to get cash back prior to loan maturity. Say you have $200 stuck in loans and you really need it, but the loans don't mature for another two years. Sell that in the secondary market and get some of it back right away. That's pretty good news in that it creates some liquidity in the Prosper community. It turns out this was what Lending Club was doing when it was not accepting new lenders. So Lending Club, it seems, is ahead of Prosper.

Now the bad news is that Prosper has been making some pretty disturbing moves, including contradicting their own legal agreements with their own borrowers and lenders. According to some sources, their default rate is pretty high as well (35% for loans originated from June 2007 on). Personally, I'm not seeing this default rate. Either I picked my loans well or I'm just plain lucky. But I have $300 invested and I have $30+ in returns. I've been lending since October 2007, so you can quickly say I got 10% return. However, my loans did not all start in October, so it's probably closer to mid to high teens. I don't really feel like calculating it all out, but I'm definitely sure I'm getting a much better return than in the stock market (I'm getting negative return right now).

Now since Prosper is in a mandatory "quiet period", I cannot make new loans. This period will last until their whole registering their promissory notes thing is finished. I guess what I need to do now is decide whether I should stick with Prosper or just let the loans mature (or sell them in the supposedly upcoming secondary market) and switch to another peer-to-peer lending site like Lending Club. As I've said before, I have had not problems with Prosper, but a quick search definitely shows concerns regarding Prosper. I need to do some research and check up on Lending Club as well. Peer-to-peer lending has kinda been frowned on, but it's been such a great investment for me this past year. We'll see how it goes. Who knows? Maybe I'll find another area to invest my small Prosper funds in.

Dow is down...AGAIN.

O...M...G...

My portfolio and 401k are bleeding money. I thought the bailout was supposed to help. Good thing I don't need that money anytime soon.

"The goggles...they do nothing."

Senate votes on a revised bailout plan tonight

So, I got into work this morning and found out that the Senate will vote on a revised bailout plan tonight. This new plan will increase the amount that is currently insured by the FDIC, so that would be good. However, this new plan will include a package of business and energy tax breaks that the House of Representatives originally rejected. So now, even if the Senate passes this plan, the House might still reject it. We're just gonna see what happens today.

House of Representatives rejects $700B bailout

If you haven't heard already, the House of Representatives rejected the $700B bailout plan that was tentatively hashed out over the weekend. So hang on hard for this economic crisis to drag on a bit. Most the representatives voted against the plan (228 - 205) due to lack of confidence in it and that the presidential election is so close. Neither party wants to be faulted if the bailout fails (For the record, the majority of Democrats wanted the bailout while the majority of Republicans didn't).

What does this all mean for us? Well, for the taxpayers out there who were worried they'd have to shoulder the $700B bailout, they don't have to worry about that anymore. But with Washington Mutual failing last week and Wachovia pretty much pimping themselves to Citi, I'm gonna take a guess and say that a couple more banks will fail. The frozen credit market will get more frozen. People will find it harder and harder to get funding for houses, cars, etc. Companies will have a hard time getting funding to do business (including paying employees). Sure this is all a wild guess. But at the moment, anything is a wild guess.

Critics of the bailout plan stated the plan did not address job losses and other stuff. And I know the plan does not touch previous contracts that grant "golden parachutes" to executives of companies that seek bailout. But I still feel we should do something instead of waiting for things to turn around. I agree that the billionaire executives have to be held accountable for the companies that they drove to the ground, but to say no to a bailout plan because we don't want to be the ones to fix it is pretty silly. It's almost NIMBY-like, if you ask me.

Oh by they way, stocks plunged when it appeared the bailout would be rejected. The House held the vote open for an additional 40 minutes, even pointing out markets were going down to convince the nay-sayers to switch votes. But of course that didn't happen. Anyhoot. At the current moment, no bailout plan = shrinking 401ks, IRA's, investment portfolios, etc. If I were you, I wouldn't look at your retirement plan. Let's see what happens when the House votes again.

Market's not looking any better

After seeing my newly purchased shares of Freddie Mac (FRE) go as high as $2.95/share with the market on news that a bailout might pass yesterday, stocks fell as the day wore on with no announcement of a bailout. FYI, FRE closed at $1.85/share yesterday. Ouch. Then I went home and watched CNN before bed. What good news there huh? Talks among the President, Treasury, and party leaders left the bailout situation worse, with the Dems accusing Republican presidential candidate John McCain for messing up what was to be the bailout plan. And to add salt to the wound, Washington Mutual went down yesterday.

Markets are down on this new situation, but I'm thinking things will be better once another bailout plan is put together again. Some think it can be as early as this weekend. We'll see about that.

Bought some more FRE

I couldn't help it. I was checking on the market and noticed that Freddie Mac (FRE) has nearly doubled in price. Based on what I've read, I still think FRE has the potential to go up to at least $3.00/share. So I bought 100 more shares. Not a lot. It's about $253 worth. Again, I don't want to put too much money in. The market is trading higher today though. Investors are really betting on the government doing the $700B bailout for Wall St. So confidence is pretty high right now. Let's see what happens.

Following the market again

So with all this volatility in the stock market, I'm following it a bit closer again. It looks like people are selling off shares of AIG to recognize the gains from last week. Share prices are down to $4.30 (but still a pretty good return if you had bought it last week at $2.20). Last week, I kinda thought the peak would be around $5.00 anyway, so this drop made some sense. I also peeked at a headline mentioning that AIG has officially accepted the $85B loan from the Fed. I would think this would push the stock up as it means AIG has time to restructure and possibly sell off some of its business. But then again, I did hear that the $85B loan has a pretty high interest.

Yesterday, I sold off my measly shares of Verizon and threw the proceeds back into the market. I got 50 shares of Freddie Mac ($1.37/share). I have a feeling they'll do okay with the government holding them. It's not a big investment, but I didn't want to throw too much money in on a hunch I have, especially with this shaky market. It's not the same feeling I got with AIG. I also got 33 shares of Sirius radio. They finally merged with XM, so I think they'll do pretty well once they work out all the details and the dust settles. They were cheap too at $0.87/share. Again, no fresh money. Just some movement with my very small portfolio. I have more money in my Prosper loans than the stock market (not including my 401K, of course).

As of now, the biggest movers right now are Freddie Mac and Fannie Mae, so my call is right so far. Should I have put more money in it? Maybe, but I think I'm fine where I am.

Need to trust myself more

So I am really really annoyed right now. Last week, when the Fed announced they were going to bail out AIG, I peeked at the stock price and thought, "Hmm...it's a great deal right now, and the general public will most likely invest in AIG with news of this bailout." It was at $2.20/share. I wound up not putting any money down and instead just made a pick on the Motley Fool, an investing website. Well, last I checked today, AIG was at $4.81/share. W. T. F.

Why am I annoyed? Well, I thought about putting some money down and ride it for a bit. With $85B in the bailout loan from the Fed, AIG has 1-2 years of breathing room while they sort things out. With the market the way it is, 1-2 years of "stability" is pretty attractive. So, let's see what would've happened if I put in $1,000. That would've bought 450 shares of AIG (minus commisions). If I decide to sell today and manage to hit it at $4.81/share, that would've meant $2,154.50 in proceeds (minus commissions). That's $1,154.50 capital gain (yes, there will be taxes) from about a week of holding the stock.

What makes this more annoying was that when it hit $3.30, I thought about going in again. You know, $1,000. That would've been $433.00 capital gain. Oy. What can you do? AIG could still potentially go up, but I don't think it's worth it now. Besides, it takes a bit of time for me to transfer the $1,000 over to Sharebuilder, so I guess it really didn't matter. Still sucks though.

Bid update

So the loan I bid on a couple days ago at Prosper ended at 22.00%. That's my seventh loan at Prosper. In a month or so, I should be seeing some cash flow there. My portfolio at Prosper is looking pretty good. My previous six loans are still current. Two of them are actually paying at an accelerated rate, so I might have two paid off loans before the three-year mark. In fact, it's because of these two loans that I'm getting cash back as fast as I am. Granted, this does cut into the amount of interest I make on those loans, but it feels nice to have cash back to make extra loans.

I'm still thinking I should limit my investment in Prosper until I feel confident in their stability. I haven't been following the situation over at Lending Tree, and I haven't heard much news about Prosper doing bad. However, the initial reviews from when Prosper started does make some sense. The good news is that three years for Prosper is coming up next February. So we'll see how it all goes then. In the meantime, I'll keep reinvesting what I have back into Prosper. The high rate of return is still very appealing, especially with the state of our economy right now.

Another Prosper loan

After a couple months with no new loans at Prosper, I made a $50.00 transfer and bidded on a B-credit loan. It is currently at 32.00% with about a day and a half of bidding to go. I wanted to load up on a relatively risk-free loan, so I put a minimum rate of 19.99%. This way, I have a higher chance of getting it without diluting my average rate of return too much. If I don't get it, I'll just look for another lending opportunity.

Last I left off at Prosper I had $250.00 (now $300.00) invested with six active loans (one funded with money that was repaid). I currently have about $20.00 repaid again, so when it hits $50.00 again, I will reinvest and add another loan. I hope to continue to add more loans to increase the cash flow there. I'm still keeping a close eye on this Prosper situation. With Lending Club not accepting new lender applications, I'm wondering if Prosper can be sustainable. I've read an old article from when Prosper started that questioned whether the servicing fees are enough for Prosper to sustain themselves. Prosper started in February 13, 2006, so it's not even three years old yet. So none of the current lenders have had a loan mature yet.

I'm sure it'll be fine as it seems there is a continuous supply of loans and lenders that bid on them. As long as people continue to borrow and lend money, Prosper should be fine. And at the moment, I only have $300.00, so I'm not exactly losing my life savings if Prosper goes down.

Reviewing for Epinions

Having been on Epinions for a while and having made $25.00+ there (not a lot considering how long I've been there), I notice that you have to keep submitting reviews to keep the income rolling in. Eventually, old reviews get less productive as less consumers look up reviews to purchase an old item. So you can't exactly just write a bunch of reviews and sit back. I'm up to about 13 reviews since I've been a member.

There's also certain areas that tend to be more productive. It's actually quite obvious if you think about it. People tend to search for reviews on electronics and recreational items. So my reviews on hiking backpacks, bluetooth headsets, cellphones, cameras, etc. tend to produce more revenue. While my reviews on simpler items such as watches, starter guitars, and RAM tend to produce less. One other thing I noticed is that certain reviews are sold to other sites. When I Google my screen name, I find my Epinions review on other merchant sites. This must be Epinions trying to maximize their revenue on user-produced content. This is also good for reviewers as their reviews get more views.

Anyway, if you are on Epinions, you really need to keep reviewing items. I suggest using your item for a bit before writing. And write well and organized. That way fellow reviewers will rate your review higher and it'll appear higher on Epinions searches. Some veteran Epinions reviewers have hundreds, if not thousands, of reviews to their credit. Whoa...

Cash flow update - $168.80/year

Just did a quick check on my accounts. Average passive income cash flow is now at $168.80/year, up from $143.88/year. Monthly, this is $14.07/month versus $11.99/month. Most of this increase again is from my Prosper and ING accounts. Not much increase anywhere else. I haven't actually been doing much lately in terms of trying to increase cash flow. I just wrote a new review on Epinions for a knife I recently bought at REI, but that's about it. Anyhoot, that's it. I'll try to do a bit more and write about it.

$168.80/year or $14.07/month

Writing for money at HubPages?

I finally got around to doing some other things besides throwing money at Prosper. I did some research when I started this blog and I made some notes of some sites I wanted to get into to see what would happen. One of them was HubPages. It's pretty much a site where you write articles and post them, similar to Helium.com and Associated Content. I haven't checked out Helium and Associated Content beyond a preliminary assessment, but HubPages is cool in that you can add in your Google AdSense, Ebay affiliate, Amazon affiliate, and Kontera accounts. So there's a lot of potential for revenue sharing if you can drive the traffic to your site.

I think this would be more productive than Epinions, as Epinions is all about reviews, and reviews eventually become obsolete. Articles about how-tos or opinions have a longer shelf life and has the potential to be linked by people who like the content. So let's see how it goes. I pulled one of my credit tips from a post here and made a "hub". Go check it out!

Oh, if you haven't noticed already, I added a Digg! button to my blogs. I found a great tutorial how to do this, so for the link go to the links section at my personal blog.

Compounding interest, here I come!

I logged into my Prosper account this morning and saw that my cash balance has finally surpassed the $50 minimum bid mark at $51.34. It took a bit, but I finally received enough in repayments to bid out for a new loan without adding more money from my checking account. So right away I searched for some loans that fits my criteria.

I found a couple but eventually decided on a business that needed $6,500.00 to change all their warehouse light bulbs to fluorescent fixtures. Their old fixtures were 400watt bulbs, so they foresee at least a savings of $2,000.00 in their electricity bills. His DTI was average at 34%, and his income looked sufficient enough to support the loan. He was also at a C credit grade, so everything seemed fine. What was icing was that the loan was 3 hours from ending and it was still at 35%. I bidded a minimum of 21.99% to be conservative and was rewarded in the end. The loan ended at 25.00%, which should bump up my portfolio's average of 21.xx%. Pretty exciting.

So once this loan is approved by Prosper, I'll have 6 loans with a total original principal loaned out at $300.00. My personal investment, $250.00. Current value of portfolio is at $268+. I'm hoping to add some more funds in there to fund more loans and increase this area of investment. But I'm pretty satisfied at how fast I was able to fund a loan from repayments (It helped that one of the loans is paying faster than the 3-year plan). I should be able to fund another one soon too as this most recent borrower is looking to pay back the loan early as well.

Nothing much happening in the other areas. ING is growing slowly but steadily. Market's pretty rough right now, so nothing happening with Sharebuilder. Just the regular investment amounts.

Another Great Blog

So I was doing my daily reading and I found a pretty nice blog that detailed a man's 20-year battle with $35,000 debt. He has since paid it all off and the only debt he has left is his mortgage. It looks like a very decent blog with a lot of interesting topics and links. He definitely has a lot of stories to tell. Sure, everyone has stories, but having the time to write it down is different. I hope to put some of mine on here when I have more time as well.

I just came back from vacation, and boy did I spend quite a bit. I was reviewing my finances and I noticed a large jump in expenses. I was quite annoyed for a bit since that with my vacation added up to a large draw on my funds. But after doing some research, the expenses were things I couldn't have prevented or I had already accounted for. This is where having an emergency fund/extra cash tucked away is a great idea. I spent $200+ on new tires, when my front passenger tire went flat. I spent another $200 on a Nintendo Wii (haha, I'll admit this was a splurge, but I had $125 in Best Buy cash, so this hit could've been worse). I also have some extra fees from signing up for the gym, but this monthly expense is still lower than my kung fu class which I quit a couple months ago.

In any case, I was prepared for this spike in my monthly expenses and will spend the next few months building up my emergency fund again. I have avoided tapping into my cash at my ING accounts, so this situation played out nicely. I just have to spend less the next couple weeks (I've been cooking/preparing my own lunches to avoid spending during the week) and then work at saving again.

Prosper update

Just peeked into my Prosper account. Cash balance is approaching the $50 minimum much faster than I thought. I would probably be able to bid on a loan next month with cash that has been repaid from loans I made. This would mark my first loan made with repaid cash, initiating the compounding interest part of my Prosper plan. This is pretty exciting. I'll probably throw in another $50 after I get back from my vacation to speed things along, but with my 5 current loans, I'm getting a repayment every week or so.

Of all my little projects, this one seems to be moving the fastest. I haven't done other ambitious projects, but it's nice to see returns coming in. The loans I'm picking seem to be proving themselves. No one is defaulting, so that's good. I seem to be making good choices. Let's hope that there will continue to be good ones as I get more and more loans.

Keep track of finances with Quicken Online

So after having my laptop die and losing access to my finances on Microsoft Money, I decided I need a more accessible financial tracking system. I googled Money online and was directed to their MSN Money site - just a bunch of financial articles. I knew Intuit provides financial tracking via Quicken, so I search for Quicken Online. Voila! I find a beautiful online site where you can track most of your financial accounts - exactly what I need. So I sign up at $2.99 a month; not a bad deal when you consider Microsoft Money is $49.99. So I pay about $36/year. I like the peace of mind that I can access my finances even if my computer is down. I also love that I can access my finances on any internet-connected computer. Love it. So I'm in the process of transferring all my info over so I can take advantage of this new service. I have most of my things on there now, even things I couldn't sync with before with Microsoft Money.

In other news, my bid for that high interest loan I wrote about wound up losing. But it was for the better. The HR (high-risk) loan wound up at below 20% - a rate I'm not comfortable with for that risky a loan. So I bid on another loan for this guy that's funding his restaurant with personal loans. It was E credit, but Prosper wouldn't allow him to put his business credentials into consideration. Prosper is pretty strict like that, but that's good when looking at other loans. So I bid a minimum rate of 20.99% and I wound up winning $50.00 of the loan at 24.89%. So I'm hoping I made a good decision again and that I just added another $0.50 or so to my monthly cash flow for the next 36 months.

My other four loans are still current, so it's all looking good right now. I'm thinking in another few months, my cash balance from repayments would be over $50, and I can reinvest without putting more money in. Right now I have $250.00 in the Prosper system, but I plan on putting more in until the repayments allow me to bid on a loan every month or so. Even then, I might still keep putting money in so I can continue to increase my cash flow and take advantage of compounding interest.

Got my stimulus payment!

I got a call from my landlord last night telling me that my stimulus payment from the IRS arrived. So that $600 is here now. I remember saying something along the lines of adding to my Propser.com account to increase my investment income. I just can't remember if I said $50 or $100. My current cash balance in the account is $32 and change, so I think I'll just throw another $50.00 in there for now. Once my cash balance hits $50, I will reinvest that as well. So hoping to have a total of six loans soon. The more loans I have, the higher the portfolio income.

The only hard thing is trying to pick a loan with a high rate with minimal risk of default. I'm a bit impatient with things like this, so my search criteria is usually loans that are already funded with time remaining. I look between credit grades A-C and I read into what they are borrowing for. I check out their Prosper profile too to see what their DTI and other finances look like. It's a bit of work, so I'm off to do that now. And because I have the Proper ad on my Facebook profile, my transfer will be instant. Nice!

FeedBurner

I added FeedBurner support to my two main blogs. Taking something from the website I discussed yesterday, I decided to add a way for people to easily come back to this blog. Another way for me to hopefully increase traffic here. I went with FeedBurner, because it seems I can track the subscriptions and visits better. Not sure how to do that with Blogger. Google owns FeedBurner anyway, so it's not like I'm going with a competitor. So anyway, if you look to the right, you will now see a link to subscribe. So for my one reader out there, subscribe if you wish.

Flipping/owning internet real estate for passive income?

So I was putting in key words in Google to see what would pull up my blog (by the way "passive income project" now pulls up a couple of my posts on the FIRST page), and I found this cool little blog/site: http://www.netpassiveincome.com/

It pretty much tracks the deals of a passive income investor. He seems to be buying income-generating domains or highly-valued domains, increasing the monthly cashflow of those domains, then hope to sell them at a higher price while collecting on the cashflow. Sounds like a pretty cool idea, especially since brick-and-mortar real estate is not doing that well at the moment. I'm not going to jump into it right at the moment, but I'd like to do some more research and see how I can get in on this seemingly good business.

Cash flow update - $143.88/year

I went around my accounts and updated my spreadsheet for my cash flow tracker. I am now averaging $143.88/year, up from $118/year when I first started this blog. That's $11.99/month versus $9.83/month. Not a huge increase. Most of it the increase came from the routine deposits into my ING accounts which bumps up my interest income. My Sharebuilder account has a $10.00 deposit every 15 days. The dividends are set to reinvest, so that helps a tiny portion as well. There were also the two new Prosper loans two that I funded, although the most recent one only started recently and probably didn't bump up the averages yet.

My Google AdSense isn't really producing right now, and I haven't really done much to increase traffic to my sites. So I either need to increase traffic or start writing more blogs. I have read some other passive income blogs where the owner has 10+ blogs going, but I'm just not too keen on having multiple blogs to keep track of. I think I'm all set on the blog front. I have some other shelved projects that I can dust off and see where I can go with that. My cafepress.com account is sitting idle. I had some ideas about a online comic strip, but just haven't had the time to sit down and map out and draw the strips. There were also multiple website where you can submit articles and get paid a portion of ad revenue based on page visits/clicks, but I'm not a big writer, and keeping these two blogs updated is enough writing for me as it is.

I need to think a bit bigger and come up with other ideas. But here's the update for now:

$143.88/year or $11.99/month.

Sharebuilder update

I peeked into my Sharebuilder.com (formerly Netstock) account this morning. Since the account was started in my early college years, I had setup a dollar cost averaging plan for a few large-cap stocks I liked and yielded dividends. Due to some tight financial situations then, I stopped the plan and only turned it on whenever I had a spare $60.00 (the cost of my plan's investment including fees) lying around. So even though I started my account fairly early, the value is quite low for its age.

Since my finances have been settling a bit from a year ago, I started funded this account again a several months back. I have an automatic deposit going into my account on the first and fifteen of the month that totals $20.00 a month. I go in every so often to see if I hit the $60.00 mark so I can invest in some more partial stocks. Anyway, this morning I realize I was above $80.00 and went in to turn on my plan for a one-time transaction. While there, I noticed that there was an option to set it to automatically turn on every time I have enough funds. Seeing how it is always nice to have savings and investments be automatic, I opted for that instead. Now I won't have to worry about my money just sitting in my account and can relax with the fact that Sharebuilder will take care of it.

In terms of what stocks to pick, I don't really have enough money in the account to actually warrant a need to track the market and trade when needed. So I plan on sticking with the few large caps I have and let it grow a bit. The dividends are set to reinvest automatically too, but we're talking cents here. If and when it gets big enough that I can try to "play" the market a bit, then I'll monitor the market more than I am now and see what I can do. The large caps I'm investing in are pretty stable. In terms of more aggressive investing, I have my 401k doing that for me there. Five percent of my gross income at my regular nine-to-fiver is being put away in some funds I've selected.

New reviews, Prosper update

I finally gotten around to writing a couple of new reviews for my Epinions account. My last review prior to that was quite a while ago. So in the last couple of days I went through my head of stuff I've recently purchased and used. I wrote a decent one about my Olympus Stylus 720sw digital camera. Then while looking for a capo for my guitar, I found the guitar I bought and wrote a review for that as well.

In my experience, electronics reviews net me the most rewards, so I'm hoping the camera review will help me out. What's nice about Epinions is that my review is not just on the website. It appears they share their reviews with other merchant sites. I know, because I've seen my reviews on the comments/reviews section of merchant sites. It's fine with me, because it means more views for the reviews.

So the loan I bid on was accepted and approved. I now have four loans of $50 a piece for a total of $200 invested. Prosper says my average ROR is 20.26%, but I need to do my own calculations to be sure. I just haven't had the time to do it yet. But looks like my monthly cash flow should increase a bit.

Google search, Prosper

I was doing some searches on Google to see if this blog would pop up. It turns out if you search for "passive income project", this blog would be on page six of the results. Nothing too impressive, but nice to know this blog is popping up on Google search. I'm hoping this blog will eventually pop up for searches for "passive income." That would be tremendous, because there are a lot of pages and blogs that talk about passive income and being on the search results would really boost my traffic.

Now onto Prosper. The $50.00 I transferred yesterday went through instantly due to the Facebook application I installed on my profile. I'm not sure how it works or what motivation they have for it, but if you install the Prosper application (which is really nothing more than a small square ad), your funds transfers as low as $50.00 can go through instantly. This is pretty big since normally it takes four business days.

With the instant funds in my Prosper account, I bid on a loan that promises to be paid within six months instead of the three years a normal loan would take. Sounds a bit shaky, but his history shows he did that for his previous Prosper loan. His background and financials seem okay and the loan was at 33.5% when I bid. I'm hoping to boost my average return again, although I'm aware if he repays early, I won't get the full benefit of that rate. I feel having the money back early with a 30+% return would be better than a three year loan at 18%. Didn't work out the calculations, but it seemed better to me.

I'll see if I win the loan later.

Dental reimbursement, jacket sale

I received my dental insurance reimbursement check a week or so ago. It was the one I wrote about a few posts back that had expired. A simple phone call and it was reissued. And since I've paid for my cleaning and it's way in the past, it feels like found money to me. Expense has already accrued and I've already recovered from the hit. I feel like this will probably happen to me with my wisdom teeth extraction. I paid upfront and now I'm waiting for all the red tape with my medical insurance. Then I can send the bill to my dental insurance for reimbursement. That's actually quite a bit of money.

On another front, I sold my motorcycle jacket to my friend. I had sold my motorcycle earlier this year to help fund my replacement of my car (it was sad, but I had to do it, and it made more financial sense). Since I sold my bike, there wasn't much reason for me to keep my jacket. My friend had a jacket, but he liked the armor in my jacket. It's quite a flashy jacket too; check it out: Cortech GX-Air (2007) in silver and black. I didn't sell my pants or my gloves. I'll probably keep the gloves along with my helmet, for when I buy a bike again. It's pretty hard to sell a helmet anyway and my gloves wouldn't fetch a lot.

So after these two "windfalls", I'm up $200. I'm going to transfer 25% or $50 to my Prosper account for lending and keep the rest in my checking for future transfer to my ING accounts. I have a vacation coming up, so I've been trying to save a bit for the expense so I don't have to dip into my long-term savings or use credit. But anyway, I'm hoping that $50 will turn into another $0.50 increase in my passive income cash flow.

Something I might not have mentioned before is that Prosper loans are for three years. So as each gets (hopefully) repaid, I have to re-lend the money out to keep the cash flow up. Otherwise, I'll just get a return and nothing else. But since I won't need this money for quite a while, I plan on reinvesting all the money back into Prosper loans hoping to effectively create a compounding interest situation. My ING is doing that too, albeit at a more conservative rate. Well, ING is also FDIC insured while my Prosper money aren't, but stocks are not protected either. You need to take some risk to attempt to get more return. So the questions is, how risk-adverse are you?

Milestone! ...eh...Footstone?

Well, I finally earned something with Google Adsense! I've earned a penny. I know, pretty unimpressive. I just haven't managed to drive traffic to my blogs. The only links I have to these blogs are the blogs linking themselves and the links on my Facebook profile. I've also added a link to my squidoo profile as well, but my blogs do not pop up in Google searches yet. I'm not quite sure how to do so; I only know Google results are somewhat link-driven.

I'll probably start a more topic-oriented blog in the future when I decide on what to write about. That might get more people to find my blogs. And since I can use my Adsense account on multiple sites, I can easily add ads to that blog as well. But for now it's just this one plus my everyday one.

Nothing new with my other passive income "adventures". I haven't added any new money to my Prosper account, so no new loans there. ING accounts have a steady biweekly transfers, so I'll update at the end of the month when my interest earnings are accrued.

Managing Credit Cards

As you may know, the average American has consumer debt. Quite a bit actually. You see, the American education is great in a lot of ways except for one. No actually taught anybody how to handle their finances. In an age were high school graduates go into college with credit card companies knocking on their doors, the uneducated easily makes unwise decisions and winds up graduating from college with student loans and consumer debt. I am one of them.

I have since read a lot about personal finance and have taken steps to pay off my debt. It helped that I was interested in passive income ideas and that I majored in Economics (taking classes in Finance and Accounting helped a lot). The concepts of cash flow and credit management eventually helped me to implement the system I have now.

So what do I do with my credit cards now? I know some people cut up all but one. Some people leave their credit cards at home and use cash or debit cards only. Some even freeze all but one card in a zip lock bag so in order to use it, you have to wait for it to defrost, which can give you time to think over any impulse purchases. I think it is a waste not to use credit cards.

With a lot of credit cards offering cash back, miles, or rewards, one would be foolish to not take advantage of them. What you have to do, however, is treat it like a debit card. You have to remember any credit purchases must be paid back, and if you can't pay it back within the month, then you will just be giving free money to the credit card company. So what I do is, I keep one or two cards in my wallet with my debit cards. I revolve them every few months with the ones I keep at home to keep them active and reporting to the credit agencies (to build credit). The biggest thing is that when I make a purchase with a card, I remember to create a fake payment entry in my checking account to cover that amount. Next time I spend, I add to the amount of that entry. This gives me a true value of my checking account and prevents me from over spending. When it comes time to pay the bill, I send the payment over, remove the fake payment from my checking account, and presto! my balance is the same as they cancel each other out. There is no way I can't pay the bill, because I always make sure to cover the purchase with the fake payments.

What happens when you don't have the money in your account to cover for a purchase? The better question is why are you buying something you don't have the money for? Is it really necessary? If it's a repair for a car that can't wait, then you dip into your rainy day savings...that's if you have one. If not, then you will unfortunately have to let the balance sit while you pay it off. We'll talk more next time about how important it is to have $300-500 saved aside for a rainy day.

Prosper referral - Free money!

I was checking my account at propser.com when I noticed that they are offering a referral program till June 30, 2008. Any borrower that I refer that gets a loan funded within 90 days gets $50. Any lender that I refer that funds a loan within 90 days gets $25 (I'll get $25 too in this case). So if you are in a situation where either of these scenario works for you, this is pretty much free money in your pocket. I've added a little referral link/ad on the side if anyone's interested. So check it out! It ends June 30, 2008.

"Found" money, Proper update

So I "found" my dental reimbursement check 8 months after it was cut. It's not a big check or anything, but I didn't know about it, and I've lived without it for 8 months. I called my dental insurance company to have it reissued. I'll probably skim $50 off the top and send it to prosper and put the rest towards my consumer debt. It's always nice to "find" money!

Speaking of prosper, my third loan that was in verification status is finally completed. I now have three loans that I put $50 in originally. The average rate of all my loans now is 18.81%. As I've said before, I'm expecting this to give me $0.50 increase in my monthly passive income cash flow. Why only $0.50? I don't put into account the money I am getting back as that's my principal that I put in. So I'm only approximating the interest. As for the money that I have returned in my account, it's sitting at just under $22.00. So once that hits $50, the minimum to bid, I will bid on another loan, effectively creating a compound interest scenario for myself. I am keeping track of the money I am putting in, so I can see what type of actual return I am getting after fees and service charges.

Nothing else new here.

New blog

So I've started another blog; this one is more of a personal blog, a place for me to throw down my thoughts. Another reason is for me to have another site where I can setup my AdSense ads. I checked my stats this morning and I've had 47 page impressions since I started this blog. Granted, that my mom might have been reading it, but I doubt it since she can't read English. In any case, I wanted to see how this would affect the numbers. I also just wanted a place for me to collect my thoughts.

Nothing new happening in the passive income front. My new loan at prosper is still waiting for the verification process. I don't have any plans for the next few days in terms of increasing anything. I am trying to figure out what to do with my economic stimulus payment. I have so many options of where to put it. I can put it towards debt and treat the decrease of debt as a return at the finance charge rate (less money out). I can throw it into my ING and increase my porfolio income cashflow, but I can also do that with prosper and spend some time finding some more great loans. Decisions, decisions. All I know is that my finances are setup so that I do have positive cashflow, even if I have to sit with debt for the next year or so (please note that I only count my credit card debt, and not my student loan or car loan). You know what, on second thought, I might just skim a $100 off the stimulus payment and throw that into my portfolio income while the rest goes to my debt. That sounds good.

Prosper update, Saving tips

So I was outbid for the loan I bidded at 22%. Not wanting to lose too much time, I found another suitable loan with a relatively low debt-to-income ratio (DTI) for the credit grade (it was a C) and bidded at 18.75%, which is still higher than my average rate for the other two loans. I found out last night that I won at 19.30%. Now I just have to wait for prosper to verify documents with the borrower and finalize the loan before I start getting monthly payments. This should increase my monthly portfolio income cash flow by $0.50. This puts my total passive income at roughly $10.25/month.

Now, you might wonder how a 26-going-on-27 year old living on his own with a car loan, student loan, and consumer debt finds cash to save. After years of fighting consumer debt from bad decisions in high school and college, I've picked up quite a bit of saving tips.

I use Microsoft Money to track all my finances, and one of the things I do is I create a "payment" to myself. Every pay period (for this job, it's weekly), I increase it by $5.00 and update the date so it stays in my recent activity. Now when I look at my balance it shows I've spent $5 when it's actually still there (I actually now have $500.00 via this method that I keep around for emergencies). I do this for credit card purchases too; as I enter the expense into my credit card account, I increase the "payment" to that card by the appropriate amount. When I actually pay that credit card bill, I either drop the amount by the payment or delete the line all together. This not along makes me realize the money is spent when I swipe my credit card, this ensures the money is in my checking account when the bill comes. Other things I use it for are my car payment (I prorated the monthly amount to a weekly amound and increase the "payment" every week), my kung fu class tuition, and other bills.

I also transfer money to my INGdirect accounts every week. Once it's out of sight, it's out of mind. My checking account doesn't pay me interest, so I try to transfer most of my money out of the account except for money for the week and bills. INGdirect also has a checking account called Electric Orange. I have a couple of credit cards that are paid via that account, so when the statement comes, I transfer the money from my checking to my Electric Orange account. Then I schedule the credit card to draw the funds a couple of days before it's due. This allows me to get some interest on the money while it sits in the Electric Orange account.

I think one of the main ways I also save is that I almost never use my change. I start the day with zero change, and any change I wind up with at the end of the day goes into a jar. When the jar is full I take it to Coinstar to be counted or if I have time, I count it myself. Sometimes I pay my sister $5 to have it counted (it feels better paying family than Coinstar). The money then either goes into my savings or other accounts; recently I've decided I should add that money to either my ING account or my propser account to be loaned out.

So in total, I save $200-$250/month. I contribute 5% of my gross income to a 401k account, but I don't count that money as I won't be seeing that for quite awhile.

Squidoo

Having this blog is forcing me to review all the sites I have joined over the years. One of them being squidoo. It's a site where you create "lens" on anything you like. The lens are automatically populated with relevant ads, and you can place modules linking to ebay and flickr for more information. So you really don't need to add a lot of content; you're really pulling together content and focusing your "lens" on it. You get paid a portion of the ad revenue based on your ranking and page visits. There's also a cool feature where you can actually donate the earnings to charity.

At the time I signed up for the account, I quickly threw two lenses together and left it at that. Well, since I haven't updated them much or promoted them, they were both marked as "works in progress." Anyway, I went into one of them and updated it a bit to give it some freshness. If you like to check it out see here: http://www.squidoo.com/KiAndAikido

Also, while googling, it turns out there are a lot of blogs out there by people who are either trying to create passive income or lower their debt, which is a great thing. Not only do I get to see what others have done, I feel extra motivation that some people are having moderate success.

Google AdSense, Prosper Update

Last night, I applied for a Google AdSense account, thinking it would take awhile for it to approve. Boy, did it turn out to be easy. I was approved later in the night and I have already setup this blog with the ads (as you can see on the right and at the bottom). Let's see how long it takes for something to happen. The beauty of the AdSense program is that I can have one account and use it on all my pages, which at the moment is a total of one. But should I decide to start other blogs or online business, I simply add the scripts for the ads and it'll place relevant items on the page. Now if I can drive some traffic to this blog, then I can see how it all works.

As for prosper.com, my $50 transfer finalized today and I've already bidded on a loan that was at 29.99%. I put in a minimum rate of 22% to make sure (hopefully) that I get this loan. This should increase my average rate of return. Keep in mind I already have $100.00 in the site, and currently those two loans are worth $108 and change (worth of loans plus money paid back). I plan to throw in $50 whenever I can to continuously increase the cashflow there. I don't plan on taking any money out there, so whenever my cash balance from loan repayments reach $50 (the minimum to bid on a loan), I would bid on another loan.

While searching Google to see if this blog is in the search results, I found another blog focused on paying off debt using different methods, including passive income online. As I believe in sharing good stuff, here it is: http://www.debtfreedomguide.com/Seems to be a pretty nice site. Found out about ebay and Amazon affiliate programs too, so I'll do some research in those areas and see how it can fit into my plans.

My short term goal right now is to make $25.00/month on passive and portfolio income combined. Let's see how long that takes.

Here it is.

So, as far back as when I was in high school, I new I needed freedom. I knew that strict scheduling would annoy me. Then when I started working, it confirmed everything. I thought back to my eighth grade reading class and how my teacher, Mr. Glionna told us about buying houses and renting them out. How that we should eventually own multiple investment properties and sell them or transfer ownership as needed. I didn't know it then, but he planted a seed in my head.

In high school, I read up on investment properties and basics of how to be a landlord. I knew that I wanted to own these properties. I loved how it gave me the idea that I could eventually "work" for myself. I went through college and found out more about passive income. I read Robert Kiyosaki's "Rich Dad, Poor Dad" (a book that eventually left me frustrated, but that's another story). One of my professors and eventual martial arts mentor further solidified my desire to own investment property and create other forms of passive income. But like every other American out there, I racked up debt and graduated from college in the red. I grabbed an entry level job and joined the 40-hour a week workforce. My dreams of owning property would have to wait.

Then when I was 23, I took a job for a residential management property. One good thing I did pick out of Kiyosaki's book was that I "should work to learn." And I took the job to gain experience in how to manage rental properties. I figured that when I was financially able to own properties I would have the know-how for it. I was right. I learned a tremendous amount of information and real estate laws during my 2.5 years, the last two as an assistant property manager. I eventually burnt out from the high demands of luxury apartment tenants. While there I learned a bit about asset management (one step above property management). I tried finding jobs relating to asset management, but they passed over me due to my lack of "analyst" experience. And now here I am, an accountant. Working to learn.

As I learned my duties and responsibilities of my new job, the 40-hour work week was beginning to bug me as it has for all my jobs. Compared to my managerial job before, this job required less thought and decision-making. I liked the freedom, but it wasn't enough. I wanted to be free to manage my schedule. I wanted to be free to make my own money. My buried desires of living on passive & portfolio income came back. I re-evaluated my goals and decided I need to dust out my road map and get back on course. And it has led me here.

This is a blog about my attempt to create a decent cash flow from passive and portfolio income (I will refer to both as passive income for convenience). If successful, I would switch to a more enjoyable job and enjoy some freedom. After the accumulation of years of on-and-off research, I understand that this is not an overnight feat. I understand that this may take years to achieve, but if I can even create $1,000/month of passive income, then I know there can be more.

I've been pretty disappointed by the information that's out there for passive income (a lot of scams and pay for info sorts or just people saying they have it and it works, but no details of how they did it), so that's another reason for this blog. Here is where I am at from my previous dabbling in passive income:

Passive income:
epinions.com: I've been pretty inactive now, but you write reviews and get a share of the click traffic. I'm currently at below $1/month. Please see my profile for my reviews: http://www0.epinions.com/user-truparad0x

cafepress.com: I've started an account there but never created enough work to place on the products for sale. It seems like a great place to sell your work on t-shirts, mugs, and stickers

Portfolio income:
sharebuilder.com: An investment site where you can also participate in dollar-cost averaging investing. It was great for me when I was in high school because I didn't have the capital or know-how to invest in the market. I still have it and ING recently bought it out, so "real-time" trades are cheaper now too. I haven't added to it much, and the market is crappy anyway. But even back then I knew to look for stocks that yielded dividends. I think I'm at $1 - $2/quarter.

ingdirect.com: Online banking. I started my savings account there fairly early. I saw rates go as high as 4.75%, but it's lower now due to the economy. Still beats any other brick-and-mortar banks. I'm getting $7.50/month.

prosper.com: Peer-to-peer borrowing and lending. You bid on loans and get a rate on the principal. Or you can be on the other side posting loans to be funded. I'm a lender with $100.00 in to test the waters. The site lists my average rate at 18.48%, but they do charge an origination fee and service fees, so I need to do more calculations to figure out the exact cash flow and rate of return. Based on the current payments I receive and the amount of time that's elapsed, a crude figure for interest earned would be $1/month. I just recently transfered another $50.00 to see if I can bid on another loan. As a note, though, borrowers can default on loans and you may lose the money you put in.

These all total to about $118/year. Nothing to really quit the ol' nine-to-fiver for. But I like to focus a bit more on my passive income and see what I can do. My long-term goal is still to own at least one investment property. I also desire to have a small business (I know, not passive income), but do not know what it would be yet. If anybody has any other ideas that work for them, let me know and I will consider doing it as well.