Thursday, October 29, 2015

How to Pick Lending Club Notes

Darts in the middle of a dartboard

Lending Club is a Peer-to-Peer lender.  Investors are able to review data regarding people who want to borrow money and have to select the borrowers to whom they want to lend.  When Lending Club started, potential lenders were able to question potential borrowers about their needs and plans for the money.  As the platform grew, that feature disappeard.  Now, investors can see a collection of data points about the borrowers, but there is no personal contact and the information is vague enough that your best friend could have an application on the platform and you would not recognize it unless you knew it was there (and probably not even then).

I am writing this article on a Saturday night (yes, I lead an exciting life) and as of this moment, there are 1175 loans looking for funding, probably one of the lower numbers of the week.  There are over 200,000 resale notes available.  How do I decide in which notes to invest?

Read the Listing, Select the Note:

This is the old-fashioned way to do it, and some people swear by it.  However, as the listings today are a set of data points, I don't know how you get any "feel" for the borrower by doing this.  While it may make control freaks feel better, it is time-consuming.

Use Lending Club's Automated Investing:

Lending Club offers an automated investing feature.  Investors either select one of three targeted returns (A&B Weighted, Platform Mix or D-G Weighted) or select their own mix, push the button and let Lending Club select the notes for you.  If you choose to select your own mix, you can determine what percent of your notes should be from which rating and you can use any filters you want to use.

Use Lending Club's Note Browser to Filter and Select Notes:

If you click on Browse Notes on the Lending Club Homepage, there is a filtering mechanism on the left-hand side.  If you don't want to lend to anyone who has had any delinquicies in the last two years, you can filter out those borrowers.  If you want to lend to people who are paying medical expenses, you can filter them in and everyone else out.  It is up to you.  Once you have your filters set, you can save them to run again, or to use with automated investing.  

It is Lending Club's goal to assign the same interest rate to loans that share the same risk of default.  If you filter beyond saying that you want a particular grade of note, you are basically saying that you think you are smarter than Lending Club.  You are looking for notes that aren't as riskly as Lending Club thinks they are.  NSR Platform can help you back-test potential filters, however, Lending Club is running the same kinds of tests, and adjusting their underwriting when they find a discrepancy.  That isn't to say you can't find a filter that could help; only that it won't be easy.

This method offers the advantage of personal control--you see each note before you invest and can decide not to invest if anything looks "off".  It is more efficient than looking at 1100 notes to select 5.  You can start with broad criteria and keep adding filters until you get down to a number of loans you are willing to review.  

Use A Third-Party Service to Pick Your Notes

The main advantage to Lending Club's Automatic Investing feature is its cost--free.  However,it does not make any attempt to beat the average, and people say it goes for the leftover notes, it does not push to the front of the line for the "good" ones.  Third-Party vendors use Lending Club's API (don't worry if you don't understand it; they tell you how to set it up) to purchase notes for your account, and they do push you to the front of the line, so to speak--their computer fires up when Lending Club releases a new batch of loans and quickly selects  the ones it wants for your.  They also try to select what they think are the best loans.  While most of the services offer a certain number of free picks, their goal is to get you to pay them a small fee per note for their help.  Some of these services are:

NSR Invest 

NSR Invest is for people with more than $5,000 to invest and they will fully manage your account (if you want) once it exceeds $10,000.  They start charging when the account exceeds $20.000 and they charge 0.6%.

Peer to Peer Quant 

Peer to Peer Quant uses computer modeling to select the notes it believes will give you the highest returns. As I am writing this, there are about 1100 notes available on Lending Club; 225 appear on their platform.  Those notes are all C, D, and E level notes, except one F.  That is in keeping with Lending Club's published statistics what show them to be the top performers. There are 629 C, D and E notes available as of this writing, so Peer to Peer Quant has decided that 225 of them are better than the others.  They have been using their system since July, 2014 and claim a return of 10.3% in the last twelve months.  If you check Lending Club's Loan Performance Details chart you'll see that for loans issued between the third quarter of 2014 and the second quarter of 2015, the annualized return was 9.5% for C's, 10.9% for D's and 9.69 for E's.  That does not take into account the cash drag that Peer to Peer Quant's return does.

To use Peer to Peer Quant's service, you create an account.  Their website then gives you a list of what they consider to be the best currently available notes, and recommends that you start at the top of the list and work your way down, in order, until your money is spent.  You select the notes you want and how much money you want to invest in each.  The notes are then purchased and put in your account. Peer to Peer Quant gives users five free selections each month so you can kick the tires to see if it works for you.  I have an account with them.  I have invested $1146.71 (they recommended secondary market notes for a while and I tried some of them) in 51 notes.  The weighted average rate on those notes is 16.35%.  I lost $24.44 when one of the notes charged off.  All the others are current.  Two have been fully paid.  I have earned $83.33 in interest, which is about 7% of the amount invested.  If  you subtract the money lost to the default, my return to date (gross, not annualized) drops to about 5%.
Lending Robot  (that's an affiliate link, and I get some free picks if you use it) has several models from which you can choose, or you can design your own filters.  Their advantage is speed.  Lending Club posts new loans several times daily, and those considered desireable by many people are filled almost immediately.  Lending Robot gives you the ability to grab those loans.  When you are trying to invest a large sum of money a speedy tool like this can get you invested (and earning interest) much sooner than any manual method and even faster than Lending Club's Automatic Investment.  The first $5,000 they invest for you is managed for free.  You can earn additional sums to be managed free by getting folks to invest via affilliate links like this one.  The rest of the money is managed at a rate of 0.45% per year.  On a $15,000 account, that is about $3.75 per month.

I have an account with Lending Robot.  I invested in their Credit Refinance portfolio and in their Popular Loans portfolio.  1.3% of my notes in Credit Refinance have defaulted.  4% are currently late.  My weighted annual interest rate is 18.16%.  So far I've earned interest worth 9.3% of my principal.  If you subtract the principal I've lost, and the amounts Lending Club estimates I will lose on my late notes, my return so far is 6.2% of what I invested.  That's not really an APR because each month when payments are made, the money leaves this pot since I'm no longer using Lending Robot to reinvest.  Another way to look at it is that these notes are 14% of the notes I own and 15%  of the defaults.

Peer Cube 

Peer Cube has a lot of statistical information and offers a collection of filters with expected results.  They also have a paid plain for which they chare $19.95 per month and they will automatically invest your money.  

The services above are all new enough that they do not have a long-term track record that could be compared against just buying the platform.
How do you pick your Lending Club (or Prosper) notes?

*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt and Shoeaholic No More*

An Analysis of My Lending Club Account

Lending Club is a marketplace lender.  Investors can purchase shares of loans which are made to ordinary people, and receive the interest paid by the borrowers, minus a processing fee.  Unfortunately, if the borrower does not pay, the lender, not Lending Club, loses money.  Fortunately, the interest rates seem to be set so as to give most investors about an 8% return on their money after bad loans are subtracted.

Lending Club allows investors to purchase shares in newly approved loans, or to purchase shares that other investors, for whatever reason, no longer want to keep.  The resale market is based on supply and demand; the owner of a note can ask whatever price is desired; whether or not it is purchased is up to a buyer.  I have been investing in both new and resale notes for over a year now, and the defaults are starting to hit.  I decided to take a look at my portfolio, analyze it, and share the results with you.

Right now, Lending Club says I have a net annualized return of 14.13% on the notes I bought new.  However, if you mark down the ones with delinquent payments at the amount Lending Club has found to be accurate in the past, that drops to 10.57%.  On the resale notes, my net annualized return is 8.01%, which adjusts to $4.74%.  The total for my portfolio is 11.98%, adjusted to 8.53%.

As of this moment, I have 1074 notes.  407 were resale notes.  About 4.2% are not current and about 1% have been lost after a year.  One thing many of the blogs I read about Lending Club said, and which Lending Club's statistics tend to confirm, is that the greatest risk of default is in the first year.  In general when I buy resale notes, I buy notes that are at least a year old.

526 of my notes were for 36 month loans; 555 were for 60 month loans.

Of the 667 new notes, 3.9% are not current and about 2% have been lost after a year.  My overall return is higher on the new notes than the resale notes because I bought a lot of low-risk resale notes when I first started investing.

I have 123 "A" notes.  60  were purchased new; the rest were resale notes.  All the resale notes are current or paid off.   Of the new ones, two are 1-15 days late.  Thirteen"A" notes are paid off, two were new.

I have 168 "B" notes.  34 were purchased new, the rest were resale.  Two have been charged off, and they were both resale notes.  Three are 1-15 days late.  Three are 31-120 days late. All the late notes were resale notes. 51 have been fully paid; only three of those were new.

I have 242 "C" notes.  171 were purchased new, the rest were resale.  Of the six that are late, one is new, the rest resale.  Four "C" notes were charged off, of them one was a resale note.  22 have been fully paid; of those 8 were new.

I have 239 "D" notes.  Of those, 209 were purchased new.  Three "D" notes have been charged off and two are in default (they usually only spend a few days in this category before being charged off).  All were new.  10 are late and of those, only one was a resale note.  22 have been fully paid and 13 of those were new.

I have 215 "E" notes.  Of those 33 were resale notes.  Seven notes are late but as of this writing, no "E" notes have been charged off.  15 have been fully paid; of those 8 were resale.

I have 45 "F" notes.  Of those, 17 are resale notes.  One was charged off and it was a resale note.  Three are late; one of which is a resale note.  Four have been paid off, three of which were resale.

I have 31 "G" notes.  Of those 16 are resale notes.  one has been charged off, and it was new.  Two are late, one new, one resale.  Three have been paid, one of which was resale.

My conclusions? While roughly 40% of my notes are resale notes, 45% of my grace period (late 1-15 days) notes are resale notes.  40% of the other late notes were resale.  36% of the default/charged off were resales.  However, while roughly 40% of the notes were resale, they only represent about 30% of the money invested.  The defaulted resale notes accounted for 29% of the principal I lost due to defaults.  While I bought resale notes with the hope that I would lose less money to default, that doesnt' seem to be happening.  Since Lending Clubs fees hit you a lot harder at the end of the loan than the beginning, I do not think the ones I have been buying have been helpful to me.

*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt and Shoeaholic No More*

Thursday, October 22, 2015

Ups and Downs with Kickfurther

I started investing with Kickfurther on April 9, 2015.  Since that time I have invested $2321.25 and re-invested paybacks and earnings.  As of right now, October 15, 2015, I have invested in 43 different offers.  Of those, seven have paid back my entire investment, plus earnings of between 8% and 20%.  Most paid back earlier than expected and the APR on those deals ranged from 22.01% to 56.13%. That's the good.

Click here to purchase
See this doll?  He is "American Girl"-sized and comes with a story.  The story explains that his brother has autism, and what that means.  The doll is made by LorettaRose, L.L.C. and  is outfitted and packaged by students with disabilities, sponsored by the My Sibling Work Experience Program. This program provides job sampling experiences for students, aged 14-21, who are entitled by federal law to have transition services in their school setting.  While LorettaRose is a for-profit company, one of their missions is raising children’s social consciousness about caring for their peers and environment. They also educate the public about the need for more services for teens and adults with developmental differences.  Kickfurther allows me to invest money in small businesses and to help them grow.  I have an autistic son so this company caught my eye.  That's more good.

This guitar, on the other hand, is being sold by a business which promised a 5% return after three months.  Their second of three payments was supposed to be last week; so far they haven't made any payments and the excuses have ranged from "the check is in the mail" to "the owner had a pulmonary embolism".  The owner has been rude to the backers and there were serious discussions about repossessing the inventory, though the decision was made to continue to monitor the situation for now.  

Kickfurther, in case you haven't read my other posts on the topic, finances businesses that sell tangible items.  The businesses apply for the amount they need to purchase a particular product or mix of products and offer a percentage return after a pre-determined period.  Businesses are allowed to offer as high or low return as they wish and as long or short a return period, providing their past sales figures indicate the sales are realistic.  Investors purchase shares starting at $10.00.  If enough people invest, the deal is done; if they don't, then the company can try again with different terms. If the deal is done; Kickfurther purchases the merchandise as agent for the backers and gives it to the company to sell on consignment.  In other words, in the strictest sense of the word, these are not loans, they are consignment sale contracts.  When the company sells the merchandise, they are supposed to pay Kickfurther for it.  If the merchandise doesn't sell, Kickfurther can re-possess it and try to sell it through other channels to recoup at least some of the backers' money.

One thing I like about Kickfurther is that these are not unsecured loans.  Most of these businesses are small and/or relatively new.  If they fail, I don't want to be in line with a bunch of other unsecured creditors trying to get money where there is none.  However, it seems to me that many of these businesses are treating these contracts like loans.  They are making equal payments on the due dates each month.  If they are paying for the inventory before they sell it, for whatever reason makes sense to them, that doesn't bother me.  What concerns me is that it is also possible that the business has sold our inventory and is using our money for other things, planning to make payments as scheduled.  That could lead to a situation where the company spends our money on something like rent, or to purchase additional inventory, and then is unable to pay us back when promised (or, worst case, at all).  Kickfurther is a relatively new platform and it makes changes where needed.  They are working on a system to track inventory sales.

As I said above, I have invested in 43 offers.  Seven have paid back completely.  Three are two months overdue with no payments made.  Five have had payments due and have made them, but one of those is substantially under the amount needed to complete payoff timely, though she has stated she is trying to catch up.  The other 28 offers have not had a payment due yet, so I think it is far too early to draw conclusions about the return on this investment.

How typical is my portfolio?  Judge for yourself.  There is a sticky post at the top of this subreddit that gives the status of all Kickfurther offers.

*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt*

Thursday, October 15, 2015

Get A Check, Get A BIG Check

If you listen to the ads on local television, you will be convinced that a scene like this is the path to riches.  As someone who works on car accident cases for a living, I'm here to tell you that you aren't going to get rich from your car accident; but your lawyer might. A major insurance company hires us to defend its insureds when they are in accidents. Often, when I call our insureds to talk about the accident, the first question I get is "How could they sue me; it was their fault!". Then I get questions about when the case will go to trial, along with a statement that they hope the insurance company doesn't pay those $#(/* anything.   Since so few people seem to know how the car accident lawsuit works, I'm going to write about it. 

The Lawsuit

Initial Pleadings

I briefly described liability and damages in my prior post.  Lawsuits are filed when either liability or damages are unclear or disputed. Different states have different deadlines for filing suit; in Louisiana plaintiffs generally have one year from the date of the accident to sue. As I've told many an insured, to sue someone takes $350 and a piece of paper that looks about right on the surface. The person in the clerk's office who stamps in the suit does not read it and the fact that it is filed is no reflection on its merits except that someone thought it was worth $350 to file it. 

Once a suit is filed, it must be served on the other party. How this must be done differs between states; in some, the sheriff must serve it, in others, certified mail is sufficient. In any case, if you are served with a lawsuit, call your insurance company immediately. It is their job to defend you, and they will hire an attorney. That attorney represents you and is obligated to protect your interests, not those of the insurance company; however, they are limited to defending you in the suit, they cannot sue the other party to get money for you. You are entitled to hire an attorney to look over their shoulder, but you have to pay that lawyer, and generally, it isn't worth it. 

Written Discovery

Your attorney will file documents responding to the plaintiff's allegations. Shortly thereafter, the parties will exchange written discovery. These Interrogatories and Requests for Production are questions that the parties ask each other about how the accident occurred, background information on the parties and about the damages the plaintiff suffered in the accident. They also ask about insurance coverage. Once the attorneys review the written responses of the other parties, they may issue subpoenas for more documents. Generally the subpoenas are issued by defense attorneys seeking copies of the plaintiff's medical records from before and after the accident, and if there is a lost wage claim, for employment records. After these documents are received and reviewed is a time that some cases settle because both parties have information about what the other is claiming, and, if there is little disagreement, such as when damages clearly exceed the policy limits, cases settle.  


Image from Wikipedia
Once the documentation has been gathered, the next step for most suits is fact depositions. A deposition is a proceeding, usually held in a lawyer's office, in which a witness is placed under oath and questioned by attorneys in front of a court reporter. Defendants almost always take the deposition of the plaintiff; if liability is contested then the plaintiff will take the deposition of the defendants. Disinterested witnesses are often deposed as well. After those depositions, both sides have a better idea of the claims of the other, and have some idea of what kind of witness both parties will make.  Because of that, this is another time when cases often settle. 

Expert Discovery

If not, the case may be set for trial, or it may move to expert discovery--to taking depositions of doctors, accident reconstructions, vocational rehab people, economists or who knows who else, depending on the possible value of a case. 

So What About the BIG Check?

There are two ways you get a check from a car accident. You either settle the case, or you get a judgment after a trial. More than 95% of cases settle before trial. Trials are for getting other people to settle disputes you can't settle between yourselves. Whether a case settles or is tried, the size of the check depend on these factors:


The simple way of looking at damages is to ask how much the accident cost the plaintiff.  In most cases, the property damage is easily dealt with.  Medical bills are the next common item of damages.  While the bills themselves are usually pretty clear, what is sometimes not clear is whether the treatment is related to the subject accident, or whether it is related to a pre-existing condition, or in some cases, to a subsequent accident or problem.  In some cases the lost wages are easy to determine; in others, they set up major battles between experts.  In the case of a permanent injury, there may be a claim for lost earning capacity.  Besides the damages which can be quantified with documentation, courts also award damages for pain and suffering, or loss of enjoyment of life, and similar reasons.  Generally speaking there are common ranges of awards that are upheld on appeal and therefore used for settlement purposes, based on the type of injury suffered.  If a jury awards too much,the defendant will likely appeal and if the award is out sized compared to awards in similar cases, it may be cut.  


Liability is the judgment of who was at fault for the accident.  If the jury determines that your damages equal $1 million, but decides that you were 50% at fault for the accident, the judgment against the defendant will only be $500,000.  

Insurance and/or assets of defendants

 Plaintiff lawyers want to get as much money as possible for their clients. No one is going to be able to make a million dollar case out of a fender bender in which no one was injured, but in a case where the damages are at or above the amount of available insurance, the plaintiff's lawyer has to decide whether to pursue a judgment against the defendant personally or to take the insurance and be done with it. Collecting on judgments can be time-consuming and expensive so if the insurance is close to enough, they may take it and call it good. On the other hand if the defendant was clearly underinsured, and has easy assets to grab, like bank accounts or other financial assets, he may decide it is worth it.

But I want my day in court, you don't, not really.  Whether you are the plaintiff or the defendant, you want this case over with.  Trials are expensive and unpredictable.  It is the job of the lawyers on both sides to assess damages and liability and then to work things out so that the plaintiff gets what is owed, and not more.  Sometimes each side as a very different idea of what that number is, and so the cases go to trial.  When that happens, the plaintiff may walk away with nothing, or the defendant may get hit with a judgment far in excess of what was expected--or both sides may end up spending a lot of time and money to try a case only to have the resolution be what one of them offered prior to trial.  

So How Much Do I Get?

Depending on the contract you signed, and the stage at which the case settled, or a judgment rendered, your attorney will take 25-40% of the gross proceeds (though sometimes if the check is low compared to the damages and they were able to effect a quick resolution, the attorney may take less).  Next, the bills need to be paid.  If the doctors have not been paid, now is when they get their money.  If your health insurer has paid your bills, they will probably want reimbursement for at least part of what they spent.  The other thing that has to be paid is the cost of the litigation.  This is where going to trial really hurts you because trial preparation is expensive.  Experts have to be hired, exhibits created and those miscellaneous expenses can really add up fast.  In general, from what I've seen, unless you have a death claim or a large claim for loss of earning capacity or a large claim for future medical expenses, you are going to walk away from the table with less than a third of the amount of the average settlement or judgment check.  The amount of the check will depend on the injury sustained and how long you treated.  The longer the treatment, the bigger the check, but the more of it that is owed to the doctors.  

It Doesn't Sound Like Suing Is Worth It!

For many people, it is not.  The typical personal injury plaintiff is someone without health insurance who was injured in a wreck.  This person cannot walk into the local doctor's office and afford treatment so she sees a lawyer, who sends her to a doctor who has an agreement with the attorney.  Even if this person does not walk away from the table with much money, she gains access to medical care that she would not have had without an attorney.  On the other hand, I have neither the time nor the desire to visit the doctor's office regularly to document healing or lack thereof for a soft tissue injury that is practically guaranteed to hurt for a couple of months, and which, in all likelihood, will eventually go away.  For me, the little I would gain suing for such an injury isn't worth the hassle it would put me through; for the typical personal injury plaintiff, it is.

Have you ever been the plaintiff (the one who filed suit) or the defendant (the one who was sued) in a lawsuit?  What was your opinion of the outcome?
*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt and From Aldi to Harrods*

Photo of wreck compliments of Glen Edelson. "Supreme Court Front Dusk" by Noclip at en.wikipedia - Transferred from en.wikipedia. Licensed under Public Domain via Wikimedia Commons.

Friday, October 9, 2015

Quarterly Report

Quarterly reports seem to be the thing to do for financial bloggers, so I'll take my turn.

This quarter we withdrew money from savings to pay my daughter's college tuition and to renovate our bathrooms.  Our investment performance has been lackluster but we have managed to save some money.  Here is how things went this quarter.

HD Vest:

This is the account we have with a financial planner.  It is invested in a diverse portfolio of mutual funds.  We did not add to it this quarter.  We lost 3.1% this quarter, for a year-to-date loss of 6.4%. To put this in perspective, the S&P 500 lost 6.4% so we were pretty average.  

My 401(k):

This is a major portion of our assets and is invested in a diverse mutual fund portfolio. My firm invests 5% of my pay in this account; I invest 6%.  While not following the precise direction in The 3% Solution (a book I read and reviewed), I did follow the basic advice of reviewing my portfolio at the end of a time period and selling stock funds if they had risen in value, and transferring money from bond funds to stock funds if stocks had fallen.  As a result of this technique my year to date loss was 3.25%.  Our loss this quarter was 7.59%. 

My husband's 401(k)

My husband saves 5% of his pay, and his company gives him 3%.  It is a relatively small account and is invested in a growth stock mutual fund.  Fees are high; choices are few.  We lost a small amount on this account but have purchased shares so when the market goes up, we'll go up too.

Our Roth IRAs:

These are invested in Vanguard's 500 Index Admiral Fund.  They are down 3.74% for the year.   We are taking $1000 per month from our savings account and adding it to these accounts, with the goal of maxing them out this year and next year.  

Lending Club:

We have not added any new money to this account.  Lending Club shows my adjusted (hypothetically, using their estimates of loss) net annualized return to be 8.74% as opposed to the 10.49% it was last time I reported.  This was to be expected as the majority of the money in the account as reached to point when it is at most risk for default.  As of the end of June, one loan had defaulted; now eleven have.  Based on what I've read, if I do not add to this account (and right now I do not plan to do so) the returns should stablize at close to 8% annually.   XIRR is considered by many to be the most accurate way of accounting for money into and out of an account like this, along with the cash drag that happens because loans are always being paid off and it can take time to re-invest the proceeds.  This XIRR calculator shows my annualized return to be 10.13% using actual values (this assumes that all loans not currently charged off will be paid in full) and 7.68%, assuming that the loans currently late will be written off at a rate that has been average at Lending Club. Three months ago those figures were 10.38% and 7.88%  Another way to look at it is that the adjusted value of the account has increased 1.6% over the last three months. Annualized, that would be about 6.75% per year.  


We have not added any new money to this account either.  Prosper is showing my annualized return to be 13.00% on all my notes, and 14.11 on my "seasoned" notes.   Unlike Lending Club, Prosper does not estimate losses for you, however, they tell you to expect returns to drop significantly until the group of notes is at least ten months old, or "seasoned".  My first notes became "seasoned" this month.  Those notes were all C rated or higher, which explains why the seasoned yield is higher than the overall yield.  The second batch of notes I bought were primarily As and Bs.   The XIRR calculator shows my returns to be 11.86% assuming all notes pay.  Assuming none that are late pay, the XIRR decreases to 7.20 %.  Three months ago those figures were 12.2% and  8.62 %.  Over the last three months the value of the account has increased by 3%.   Annualized, that means my returns are somewhere between 7% and 12%.  I now have eight notes that have defaulted.  

Motif Investing:

I invested $5,000 to this account in March, and another $2000 in September.  It is now worth $6775.87.  My year to date dividends are $44.03 and the estimated yearly income on the account is $129.30 or about 1.8% of the money I invested.    I have invested in the following motifs:

Things I Like:  This was self-designed and is beating the S&P.  
Buyback Leaders:  Stocks in companies that are buying back their stock. .  Currently beating the S&P.
Cyber Security:  Anti-hacking stocks. S&P is beating it.
High Yield Dividends:  The S&P is beating it, but barely.
Online Gaming World:  Stocks of companies involved in Multi-Player On Line Role Playing Games.  Bought $500 worth on May 11.  Beating the S&P by quite a bit.
Online Video:    The S&P did better.
Low Beta:  I invested 252.20 on July 15.  Today it is worth 250.56 and that definitely beats the S&P. 
Growing Dividends:  Invests in shares of companies that have increased dividends in the last few years. I invested $1980.28 on September 18, and it is now worth $1961.64 and is beating the S&P. 

Overall, my Motif account is down 3.2% since purchase.  

Generally speaking, it costs a $9.95 sales fee to purchase a motif (a group of stocks).  However, it is not uncommon for them to run a promotion of a "Motif of the Week" for which they waive the sales fee.  All these motifs, except "Things I Like" are Motifs of the Week.

If you are interested in investing with Motif, use this link; we both get $100 out of the deal.  


You can read about Kickfurther here and here.  In short, I have increased my investment from six deals to  thirty-seven.  Five have been paid back completely, plus earnings.  Seven have made partial payments. Three have not paid anything, and are overdue.   If you value the unpaid accounts at the amount invested, and plug all this into the XIRR calculator, right now I have annualized returns of 37.02%.  Yes, you read that correctly.  However, if you subtract out the value of the delinquent accounts, my returns go negative.  The deals that have paid have paid either 4% or 8% of the amount invested.

The two problems with this site are lack of investing opportunities (many are filled in less than an hour, so you have to be able to get online at 4 p.m. Central and make a quick decision); and, because it  is a new concept, so there is no history of losses to help you really determine the risk, or the likely long-term returns.  Logic says that 37.02% can't last.  Most of the companies in whose products I invested (if you read the fine print, you'll see that these aren't loans, the backers are purchasing the products and then giving them to the companies to sell on consignment) have not reached the point of making their first payment.  While the contracts give Kickfurther the right to re-possess the inventory if payments are not made timely, I have to wonder what we'd do with it after we got it, since the lack of payments would indicate that the company selling it couldn't move it.  If you'd like to invest, use my affilate link and you get $5.00 and I may win more.


The stock market was down this quarter and our returns showed it.  I'm glad I found Lending Club and Prosper; they are pretty much the only things that are making money for us.  I've earned $20.00 through Kickfurther, and may put some more money toward it this month, but I'm leaning toward just reinvesting payments and seeing how some more of those deals work out.

We still haven't decided whether or not to fire the financial advisor.  The returns are neither so good or so bad as to make the decision a no-brainer but we are definitely leaning toward going it alone .

*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt*

Tuesday, October 6, 2015

Oh No, I Was in a Wreck!

Ljubljana car crash 2013

The day after I finished my article on automobile insurance, I got a first-hand look at why you have it. I was running an errand for work in heavy traffic. The car ahead of me stopped, and so did I. Unfortunately, the car in back of me did not. 

The Accident:

Okay, it happened. Your car and another have made contact and there is damage. What now? First, make sure you and everyone in your car is okay. Then, call 911 to report the accident. Ask the operator if the police will respond, as in some jurisdictions they do not respond to accidents on private property or to property damage only accidents. Ask if you should move the cars. Follow his/her directions. Then, make a decision about whether you are better off in your car our out of it. In most neighborhoods, at most times of day, you do not want to be in the cars above, with fuel on the ground. On the other hand, you don't want to be holding on to three kids on the side of the Interstate. If the police have been called, wait for them to arrive. 

Take a deep breath. Once the police arrive, they will gather the necessary information from both parties. Do not engage with the other parties any more than necessary. If it is a minor accident and the police tell you to exchange information without them (the norm in some areas for fender benders that are blocking traffic and have no injuries) do so quickly, politely and without admitting fault. Take photos of both vehicles where they came to rest and, if possible, on all sides once they are on the side of the road. If the police do not respond, make notes for yourself about what happened, and when it happened. If you decide to make a claim against the other driver's insurance, you will need his/her name, make, model and license number of the car and the insurance information. If someone decides to make a claim against you, or if you make a claim with your insurance company, you'll be asked to provide the same information to your insurance company. If you are going to make a claim, whether against your insurance or the other driver's insurance, call them as soon as possible. 

The Aftermath:

Property Damage

No matter which insurance policy you are making a claim on, the next step for the damage to the car (assuming it has been removed from the scene) is the damage estimate. These are done either by an insurance adjuster or by a body shop, and the process is pretty straight-forward. Few auto accident property damage claims are handled by attorneys unless liability is contested. In my case, the other driver's insurance company has agreements with certain body shops and they deal directly with those shops. While I was free to use any shop I wanted, picking one of those meant that I was able to drop my car off and know that the body shop and the insurance company would deal with each other, and that the insurance company would warranty the work. I got my rental, paid for by his insurance, and until my car is ready, I'm set. 

Bodily Injury

It is not at all uncommon for someone to be "fine" at the scene of an accident, and yet to be very sore the next day. Other people hurt at the scene, often from seat belt or airbag contact. They may have bumps and bruises or broken bones and internal injuries, depending on the severity of the accident. There are two things to remember at this point: 1) unless you have hired an attorney, do not sign a document releasing the insurance company until you are back to normal, health-wise and 2) if it is getting close to a year since the accident, and you are not back to normal, see an attorney, even if you have good health insurance.

The Claim Process

Whether it is you or the other party that calls the accident into your insurance company, once they know about the accident, a claim file is open and a number assigned. At this point your insurance company is looking at two things: 1) Liability: In other words, whose fault is the accident, and to what degree? Is it all your fault? All the other party's? Is liability shared? 2) Damages: In other words, how much is this going to cost? An adjuster will talk to you and, if possible, to the other party to determine how the accident happened, what is wrong with the cars and what injuries were sustained. The majority of car accidents are property damage only and are resolved between the insurance companies with little fuss. But why might that not happen?

Liability. The parties may tell very different stories about how the accident occurred and the insurance companies may not agree on the degree of fault to attribute to each driver.

Damages. In short, the question is how much money did this accident cost the person not at fault? Some elements:

  • Medical Bills. Unless there were pre-existing conditions these are easy to add up.
  • Lost Wages. This can be more tricky, especially with claimants who work irregularly, or are paid commission, but the idea is to compensate for time missed from work due to the accident
  • Pain and Suffering, inconvenience etc. Different jurisdictions use different amounts, but for settlement purposes, most places have a lawyers' rule of them that says x dollars per month that you were injured or treating and y dollars because you have that kind of injury.
Generally speaking, the higher the damages and more speculative, the higher the chance that the case will not settle at the claim level.

My next article will deal with what happens when claims are not resolved, and move into lawsuits.

Photo credit: By Dino Kužnik from Ljubljana, Slovenia (Flickr Uploaded by Sporti) [CC BY 2.0 (], via Wikimedia Commons

*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt*

Friday, October 2, 2015

Preparing for the Unexpected: Automobile Insurance

The front ends of two vehicles after an accident
Photo from Wikipedia

We've all seen the commercials for the lawyers who promised big checks to people who are in car accidents.  They make it sound like a car accident is a way to riches--and it is--for the lawyers.  That money has to come from someplace and that someplace is usually an insurance company.  Today I'm going to talk about car insurance.  

Different states have different laws about what types of automobile insurance are sold in those states but these are generally the kinds sold:


This pays to fix your car if you are in an accident.  The insurance company will get an estimate, generally from a repair shop, of what it will cost to fix your vehicle.  They compare that estimate to the value of the vehicle and decide whether to repair the car or "total" it and pay you its book value.  Remember the adage that insurance is to protect you against things you can't afford to have happen.  Generally, you can afford to replace an old car, and you will be disappointed at how much (or more precisely, how little) you are paid if you are in a wreck.  Check with your agent every year or two about the amount you would be paid if a car was totalled.  Decide if it is worth paying the premiums to get that amount of money if the car is wrecked.  You can reduce your premiums by increasing your deductible--the amount you pay out-of-pocket before the insurance pays anything.  


This pays to replace or repair the vehicle if it is stolen or damaged in some non-collision manner, like hail or flood.  Again, it is not going to pay more than the car is worth, and again, the way to lower premiums is to increase deductibles. 


This pays for harm you cause to others.  In other words, if we are in an accident and the accident is your fault, your liability insurance will pay to fix my car, pay my medical bills and pay another other damages I incur as a result of the accident.  Most states require that you carry a certain amount of this as a condition of driving on public roads.  In Louisiana, the requirement minimum is "15/30" meaning that a policy will pay up to $15,000 per person and up to $30,000 per accident.  The maxium my insurance company sells is $500,000/$500,000.    The amount you need depends on your assets, your earning power and your conscience.  In short, you want enough insurance so that if you are in a bad accident, the attorney for the person you hit will be satisfied with the insurance, and will not come after your personal assets.  If you are a low wage earner with no real assets outside of a retirement plan, a 15/30 policy may be enough.  If someone gets a judgment against you, you can file bankruptcy to get rid of it, and though your credit rating will take a beating, you will get over it and life will go on.  On the other hand, if you are a high earner with a lot of assets, no plaintiff lawyer worth anything is going to take a 15/30 policy for a serious injury because you have assets they can get.  

Uninsured/underinsured motorist:

If you are in an accident and the at-fault party does not have enough insurance, this coverage pays after the at-fault party's insurance.  You purchase this coverage and agents often recommend you carry the same limits as you do in liability.  Most of the  time you cannot purchase more UM coverage than you do liability coverage.  This coverage seems like something that can be skipped if you are trying to save money, but if you are in a serious accident that is the fault of someone with little or no insurance, this is the insurance that could replace your lost wages and pay for your pain and suffering.  

No Fault Coverage:

Some states have "no fault" insurance, either totally, or up to certain limits.  This means that following an accident, each party's insurance fixes their own cars and pays their own bills, at least up to a point.  The idea behind no-fault was to reduce cost by getting lawyers out of the minor car accident business.

Medical Payments:

Most policies include a certain amount of "med-pay" and do not allow you to waive it.  Again the idea is to provide coverage that pays without the need for suit to be filed or even blame to be assessed.  The limits are usually only a few thousand dollars, but it is enough for an ER visit and a doctor's visit or two.  

Used with Permission

Umbrella or Personal Liability Policy

This policy pays on top of your homeowner/renter policy and your auto policy.  It is protection for people with high net worths or high incomes.  If a claim exceeds the value of their auto or homeowner's policy, this policy pays.  Since it doesn't pay very often, it can provide a high amount of coverage for a relatively small price.  

As with any other insurance, you need to consider your personal situation in deciding which coverages to purchase, and how much of each.  If you finance a car, the lien holder will require you to purchase collision and comprehensive insurance, and maybe even a "gap" policy which would provide enough money to pay off the car in the event that it it totalled, since most people owe more than the car is worth for at least the first year they finance it.  If you are driving an older vehicle you an afford to replace, then skipping the collision and/or comprehensive makes financial sense.  Skimping on liability coverage could come back to haunt you--but carrying too much doesn't make sense either.  

*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt and She Picks Up Pennies*