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Monthly Archives: April 2008

Prepaying a mortgage


Keeping up with the personal finance theme that I started yesterday with my post about investing on Propser.com, I will admit that some of my favorite sites to read around personal finance blogs. My favorite is Get Rich Slowly. One of my favorite posts from that site deals with the topic of prepaying your mortgage. If nothing else, it shows that not even the “experts” can agree on what to do, so it really comes down to a personal choice.

For anyone, obviously, buying a house is a huge decision and investment. For me in particular, it was the first time I was putting myself in debt. And boy what a debt it is, 30 years worth. Sitting down and thinking that I’ll be making payments on this house until I’m 59 years old is hard to wrap my head around. I realize that tens of millions of Americans are in the same boat, but to me, not being used to having a debt, it can be overwhelming.

While I’ve only made 2 payments so far, I’ve been strongly tempted to include extra money towards my principal, which will shorten the length of my mortgage and ultimately save me tons of money in interest. On the flipside though, I got a really great rate on my mortgage (5.5%), and it’s very possible that I could invest that extra money and earn a greater rate of return that my mortgage, though obviously it’s no guarantee. I’m already maxing out my retirement savings options, so putting extra money towards retirement, which would be an obvious place to put the extra money, is not an option.

I think after reading all of this, I’m even more undecided on what to do. I think my best option is to pay a little extra here and there, as I can afford to, but not to go overboard and send away every penny of leftover money each month.

My Prosper experience

Over the past few months, I’ve been putting aside some money and sending it off to Propser.com, a site that has been described as the “eBay of loans”. Essentially it is big kahuna of the growing peer-to-peer lending movement. Essentially, I am loaning money out to people who “need” it.

I know, the words “money” and “Internet” always sound suspicious when found in the same sentence, but Propser seems to be on the up-and-up from my limited experience. Basically someone posts that they need X amount of money @ Y% interest, and people bid with the lowest interest rate they are willing to pay. So if enough people are interested, and the loan reaches 100% met, the interest rate starts going down until the listing ends. So I might bid $50 at a 12% interest rate, but a bunch of people bid 11%, and my 12% bid is outbid. The interest rate is largely driven by the credit rating of the person asking for the loan. So someone who has a credit rating of D or E is likely to not get what they are asking for, and if they do, it might be at like 25% interest, because the lender is taking a lot of risk. Meanwhile, someone with an A or AA credit score, will often get an interest rate under 10%, since they are less of a risk.

The minimum bid on a loan if $50, so I’ve slowly been sending over money and picking up $50 loans. Currently I have 8 loans, each right around $50. Of those, 2 are to borrowers with a AA credit rating, 5 with an A, and 1 with a B. The average interest rate on my loans is 13.21%, which is a lot better than the less than 3% my money market account is paying right now. Obviously there is more risk involved, hence the premium, but I’d like to think that as long as I stick to loans with good credit scores, and spreading my money out across many loans, that I’ll be pretty safe and come out ahead of where I’d be with just leaving all of my money in a money market account, even if a loan goes bad every now and then.

Business & Personal Loans. Great Rates. Prosper.

pay the man

Today I made the dreaded trip to the post office to drop off some fat checks to the federal, state and local governments for my taxes. I sold a number of stocks last year to get cash for my down payment on the house, so my tax bill this year was not pretty. But ultimately it means that I made some nice profits, so I guess I shouldn’t be too mad. I didn’t enjoy the full parking lot and line out the door at the post office, though I’m sure it will only be worse tomorrow. I just hope that next year I’ll be filing early so I can collect my fat refund that I am hoping my house has entitled me to.

I skipped the gym today to go the post office & library, so I came home and cooked dinner #2 from my new Ellie Kreger cookbook, The Food You Crave, a Black Bean Mexican-Style Pizza. It took me a while to get it ready, because I’m still a little slow in the kitchen (thanks to my anal-retentive exact measuring compulsion), though it was far from difficult. I enjoyed it, though was no super impressed, though Kristy on the other hand really liked them. So it looks like this recipe is a keeper as well.

I’d also like to share a new band I found over the weekend, Frightened Rabbit from Glasgow, Scotland. Very good stuff, with a new album that was released today.

crossing line

A few weeks back I was at Borders wandering aimlessly, trying to figure out how to spend a gift card from a couple Christmases ago. Ultimately, I ended up in the cookbook section and stumbled across the new cookbook from the Food Network’s Ellie Kreger, The Food You Crave. She is sort of the “healthy” cook on the Food Network, and since I’m always looking to eat a little better, I checked it out and saw some recipes that seemed easy enough that I could handle, given my slightly-better-than-beginner cooking skillz.

So today, I finally got serious and picked out 3 recipes and wrote down the ingredients on my shopping list and picked them up on my trip to the local Acme in Hudson. Tonight was recipe attempt #1, the Fettuccine with Creamy Red Pepper Sauce. After getting over my frustration that the jar of red peppers were not completely de-seeded, and the fact that I didn’t know how to operate Kristy’s food processor, things went pretty smoothly and we agreed that the recipe is a keeper.

It was a good way to cap off a lazy Sunday during which I watched the Indians finally pull out a win. Cliff Lee is looking like the #1 starter instead of #5 at this point. If it takes snow for the Indians to win like they did today, I’m totally willing to put up with a few more weeks of crappy weather. Thank goodness Detroit’s awful start is taking off some of the pressure of our poor start.

over and over

A number of months ago, I did what I said I wasn’t going to do again for a while, and registered for another marathon. I think my hope was that it would prevent the wintertime hibernation that I have a tendency to go into. Well, unfortunately it didn’t work too well, and now I’m trying to play catch-up and get my body somewhat prepared to run 26.2 miles.
This morning I experienced quite possibly the most boring 2 hours of my life. Since it had stormed last night, and the trails I normally ran on in the park would have been swamp-like, I had to use my backup training plan and head to the fitness center and run on the track. A 200 meter track. For 14 miles. So around and around the track, well over 100 times, in just under 2 hours. I’m surprised I didn’t manage to fall asleep during it. But I managed to get it done, which is the important part. So now the plan is to get in 16, 18 & 20 mile runs over the next 3 weekends, and hopefully make it to the finish line on May 18th at the Cleveland Marathon.
Yes, it is a little strange that I ran 5 other marathons before actually attempting Cleveland, the one in my own backyard. I think a big part of it was it’s springtime date. Up until the past few weeks, it’s been really cold outside on the weekends, and my body is not happy running in the cold, so training has been really difficult. I only managed to do what I did today indoors because I knew it was pretty much essential for me to get this run in, or I’d probably be wise to give up on trying to run the race in 5 weeks. So while I might say again after this one that I’m not going to run another, I’m most definitely going to think twice before doing another one in the spring. The big reason for me attempting it this year is because I’m getting married in August, so after spending 10 days in Jamaica for my honeymoon, I don’t think I’ll be able to pick right up where my training left off.