No More Prosper Lates

Jan 25, 2007 @ 06:53 pm by EMS

Well, surprisingly enough, my 2 late payments in Prosper have been paid this week.  I guess I just need to be a bit more patient.  I’m back up to having 100% current loans in Prosper, averaging about 14%.

The one bad thing about it is that if you are somewhat obsessive compulsive about this stuff like I am, you are checking Prosper at least twice a day to see if your lates have paid yet.  I guess that’s just something I’m going to have to work on and just let it be once the bid is made.

Prosper Late Loan Statistics

Jan 16, 2007 @ 05:29 pm by EMS

There’s some interesting discussion over at the Prosper Discussion forums about the growth of late payments. As you can see in the chart below (created by pninen) and generated from the daily dumps of Prosper data, you can see how lates are continuing to grow. The disturbing aspect of this graph is that the lines aren’t leveling off. Many would expect that once you hit a specific time frame (say 3 months for example), the lenders who are going to default and the ones who aren’t are going to be seperated which would flatten the percentage of lates for a given month. Pninen suggests that this data shows that Experian default rates are going to be lower than the default rates seen by Prosper, and therefore investments in Prosper shouldn’t follow the Experian benchmark.

If you read through the thread, there are arguments both supporting and against this theory, but the data alone is enough for me to hold back my Prosper investments for the time being (as I was planning on doing anyway). There is definitely money to be made on Prosper, but I think I just need to learn more about selecting good loan candidates.

Prosper Late Graph - Jan 15 2007

Fed up With

Jan 14, 2007 @ 02:00 pm by EMS

I think my love affair with Prosper is over.  Prior to this month, I had 23 good standing loans.  In just slightly more than 2 weeks, I have two loans late.  One over 15 days late, and one just marked late < 15 days on Friday.  Both of these loans are over 6 months old and they neither had missed a payment.  The two loans combined are worth about $105. if both loans default and I put no more money into Prosper, I will probably come close to breaking even (0% gain) for this calendar year.  Once one more loan defaults, I'm officially losing money. I thought both of the loans were good risks.  They were B and C credit grades and from what I could tell they looked good.  I guess I'm just not cut out to be a loan officer 🙂 Regardless, it was a good experiment, I learned a lot about credit grades and how the loan business works.  But there are other ways for me to put effort in to that have better paybacks.  I'll see what happens with the current loans and will probably wait another 6 months before I decide to put any more money into Prosper.

Year 2007 Goals

Jan 08, 2007 @ 10:21 am by EMS

My blog aggregator has been getting hit almost hourly with personal finance blogs listing financial goals for this year, so I guess I had better get with the program! This year will act as a benchmark for the next several years because for the first time in a while, we don’t expect any major life events. This will be the first full year living in our new house and having my wife working more than 3 days a week, as she has for almost the past 3 years. Therefore, I’m not quite sure totally what to expect, but I’ll make some pretty general goals known:

  • As I mentioned in my previous post, I want to increase my net worth by 24%. I will have to average monthly gains of approximately $3,000 a month and I’m not quite sure how realistic that is, but I figure I’ll set my goals high and see what happens.
  • I want to increase our liquid assets (checking & savings accounts) to a solid $10,000 for emergency expenses.
  • Continue increasing my interest income through high-interest savings accounts such as Emmigrant Direct and ING Direct.
  • My philosophy will remain the same until at least July. I will continue transfering the minimum allowed ($25) every time my Prosper balance hits $20. Once the transfer is complete, I will bid $50 on the best loan I can find. This way, I’m not losing any money by having it sit in their accounts, while still minimizing my exposure to unpaid loans. So far, I’ve been lucky with Prosper, having all of my loans being paid, but I’m still cautious of the business model and will wait before increasing my position there significantly.
  • Grocery and gas spending will be decreased. I’m working on a budget now that will hopefully lower our grocery spending by 5% or more. With my wife’s new position, her daily work mileage will decrease over 70%. This will help save money not only in gas, but also in vehicle depreciation.
  • No major purchases planned – the only thing I can think of is a new electric motor for the hot tub ($300-400), but that can wait until the Spring or Summer. As long as our vehicles are self-propelling, we will be keeping them another year 🙂
  • Keep my 401(k) funded at the current level and deposit at least $2K each in both or Roth IRA funds.

I think most of these goals are obtainable. The main goal will depend largely on how the market does this year, but I think it is a possible reach.

December 2006 Net Worth Report (+$493)

Jan 01, 2007 @ 04:34 pm by EMS

Wow, definitely not a good month. I wasn’t expected a good number, and I didn’t get one 🙂 The two biggest events were a down market (-$1,042) and the quarterly depreciation of our vehicles ($-1,380). Combine that with the typically high expense numbers we have seen in Decembers past and we see the smallest net increase that we’ve recorded since the site started.

The one good aspect to point out is that our net increase over the course of the year is a pretty decent 22.5%. Considering we’ve had some pretty significant one-time expenses this year that came about with the purchase of a new house, I’m pretty happy with the number. My goal for next year is to increase our net worth by ~24% to $193,000. This will take an increase of slightly more than $3,000 a month for the next 12 months. Since this is the first time I’ve done a goal like this, I’m not quite sure how obtainable that number will be, but I have to start somewhere.

December 2006 Net Worth

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