Freezing in NH

A local bank has started advertising a high interest rate checking account.  It all sounds very good on the radio: 4.55% interest, no monthly fee, $50 to open.  But there are a couple of catches…which aren’t listed in the radio ad but are listed in the teeny-tiny print at the bottom of the postcard. 

The rate is only good for balances of 0-49,999 dollars, above that it’s 1%.  And then you have to “qualify” during each statement cycle.  The qualifications?  Get electronic statements, have an automatic deposit, and make at least 12 charges on your debit card.  Miss any one of those?  Interest is 0.10% for that statement.  Ouch.  That’s a lot of loose ends to keep track of, especially on an account that charges you $3 per check after the first three per month. 

If you had 10K to put in this account, you’d make an extra 150 a year above keeping it in HSBC Direct.  But you have to make 12 charges per month, how easy would it be to justify buying one more thing?  If you can keep your charges to your normal purchases, and you normally have a direct deposit and use your debit card a lot, this is a great account.  You could miss the 12 charges a couple times a year and still beat HSBC. 

But how long is the account likely to stay at 4.55%?  The woman in new accounts at the bank couldn’t give any promises (they never do) but did say they intended the interest rate to stay above the interest for the CDs.  I’m still thinking about it.  I use a rewards card for my purchases, so I need to figure out what I’ll lose in rewards (and holding my money an extra month) compared to what I’d gain in interest.   If I used a debit card all the time and had closer to that 50K limit, I’d be more likely to do it. 

I didn’t set good goals this year (search the web for S.M.A.R.T. to see what good goals might look like).  But I can still evaluate myself on them (good, okay, fail) and firm some of them up for the rest of the year.

Health: Okay.  I’ve gotten my checkup, my cholesterol is good, and I’m getting enough protien and fiber.  But I’m not exercising or loosing weight.

Financial: Good.  I’m living within my means and saving.  Other than investments in the market (401k) my networth is trending up.  I’m contributing the amount I set in January to my retirement funds.  It’s on autopilot since I haven’t changed jobs.  Which brings me to…

New Job:  Fail.  I’ve got some things I need to do to even get to “okay”.  Obviously “good” would be actually having a new job.

Finishing House: Okay.  I’ve got a plumber in doing work, and the first set of inspections are done.  I’ve made some decisions that need to be made to proceed with several projects.  But I haven’t gotten as far as I wanted to.

Secondary Income: Fail.  I haven’t been posting regularly.  I haven’t looked into a couple of other things I meant to look at.  I did finally set up the Amazon associates link, so if you click on a book in the sidebar (and then buy it) I’ll get a tiny cut of the total.  But I have to reccomend buying books used (even though I don’t get a cut of that), so I suspect that won’t be a major source of income.

I’ve been thinking for a while that I should be starting some sort of website (other than a blog) to bring in some outside income.  My employer is happy with my work but they are in a declining industry so it’s time for me to be looking around.  Anyway, I’ve had some thoughts but ran across another site today that seemed interesting. 

It’s a site that sells term papers and such.  Check them out and see what you think. It’s quick and easy to sign up, and then they bill you a fee per month ($29.95) until you cancel. I like the idea of setting up something that will produce a stream of income, and the monthly charge is a pretty good idea. I’m not in school anymore (nor in a business where I need to write any sort of position paper) so the site itself isn’t that useful to me, but it’s a really good idea. I didn’t join so I can’t vouch for the quality of any of the papers.

If you do join, come back and leave a comment about the site so we’ll know it’s worth it.  I wonder if they pay for nicely written papers.

I got the same email as Single Ma, but while I just grumbled to myself, she went and wrote a fab Dear John letter.  Go read it!

So, just to add insult to injury, Prosper has issued a 1099-B for the loans that defaulted and were sold.  I supposed if I had a large balanced portfolio I could use this as some sort of loss against some other gains.  Given the size of my portfolio, it’s mostly an annoyance and an extra set of forms to fill out.  Ah well, it’s a learning experience.

So I’ve been ignoring my Prosper account for a while since I know it’s not looking great.  Anyway, I took a look just now and it’s just about what I expected.  I made a total of six loans in six different credit “grades”.  One (the AA loan) was paid off very quickly and made very little interest.  Two (the B and the HR “high risk”) are current in all their payments (11% and 24.85% interest respectively).  Three loans have now completely defaulted and been sold to a collection agency for pennies on the dollar (the C, the E and the NC “no credit history”).

So overall it was a bust.  On half of my loans I lost more than 80% of the principal.  On one I got the principal back and made about 2% interest (for less than a year).  Only 1/3 of my loans are paying on time/as agreed, and it’s not really the ones I expected. 

I might be bad at choosing loans, and if I’d had a larger “porfolio” the loss of a few loans might have still left me in the black, but I’m not ready to put any more cash into it.  So far I’m looking at a net loss of about 36% (and that assumes that my two current borrowers stay current for the next two years!).  That doesn’t count the “opportunity cost” (the interest I could have made on the money by putting it into a savings account) which probably pushes it up another 4-5%.

Thanks HSBC for sending me an email today letting me know that you’re cutting the rate I get on my savings.  It must be hard writing a diplomatic email about how you’re still great when you are cutting rates more than other folks (e.g. etrade).  I need to take email lessons from you (since I wrote a decidedly non-diplomatic one at work today….)

Lazy Man and Money has a post on Lending Club, which I’ve been meaning to check out. I haven’t had the best experience with Prosper, so I’m a little cautious.

I think my first task needs to be figuring out where my money is (post Netbank disaster) and what I am going to need money for in the near (<3yrs) future.  Not too sure since my job situation is kinda fluid these days. 

The second check is completed and I’ve gotten my money via PayPal.  Very easy, and now I have cash to spend on more eBay junk.  I mean save.  That’s right, save.  Yeah.

As a followup to my last post (about baby steps and continuous improvement) here’s Deer in the Headlights Decison-Making. The take-home message is “don’t freeze, when conditions change, you need to change too”. Or as he puts it in conventional wisdom:

This is the first day of the rest of your life.