A lot of personal finance sites out there focus on saving you a few bucks here and there, but I’m more concerned with the big stuff.  Everyone knows that they can save money by making coffee at home but what about getting rid of coffee altogether?  Cutting out your morning coffee won’t have a huge impact on your day to day finances but it could end up saving you a ton of money.

I’m a huge proponent of preventative care and taking great care of your body.  I like working for a company that feels the same way and I also know that there is a direct correlation between how healthy you are and how long you’ll live.  I think we all want to live as long as possible and we all want to be healthy for as long as possible.  Getting sick sucks and it’s getting more expensive every year(are your premiums going down or up?).  There are things you can do to reduce the costs like getting a HSA, but the biggest thing(along with having good genes) is living a healthy and active lifestyle.  There are always outliers, so being healthy won’t guarantee a long life but it should greatly increase your chances.  

I started thinking about all this a few weeks ago when the water was out in my building at work.  Imagine over 2,000 engineers without working bathrooms and drinking water.  I drink about 3-5 cups of water a day so I was kind of bummed that I would have to buy a water bottle(water bottles are a total rip-off) and my weak bladder would mean that I’d have to walk to the building next door to go to the bathroom.  Not a huge deal, but it would be slightly inconvenient for me.

The company sent out a couple mass e-mails saying the water would be out for the day and they’d be bringing in drinking water eventually.  But then the e-mails started flying around from concerned co-workers: people literally could not work without their coffee.  The e-mails I started getting(a lot of reply all variety) were pretty hilarious.  People were genuinely pissed that the water was out and the coffee machines weren’t working.  A couple of the managers even had to run over to Starbuck’s and buy meeting-sized coffee jugs just to get their employees to work.  And that’s when I realized it.  These people were addicted to their coffee, they were becoming agitated, stressed and cranky by the minute.

I don’t need a doctor to tell me that type of product can’t be good for your body.  The key with coffee or almost any addictive behavior is to use it in moderation.  You can’t do it every day.  I know some people enjoy the taste of coffee but caffeine is a drug and the sugar that you add in doesn’t help matters much.  If you’re a coffee drinker and any of this concerns you, I’ve come up with a few ways to help you get healthier.  Like I said, I could care less about the couple hundred bucks you’ll save a year by cutting out coffee.  I’m more concerned with the lifelong health problems that being dependent on coffee for over 40 years will inevitably cause.

1.  Switch to Tea

I know there is a little caffeine in tea but I don’t think most people drink tea for the caffeine boost.  I like a nice glass of tea after a big meal to calm my stomach or to keep me warm on a cold day.  This might be more of an intermediary step to help you wain off coffee for good since I don’t think it’s a smart idea to replace one addictive behavior with another.

2.  Pair It With a Rewarding Behavior

I really like this one because for those of you who still want to enjoy a nice coffee once in a while or a couple times a week it forces you to challenge your body.  Make a deal with yourself: every time you drink a coffee you have to go for a 3 mile run or you have to go lift weights before work the next day.  That should make you think about drinking that next coffee and also make it more rewarding when you do.  As with anything, I’m sure coffee would taste a lot better if you drank it only once in a while as opposed to every day.

3.  Take a Cold Shower

A lot of coffee drinkers tell me they can’t start their day without a coffee.  I can get the same feeling of awareness and readiness from a cold shower every morning.  I don’t actually sit there for 10 minutes in cold water(that would be painful), but I will take a cold shower for the last 30 seconds or so.  Going from hot to cold will wake you right up no matter how tired you are and it won’t have any negative effects on your health.  Try it and I bet you’ll be hooked.

4.  Sleep More

One of the biggest reasons why people tell me they drink coffee is because they’re tired.  But it’s important to listen to your body; when your body tells you it’s tired you should sleep more, it’s that simple.  I feel great after a nice long work out so I constantly do them; my body might be tired but my find feels relaxed and alert.  After I eat a cheeseburger with fries and a coke my body feels bloated, so I don’t do that very often.  It’s important to listen to the signs your body gives you and follow through on them.  If your body tells you it’s tired, you need to make time for more sleep.

5.  Man Up

If you don’t know what this saying means(or you’re a woman) it’s the same as going cold turkey.  Not everyone has the willpower to do it but if you are reading this article and you want to give yourself the best chances at a long, healthy and financially stable life, the decision should be pretty easy.

Readers, are you addicted to coffee or could you stop if you wanted to?  I think caffeine is a highly addictive drug, you’ll feel even worse at first when you cut out caffeine but after a couple weeks your body will start to reward you.

-Harry @ PF Pro

The post 5 Ways To Reduce or Eliminate Your Coffee Budget appeared first on Your Personal Finance Pro.

I’ve lived in San Diego for almost 10 years now and not once had I ever been called in to jury duty.  During college, my official records stated that I lived in Los Angeles(at my parent’s house) so every time I got called in to LA County jury duty I was excused since I lived in San Diego.

Now that I’ve officially taken permanent residence in San Diego, I actually researched ways in which I could get called in for jury duty service.  Maybe it was my naivety, since I had never done jury duty service before, but I genuinely wanted to get called in.

About a year ago, I called into the Superior Court’s office and asked, “How do I get selected for jury duty?”  The woman on the other end was a little taken aback, apparently not many people want to serve on a jury, but she told me that they pull from DMV and voting records so make sure I was registered there.  I had recently changed my DMV address to San Diego county so I was all set on that front and after filling out a quick online form, my voting address was changed to San Diego County.

I guess the government can be expedient when they need something from you since it didn’t take long after that.  I was called in to jury service less than a year later and I couldn’t have been happier.

Flex Scheduling

I’m not sure that every region is the same, but San Diego Superior Court offered me the ability to report up to two weeks before or after my date.  Now that’s some flexibility for you!  I didn’t end up using this feature but I could see how it would be very handy if something came up at the last minute or you had a light day of work planned.

I did end up postponing my date a couple months though to a more convenient time(twice actually) and the process was very simple.  I went online and they gave me the next available date, I said OK and received a new badge in the mail a week later.  So far so good!

The Day Had Finally Arrived

One problem with serving on jury duty downtown is parking.  I’ve never even tried to park downtown during a weekday since the prices are astronomical.  The parking lot behind the courthouse was $25 a day for parking.  There is plenty of metered parking around the area, but the meters are only good for a couple hours.

I decided to use my Car2go membership to get downtown and I quickly found a metered space(Car sharing services can park in meters for free!).  Total trip cost was $8 one way, a lot cheaper than parking in the lot and a lot quicker than taking public transportation, or so I thought.

7:45 am

I arrived to jury duty a few minutes late just after 8 am and didn’t get into any trouble(score!).  They showed a quick video about jury service and then started calling off names.  It took me a while to figure out whether I wanted my name called or not, but eventually I decided it would be best if the speaker never uttered my name.

8:30 am

After the initial round of name-calling, I went into a quiet room in the back and started working on my blog.  I wrote one article and brokered two advertising deals for $300!  Just as I was finishing up, a voice came on over the loudspeaker telling us it was time for a break.  Sweet, union mandated break!

10 am -10:20 am – Break

After an hour or so of working on my blog I decided to switch gears to my second, third, fourth job.  Did you guys know that I’m a freelance writer for various financial sites?  Anyways, I started writing a few months ago and since I have limited time, I am very picky as to which jobs I accept(translation: I only take high paying gigs).

Anyways, I worked on a long article about foreclosure mobile homes and turned the article in for a cool $100.  My name still hadn’t been called.  By this point it was looking like we might get to go home early.  Just then, a mysterious voice came on and let us know that it was time for a 1 hour and 45 minute lunch break!

11:30 am – 1:15 pm – Lunch Break

My work has pretty flexible hours but I don’t think I’ve ever taken a 1 hour 45 minute lunch break!  So far, I’d say jury duty was way better than my day job and I hadn’t even hit my ideal 4 hour work day.

An hour and forty-five minutes is a long time and I knew I’d only need about 20-30 minutes for lunch so now I had to find a way to kill an hour.  I picked the downtown court location in part since there are tons of restaurants, shops and the bay is right there if you want to take a nice walk.

San Diego Bay Downtown Skyline

My options were pretty abundant but when I walked out I saw a Chase bank and remembered that I had seen an offer the week before for a free $200 for opening a new checking account.  You all know how I love free money so I decided to stop in and hit them up for a free $200.  I was immediately greeted by a nice guy named John who helped me set up my new checking account.

All I had to do was deposit $100 and keep a minimum balance to avoid fees.  Sure enough, three days later, a $200 bonus arrived in my account.  The whole process took about an hour but it still left me with enough time to grab a panini and make it back by 1:15 on the dot.

1:30 pm

We’re all back from lunch now, but things are still getting settled and I probably could have made it a 2 hour lunch without anyone noticing.  The room has thinned out quite a bit, but there is still a significant amount of people waiting for their name to be called.

My post lunch food coma is hitting at the perfect time since my computer is nearly out of batteries and I’m tired of working so hard.  I browse the internet for a while, catch up on ESPN, Slickdeals, Facebook, etc and before I know it an hour has gone by.

People are starting to get antsy, a woman next to me tells me how she can’t wait to get back to work.  Huh?  We’re supposed to go back to work?  Isn’t the point of getting let go early from jury duty so you can go home?

2:30 pm

A final flurry of names are read off and we are told to wait in case they needed more jurors.  Sounds suspicious, but 20 minutes later, a magical voice comes on over the loudspeaker and tells us that we are free to go home.  They thanked us for completing jury service and they will see us again next year!

WAHOO!  Ok I didn’t actually scream, but I did smirk and walk out.  I received a free day pass from MTS San Diego so I decided to take the trolly home.  30 minutes later I was walking into my condo and my day was done!

In Summary..

My employer paid me for the entire day and most of the people I talked to said the same.  I don’t think my outlook on jury duty would be so sunny though if I had to do it on an off day or if I wasn’t paid for it.  But either way, it’s pretty easy to get out of jury duty if you really want to.  Personally though, I’m not too busy to take a one day vacation and I definitely made the most of my time.  Got paid by my employer, worked on my blog, wrote a couple articles for my freelancing gig and stopped by Chase to get a free $200 checking bonus.  Not bad for a paid vacation if you ask me.

Readers, was my jury duty experience pretty uncommon or do you think it’s typical?  Do you have any similar stories or maybe horror stories from jury duty?

-Harry @ PF Pro

The post Why Does Everyone Hate Jury Duty So Much? appeared first on Your Personal Finance Pro.

Gary Dek is a former investment banker and private equity analyst. Don’t hate him – he had nothing to do with the mortgage crisis and the recession. He writes at Gajizmo.com – check out his site sometime.

There are excellent reasons for refinancing a home, but before deciding to do so, homeowners should be aware of both the advantages and disadvantages that refinancing entails. Whether you want to get a lower interest rate, lower monthly payments or cash out equity in your home, there are times when refinancing may not be the best option for your investment.

Lower Interest Rates

Whenever there is a significant drop in interest rates, homeowners rush to banks and mortgage companies seeking to refinance their primary residence’s mortgage as well as investment properties. Over the life of a 30 year loan, saving 1% on mortgage interest translates to tens of thousands of dollars. This can mean lower monthly payments and can make your home more affordable, particularly if you are struggling to pay your bills because you are feeling house poor. Lower interest may be a good reason to refinance your home, especially if you have a good payment history for at least two years.

Homeowners who had a fair credit rating when they obtained their current mortgage may get lower interest on refinancing if their credit score has increased to good or excellent. High credit scores usually get borrowers the lowest possible interest rates. So what is considered a good credit score? If you have 650 or above, you should be able to get one of the best rates, though 720 plus will get you the best and lowest interest rates.

Get More Favorable Mortgage Terms

Some homeowners opt for adjustable rate mortgages (ARMs) because the interest rates are lower than fixed rate mortgages for the first several years of the loan. Unlike fixed rate mortgages, the interest rates on ARMs rise over time and increase the amount of monthly payments. Some ARMs also have balloon payments that are due at intervals specified in the mortgage terms. Buyers with lower credit scores and small down payments may not qualify for a fixed rate mortgage and accept the terms of an ARM because it is the only financing available.

Refinancing to replace an adjustable rate mortgage with a fixed rate mortgage is usually a good idea since it keeps monthly payments stable and there are no balloon payments. Interest rates are so low now that anyone who hasn’t refinanced in the last 5 years should definitely research mortgage loan offerings before rates increase any further.

During the recent mortgage crisis, some homeowners lost their homes to foreclosure because they did not understand the mortgage terms and were not prepared to make balloon payments when they became due. Others were unable to pay substantially higher payments when interest rates increased. Getting better terms on your loan is a great reason to refinance.

Cashing Out Equity

There are times when cashing out the equity in your home makes sense, whether it is to meet a long term goal like sending a child to college or to make needed repairs or improvements on the home. If you have been making payments on a mortgage for more than 5 years, or if property values in your area have risen, you probably have at least some equity in your home. Your equity is the difference between the value of your property and the amount still owed on your mortgage.

The disadvantage of removing equity from your home by refinancing is that your debt is increased and it will take longer to pay off the home. Depending on the current interest rates and mortgage terms, you monthly payments may be higher on the new loan. Using the equity in your home to pay off other debt, like credit cards, can be a great use of the proceeds, but could put your home at risk of foreclosure if you default on your payments. If you default on credit cards or other debts and fall into bankruptcy, you may still be able to keep your house.

Bottom line – as long as you don’t refinance your home and use the money to buy an RV, jet skis, a sports car or some other depreciating asset, using low-interest funds to make investments or pay off higher-interest debt is a wise financial decision.

Cost of Refinancing

Applying for refinancing is a lot like applying for any mortgage. You may be unable to refinance if your credit score is poor or if your income has been reduced due to a change in employment. Most finance companies and banks require that applicants have a stable employment history and may require that the applicant have held the same job for one to two years. If your credit scores are lower now than when you originally financed the home, you could be approved at a higher interest rate than you are paying on the original mortgage, which obviously means you shouldn’t refinance.

Furthermore, there are points/fees associated with refinancing that are similar to closing costs when you purchase a house. Lenders require a new appraisal, title search and credit report and discount points may apply. There is also a loan origination fee and all of the costs are paid by the borrower. You may have to pay for mortgage insurance when refinancing. While some lenders roll these costs into your new loan, others will require that you pay the costs out of pocket when the loan is finalized.

Refinancing Upside Down Mortgages

In many areas, the average market value of homes has dropped in just a few years. If the value of your home has depreciated since you purchased it, you may owe more on your mortgage than the home is currently worth. Since most lenders require some equity for refinancing, you may not be able to get a traditional loan. There are government insured refinancing programs to help homeowners without equity find mortgages with better terms so you can lower your monthly payments and pay off your mortgage early.

While real estate values will likely rebound in the coming years, appraisers must use the selling prices of recently foreclosed homes as comparisons (comps) to determine the market value of your property. Since foreclosed homes typically sell for less than their original market value, this can drop real estate values in areas with a large number of foreclosures. If the value of your home is less than the principal on your mortgage, it may be smart to wait to refinance until housing values recover or you have more equity in the property.

Homeowners who need to refinance to avoid foreclosure or to lower their interest rates or monthly payments may be eligible for the Home Affordable Refinance Program (HARP) sponsored by the U.S. Treasury Department and HUD. The program is designed to help homeowners keep their houses and may provide refinancing solutions for those who have no equity or negative equity in their homes. Although the program originally only addressed mortgages guaranteed by Fannie Mae or Freddie Mac, it has been expanded to include some private mortgages.

Refinancing can be a good financial decision, especially when it helps families get better interest rates and save money each month. For some, refinancing may be a way to avoid foreclosure and stay in their home. It is important to consider the pros and cons before deciding to refinance your mortgage and to shop around for the best terms and interest rates.

Check out more of Gary’s work at www.Gajizmo.com.

The post Pros and Cons of Refinancing Your Home Mortgage Loan appeared first on Your Personal Finance Pro.

This is a guest post by Chris at StumbleForward.  Head over to his blog and check out his other articles after you’re done with this one!

We all understand that the cost of living is going up on an annual basis.  But as we get older, there are going to be some huge cost increases that you may not have realized you had to deal with making those golden years not so golden anymore.

So in this article I’m going to cover 3 expenses that may be increasing and help you plan for those increased expenses now before it’s too late. 

Taxes

One of the first increases you may see is a rise in is taxes.  Once you’ve retired you won’t be able to claim several of the great tax deductions like you once did.  To start, your kids will likely have all grown up and moved on with life so you won’t be claiming any sort of child tax benefit.

Secondly, now that you’re retired you won’t be contributing towards your retirement through a company retirement plan such as a 401k.  Contributions towards these programs helped keep your taxes lower during your working years and what’s worse is when you go to withdraw that money you will owe taxes on every single penny you pull out.

Finally, one of the last ways your taxes will increase is if you are a homeowner, because once you have your home paid off you will no longer be deducting the interest you paid toward your mortgage.  The only upside to this is that you won’t have a mortgage payment anymore.

When it comes down to it, your taxes will increase when you get older assuming your income stays the same.  You may not necessarily jump up in tax brackets but rather you won’t be getting the comfortable deductions you once were.  To avoid these issues now, start contributing toward a retirement plan that is not tax deductible such as a ROTH IRA.  Doing this allows you to pay a portion of your taxes now before you retire and hopefully at a lower rate.

Insurance

The next thing to increase is your insurance, and the big one on this list is health insurance.  Health insurance has been increasing by huge amounts over the last few years.  In fact I’ve personally seen it go up by 50% in the last two years alone.  On top of that in the state of Ohio it is projected to go up by 80% by 2017.

However if you’re on Medicare don’t count yourself safe either.  In a recent article by the New York Times, claims that the Medicare trust fund will run out of money by 2024.  This means the safety net that you once had could be gone now, and before that time even comes you could be seeing a huge decrease in benefits, and higher taxes cover the ever widening gap.

On top of that consider the cost of life insurance.  When you are younger, life insurance is cheap.  But when you hit age 60, rates can go way up and a pre-existing medical condition will make the situation worse. In fact nearly 50% of those living in the US do not have life insurance.

In the end, insurance for the elderly is going up especially as you get older.  Buying life insurance earlier in life when you are healthier and younger could save you a lot.  Secondly, start saving extra for your health insurance needs, by setting up an HSA account or extra savings account to help cover unexpected medical expenses.

Retirement

When it comes to retirement savings, most people don’t start until it’s too late.  In fact, in a recent survey by the Employee Benefit Research Group said that 60% of 55 year olds and older had less than $100,000 saved for retirement.

What’s worse is that the cost of living is also increasing on a year by year basis, which means when you do plan to retire things are going to cost more, a lot more.  Not having this extra cost figured into to your retirement savings may end up draining your savings faster than you anticipated.

Finally, we have to consider social security.  As it stands right now social security may run out by as early as 2023, and just like Medicare, it will likely be facing benefit reductions, and possible tax increases.

The best way to avoid this disaster is to start saving as early as possible.  This will allow you to compound your money for a longer period of time and as a result live a better retirement, not a semi-retirement, or even none at all.

So, what are you doing to protect against these extra cost?

Bio:

This article was written by Chris Holdheide a personal financial blogger with StumbleForward.com, helping people avoid financial mistakes and live a higher quality financial life.

The post 3 Expenses That Will Go Up As You Get Older appeared first on Your Personal Finance Pro.

Whether you’re rich or poor, access to high quality healthcare is something that’s important to all of us.  Since it can literally be a ‘life or death’ matter, there is always great debate over the topic and when it comes to health insurance.  Generally, we know which side’s for what: Democrats want to see everyone healthy and with insurance(hence Obamacare) and Republicans tend to steer more towards private insurance paid for by individuals and less government assistance.

Personally, I fall somewhere in-between.  Living in the greatest country in the world should mean that you can’t die on the streets(and indeed that’s how it is).  If I have no insurance and I have life threatening injuries, I’ll be admitted to a hospital, treated and released.

But what about the people who stuffed their faces with hamburgers and fries for 25+ years, refused to exercise regularly and are now becoming a drain on our health care system?  I don’t want to pay for them and if they die because they can’t afford a triple bypass surgery to unclog their heart I won’t lose any sleep.

About the Study

The Oregon Health Insurance Experiment is a landmark, randomized study of the effect of expanding public health insurance on the health care use, health outcomes, financial strain, and well-being of low-income adults. It represents the first use of a randomized controlled design to evaluate the impact of Medicaid in the United States. Although randomized controlled trials are the gold standard in medical and scientific studies, they are rarely possible in social policy research. In 2008, the state of Oregon drew names by lottery for its Medicaid program for low-income, uninsured adults, generating just such a randomized controlled design. This ongoing study represents a collaborative effort between researchers and the state of Oregon to use this opportunity to learn about the costs and benefits of this expansion of public health insurance.

Most people are familiar with the government’s two most prominent health insurance programs but while Medicare is for those 65 and over, Medicaid is essentially health insurance for poor people.

This study has come up a lot in the past month on the blogosphere and news cycle.  Two years into the study, results have shown that there has been no significant statistical impact found on basic health measures like blood pressure and cholesterol, but did find reduced financial stress and better mental health.

Financial Benefits Are Obvious

It doesn’t take a genius to figure out that health insurance will cause less financial stress.  Even though I’m not a huge fan of insurance personally, I think it’s a necessary evil and it does provide a certain peace of mind(especially for people with less money).  And in fact, health insurance is the one type of insurance that I think makes sense for everyone to have.  If you don’t have car insurance and you crash your car, you can always take the bus or get another ride.  But what do you do when you don’t have health insurance and your heart breaks down?

My biggest problem with health insurance though is the fact that you are insuring against things that you know will happen.  I know I’m going to go see a doctor once or twice a year so why do I need insurance for that?  It doesn’t make sense to add in a third party who will only make things more expensive.  Do you think it only costs $20(the cost of a co-pay) to see a doctor?  No, the insurance company pays the rest and then bills you for it through your premiums; insurance for every day and routine exams hides the true cost of healthcare.

Insurance Isn’t Enough to Improve Your Health

The most controversial parts of the study were the results that showed Medicaid did not significantly affect the A1C levels of people with diabetes or levels of hypertension or cholesterol.  These findings have led many to declare that Medicaid does not work, it is a failed system since it’s not improving the health of it’s participants after two years.  Personally, I don’t think two years is enough to make a determination about the validity of Medicare.

Austin Frakt, at The Incidental Economist, notes that non-statistical significance does not mean failure.  It means that either there is no treatment effect or the study is underpowered.  Blood pressures did fall in the study, but the amount they fell by wasn’t statistically significant.  He suggests that aybe these health measures could have been shown significant with a larger sample size.

Preventative Healthcare Matters More

Over time, I think the results of this study will show that Medicaid will improve participant’s health but I don’t necessarily think just having insurance prevents healthcare problems.  I don’t know why we aren’t focusing on preventative care like eating healthy, exercising regularly and so on.  It would be a lot cheaper to hire a bunch of nutritionists and personal trainers to whip people into shape than it is to have to pay for a cardiologist to go in and do a complicated surgery down the road.

Unfortunately, government tends to be the last one to adapt.  I look to the private sector for change first and I don’t have to look far.  My own company is a huge proponent of health and wellness.  They actively encourage all employees to go for walks during lunch, provide two on site gyms, have wellness fairs and even monetary incentives for setting health goals, getting a biometric screening and taking a health survey.  Now what is their motivation behind all this?  While I’d like to think they want to employ a happy and healthy workforce, the answer is more likely money.  They see that there is a huge cost savings when you have a healthy workforce that doesn’t need to see their doctors very often.  My employer takes a preventative approach now so that down the road they can negotiate cheaper plans for the company’s bottom line.  That’s good business.

I think health insurance for all is a good thing and although there are definitely some tweaks that need to be made here and there we’re on the right track.  I’m still hoping that HSA’s will catch on and employers, employees and governments will realize the benefits of being able to shop around for healthcare services much like you would with other services.  Until people actually have to see the cost of the services they are receiving, there won’t be much change though.

Readers, do you think Medicaid is a flawed system?  What are your thoughts on the Oregon Public Health Study?

I didn’t want to dive too deep into the statistical side of the study but there are some really interesting facets of discussion if you consider yourself a stats geek and words like power and statistical significance mean anything to you.  Here are some more resources if you’d like to learn/read more about the study and it’s results:

• Oregon Health Insurance Experiment
• Econ Talk Podcast: Frakt on Medicaid and the Oregon Medicaid Study
• Oregon and Medicaid and Evidence and CHILL, PEOPLE!

-Harry @ PF Pro

The post The Oregon Public Health Insurance Experiment: Does Medicaid Work? appeared first on Your Personal Finance Pro.

Living in Souther California has it’s benefits, yet year after year I find myself making the same trek to the hot and arid Nevada desert.  Las Vegas probably feels like a second home to a lot of SoCal’ers since it’s just an hour plane ride or a 5 hour drive away.  But for me, I rarely go more than 1-2 times a year and since I’ve already been twice this year, it looks like I’ve hit my limit.

Since I traveled the first couple times for my second job, flights and hotels were paid for but there was still a lot of down time left over to get into trouble and spend some money.  I’m not your typical 20-something in Vegas, I would never pay for bottle service and wait in long lines to get into clubs or bars(unless someone else pays for it!).  But I probably get into just as much trouble; I can have fun walking the strip, interacting with local residents and of course gambling.

Gambling From an Early Age

My gambling habits probably stem from when I was little growing up with a family that loved to gamble.  With my mom’s side of the family, we would always play a game called Fish, Shrimp and Crab(yes that’s really the name – it’s a Chinese game).  It was a very simple game in which there were six squares you could bet on and three dice that the dealer would roll – each dice had one of the six figures on it’s face.  If you bet on the correct figure, you would win that ratio(1:1, 2:2 or 3:3).

Even though we had kids gambling at a young age, it was never with more than a few dollars worth of quarters.  Whenever one of my uncles would lay down a dollar bill we would all ooh and ah!  Today, I still gamble here and there but it’s never for significant amounts of money.  I bet on sports games with my friends, play iphone casino, enter into a couple fantasy leagues and have poker nights once in a while.

Gambling Responsibly

Even though I love gambling, I rarely gamble to excess.  When I go to Vegas, I like going to Hooter’s Casino or Casino Royale since they have $3 blackjack limits.  You’ll probably get bored before you lose too much money when you’re only gambling $3 a hand.  When I play poker with friends, we do a $5 or $10 buy in.  I just like to win, doesn’t matter if it’s $50 or $500, although the latter would be nice if there wasn’t also the risk of losing $500.

Sometimes, it’s fun having a little money on the line since it will make people take things a little more seriously.  Playing poker with no repercussions can be no fun and trust me, it’s a lot easier to watch a Bengals vs. Dolphins game when it’s the last leg of a 3 team parlay to win $200!

I know that gambling is an addiction for some people but I think of it just like credit cards.  It’s not my job to babysit people and tell them they shouldn’t use credit cards because they might overspend.  We are all adults so have a little self control and don’t overdo it.  It’s ok to indulge once in a while as long as you do it responsibly.  I open up a ton of credit cards for the bonuses, but I pay my bill off every month and keep track of all of them in a spreadsheet.

Like investing, you should never bet or take on more risk than you’re willing to lose.  I know how hard I work for my money and I also know that mathematically the more I play, the more I will lose.  That is a fact that you can’t argue with.  So when I gamble, I set a limit as to how much I can lose and once I hit it, I stop.  Sounds easier than it is, but that’s what you have to do if you want to gamble responsibly.

Readers, do you ever gamble to excess?  What do you think it is about gambling that allows people to so cavalierly lose hundreds or thousands of dollars when they go to Las Vegas?

-Harry @ PF Pro

The post Is There Such a Thing as Responsible Gambling? appeared first on Your Personal Finance Pro.

Most people wouldn’t think of me as a small business owner but I actually own two small businesses.  They don’t have a physical presence or a storefront but they still count as small businesses in the eyes of the IRS.  And although the income is only supplemental to the salary at my main job, it still counts for something(and most of it is tax free).

There are lots of benefits to starting your own small business including flexible working hours, being able to enjoy your work and so on.  But the real benefit in my mind is the ability to work for yourself.  See when you own your own business, the amount of work you put in will generally correlate to your level of success.  I can’t say the same about my day job since if I work 60 hours a week instead of 40 hours, my boss will give me a pat on the back as a reward(if that).  I don’t mind working hard and I feel that the work I do for my business is rewarded accordingly.

Can’t Do It All Alone

One of the things I hate about my day job is how dependent I am on others.  There aren’t a whole lot of structural engineering topics you can just google to learn about and my workplace doesn’t have a very organized system of standard tools like other companies.  So I’m forced to rely on other engineers to help me out whenever I don’t know how to do something.

I thought this dependency would change when I started my blog(since I would be the one working on everything) but I was wrong.  I’ve gotten help from countless numbers of people and I use an extensive network of friends for ad referrals, advice and so on.

This is actually one of the most important things I’ve learned from starting a business.  There are other people who have done it before, encountered some of the same problems you’re going to encounter and are willing to help you succeed.

Promote Your Business

Most of the promotion for my blog is done on social media.  It would be asinine for me not to focus on this aspect of promotion since it’s so easy to get referral traffic from here.  If I owned a physical business, people might read or hear about me online but they would still have to physically drop in.  Online, I’m just a click away.

Some people think that promoting their business to as many people as possible is best.  Although I partially agree, I would rather have a smaller group of extremely dedicated followers.  Your most loyal customers/readers are the ones who will tell their friends about your business and support you no matter what.

Online, I try to build solid relationships by giving thoughtful responses to e-mails I get, responding to comments and promoting other site’s articles.  Offline, I don’t talk about my blog with my friends/family a whole lot unless they bring it up.  I’m sure most people know that I run a blog and I don’t want to force them to read it.  But for those that do show an interest in finance, I always carry around a few business cards.

My business cards aren’t anything special, they say the name of my site, what it’s about, the web address, my name and my e-mail.  Not really the type of business card that will impress a woman but it gets the point across.

Readers, so what do you do to promote your small business?  How have you built it up from just an idea to a thriving(or on the way to thriving) business?

-Harry @ PF Pro

Btw, here’s where I got my business cards: http://www.instantprint.co.uk/flyers-leaflets

The post How to Build and Promote Your Business appeared first on Your Personal Finance Pro.

Four years ago, I knew very little about saving for retirement.  But I didn’t need to know anything yet, since I had just graduated and I was more worried about getting a job than saving for retirement.  Once I landed that great-paying job though and got my first paycheck, I had to decide how much to contribute to my 401(k).

Saving and investing for retirement isn’t something they teach you about in school(they should though!).  So it’s up to you to independently do your own research and figure out what to do.  I am shocked and sometimes appalled at the lack of knowledge my co-workers have when it comes to investing.  I’m talking about the basics: the difference between a 401(k) and a Roth, the tax treatment of 401(k) contributions, etc.

It’s funny how conscientious people can be about their every day finances but so lackadaisical when it comes to retirement.  People are living longer than ever, things are getting more expensive and taxes are going up.  This all leads to a higher cost of living in the future and the more money we’ll need in retirement.  The current 401(k) system sucks and it doesn’t work for most people because it gives them the option to contribute.  Most people would rather see a larger paycheck today so they tend to contribute less.

I would much prefer a system like Australia’s, where employers are forced to contribute 9% to a Suncorp superannuation fund.  Unlike social security, the money is still yours though.  I prefer this ‘forced contribution’ since it’s kind of like an auto-deduction from your paycheck.  You’re essentially getting the same salary, but 9% of it is automatically siphoned off to your retirement account.  Most of us don’t live in Australia though, so we need to figure out how much to contribute ourselves.

The Bare Minimum

The minimum amount to contribute is usually pretty easy to determine: you’ll want to contribute at least up to your company match.  Pretty obvious right, why would you turn down free money?  I can’t think of one good reason not to contribute up to your company match.

For those who do contribute the minimum, great job but you should probably be contributing more.  Successful people don’t ever become so by doing the bare minimum.  Why would you go through your whole life over-achieving in school, in sports and busting your ass at your job but only contribute the minimum when it comes to retirement?  That baffles me.

So What’s the Right Number?

I’ve thought a lot about this question over the past few years and I’m still trying to find an eloquent way to answer it.  I think a lot of new grads tend to get too accustomed to living off their parents during college and once they’re on their own it’s natural to want that same lifestyle.  All students don’t follow this path. Many will take out loans for undergrad, find a job and work around the pursuit of a flexible setup such as night classes or pursuit of an online mba program.

Most people need to have their ‘investing epiphany’ before they realize the benefits of compounding interest.  Save a lot now so that you can have your money working for you for 40+ years and earning interest that whole time.  I was 22 when I had my ‘epiphany’ and since then, I’ve worked hard to make as much as I could so that I could save as much as I could.

I’m fortunate to have had my epiphany early on and that determination has allowed me to amass a 6 figure retirement portfolio by the tender age of 26.  Go type those numbers into a retirement calculator and maybe you’ll have your ‘investing epiphany’ too.  Too lazy?  Ok, you’d have about a million dollars in your retirement account(assuming a conservative 6% return over 40 years) when you retire at the age of 65.  That’s without ever contributing another dime for the next 40 years.  Reason enough for you to save?

Increase the Contributions

Even though I now max out my 401(k), Roth IRA and HSA it wasn’t always like that.  I started off slow with a 401(k) contribution up to the match but every year I would add 1% to my contribution.  A lot of employers actually have programs that you can sign up for that will automatically increase your 401(k) contribution each year.  Since there are new tax laws going into effect and older ones expiring every year, your paycheck from year to year will always differ, so you shouldn’t even notice a 1 or 2% change.

I’ve talked before about how contributions matter more than performance when you’re young.  And the best way to increase your contributions without affecting your take home pay is to use your raises and merit increases to offset your contribution increases.  I’ve gotten a 2-4% merit increase every year and as soon as I got it, I would always go into my 401(k) and increase my contribution by that exact amount.

I don’t think it’s fair to provide specific guidelines to how much you should contribute to your 401(k) since everyone’s situation is so unique.  One person might have student loans at 6.8% to pay off and another might live in an ultra-expensive city like New York or San Francisco.

I can provide a minimum and a maximum percentage but it’s up to you to determine everything in-between.  If you like the idea of turning $100,000 into $1,000,000 in 40 years without having to do anything other than plopping your money into a basic target retirement fund, maybe you should be closer to the maximum.

Readers, how much do you contribute to your 401(k) each year?  What percentage of your salary is it?

The post How Much Should I Contribute to My 401(k)? appeared first on Your Personal Finance Pro.

The following article is a guest post.  It’s also part of my monthly series on credit and building up your credit score.

If interested in submitting a guest post, please read my guest posting policy and then contact me.

Applying for a loan in any form, be it a personal loan, credit card or even a mortgage can be a lengthy process even in the best of times. Before you actually get to the application itself, you need to work out how much you want to borrow, what you can afford to pay back in terms of interest and of course, find the best possible interest rate.

When you reach the point where you’re about to find out if your application for a loan has been accepted, you might begin to worry about whether or not your credit rating is good enough to help you get what you need. Credit ratings play a huge role in determining whether lenders decide to give money to customers, but what are they and how, if at all, can they be altered?

Where Credit’s Due…

In simple terms, your credit rating is a statistic which helps to determine whether or not you’re deemed eligible to take out any form of loan. It’s determined by a number of factors, the main ones being:

• Late or missed bill payments
• Poor financial management
• Multiple failed credit applications
• Having too many open bank or building society accounts
• Not having a history of financial responsibility
• Large levels of unmanageable debts

If your financial circumstances mean that you tick at least some of those boxes above, then it’s likely that you may have a poor credit score. Thankfully, if you need to apply for credit at some point at the future, it’s possible to improve your rating, and all it might take is a little sound financial management and a degree of self-control.

Top Tips For Improvement

There are certain things which lenders, not to mention the three main credit rating agencies which handle all ratings data (Experian, Call Credit and Equifax) will take note of when trying to do your best to boost your credit score. Here are some top tips you might want to use:

• Live within your means. Trying to stay within budget every month in this day and age might seem like a thankless task, but scrimping and saving can boost your credit rating
• Use a credit card. If you get a new one and use it responsibly, then you’re showing lenders you can be trusted with their money
• Repay any debts you might have. It doesn’t have to be in one go, but by chipping away at your arrears, you’ll show that you’re trying to get on top of your personal finances
• Open a savings account and make regular deposits. Again, you don’t have to spend a lot, but if you’re saving, you’re proving to lenders that you can be prudent and show good financial management.

“Set up a regular savings account and shop around to make sure you get the best rate. Ensure that you are on the electoral roll as this can improve your credit score. Review your day-to-day spending to see if you can make any cuts to increase you’re saving, then set up a budget for essentials and stick to it,” commented a spokesperson from Yorkshire Building Society.

The post Guest Post: Understanding Your Credit Score and Improving It appeared first on Your Personal Finance Pro.

The following article is a guest post, the ages and terms are UK-based but the overall message is applicable to all countries.  If interested in submitting a guest post, please read my guest posting policy and then contact me.

The days for women being able to leave the world of work for good by the age of 60 are numbered. Following anxiety from the coalition government over how to bring down the cost of state pensions, the retirement age for both men and women has increased gradually since a law was passed in April 2010 by the House of Commons.

Working for longer

As the life expectancy for people has improved over the past two decades, some might say that the government was right to increase the retirement age. However, it seems that women, who were previously able to retire from their 60^th birthday, were more affected than men. The male retirement age before 2010 was 65.

By 2020, the retirement age for both genders will reach 67, which in many cases will probably mean one thing – working for a few more years. For a small number of older workers, they might not mind being made to wait until they can retire and take out the basic state pension. However, for many, the prospect of waiting might not suit them.

Harsh reality?

Now that the government is trying to reduce the amount of money it spends on state pension payments, women in particular may have to stay in their current role or look for another job if they don’t have any retirement income stream they can live off. The pensions minister Steve Webb suggested that older people staying in work could become the norm.

If there becomes a shortage of workers, there could be a chance that many older members of the UK workforce will have to postpone retirement until they reach their 70’s. However, the more immediate problem of retirement age increases will present plenty of problems for women in terms of knowing what to do if they have already made plans post-retirement in their early 60’s.

Pension confusion

While waiting until they become eligible for the state pension, female workers in their late 50’s will have a limited number of choices. They could either carry on working, rely on their savings if retiring before they turn 65 or, if they have one, rely on a private or workplace pension for income. Those who turn 60 before 2018 are expected to suffer. They are likely to have little time to prepare for the worst, and could find themselves in limbo.

A spokesman from mypensionexpert.co.uk explained how this confusion could cause chaos:

“Little and often early will pay dividends when it comes to young people and their pension contributions. Even if payments are small at first, the fact that the money will be invested for such a long time over their working life can make a huge difference to their overall funds at retirement. Encouraging hard pressed young people to make savings now for their retired life is a big challenge but this decision will soon be made easier with the introduction of Automatic Enrollment where employers will have to provide a work based scheme and also make contributions. “

“Self-employed youngsters will, however have to be self-disciplined and start their own pension and it is this group of people who may be most likely to fall behind in the pension saving stakes.”

Those who turn 60 before 2018 are expected to suffer. They are likely to have little time to prepare for the worst, and could find themselves in limbo.

The post Guest Post: Women’s Retirement Age is Set to Be Going Up appeared first on Your Personal Finance Pro.

This is the second part in my series on investing in a Lending Club Roth IRA.  You can read the first article here about Opening a No Fee Lending Club Roth IRA.

Finding a Great Sign-Up Bonus

Lending Club has always had some pretty solid sign-up bonuses.  When I opened my account three years ago, their $50 sign-up bonus definitely assuaged my initial apprehension and was part of the reason why I signed up.

Lending Club was offering cash bonuses of $100-$300(thanks to reader Noah for this tip), but they actually slashed these bonuses by 25% this past Monday(5/20)!  Horrible timing for me since I had already written this article, but Lending Club now offers bonuses ranging from $25-$100 depending on how much you invest.

It’s not a ton of money like it used to be, but it’s better than nothing if you’re going to sign up anyways.  There is an abundance of investor money out there right now so it doesn’t look like these bonuses will be going back up any time soon.

Lending Club’s referral program actually requires current members to invite new members through e-mail or social media accounts from the account dashboard.  The referral bonus you can send out depends on how much money you have in your account but I’ve copied the links to the landing page for each bonus and I’ve posted them below:

• $25 Lending Club Bonus on an investment of $2,500 or more.
• $50 Lending Club Bonus on an investment of $5,000 or more.
• $100 Lending Club Bonus on an investment of $10,000 or more.

From my account, I can only invite people with a $25 referral bonus so YMMV on the $50 and $500 links.  I would make sure to take a screenshot in case you don’t end up getting the bonus.

In case you’re wondering, I won’t receive any type of bonus or commission if you sign up using any of the above three links.  I do have affiliate links though where I get paid a small commission if you click on them and then sign up with Lending Club.  But if you plan on investing more than $2,500, you should use one of the above non-affiliate links since my links won’t give you any type of bonus.

Funding a Roth IRA and Investing in High Quality Notes

Since my after-tax account was relatively small, I only needed to invest in new loans once every couple weeks.  For my new Roth IRA, I was a little worried about investing $5,000 all at once since I have such strict filters.  Either way, it was too late, since I didn’t really think about this until I already had the money transferred over.  I probably should have though since what I found was that there are hardly any notes to invest in anymore.  There is a gluttony of investor money and borrowers just can’t seem to keep up with the demand.

I was checking constantly throughout the day and there never seemed to be more than 100 notes available.  Most of which, didn’t even come close to meeting my strict filtering criteria.  I was getting a little worried but then I came across some great advice from Peter at Lend Academy.  Peter told me that Lending Club has started releasing all their new notes at 6 am, 10 am, 12 pm and 2 pm Pacific time each day.

Once I started logging in at those times(sometimes it doesn’t update until 1-2 minutes after) I was often seeing the number of notes jump from 50-75 to 150-200 depending on the day and time.  I finally had the selection I wanted but now I had to decide which notes to invest in.

Using a Tiered System

I did a lot of experimenting searching for notes using various filters and I finally settled on two variations.  The first filter I call my tier 1 filter and I invest in $50 notes with it.  The second filter I call my tier 2 filter(real creative, I know!) and I invest in $25 notes with it.  I plan on owning about $2,500 worth of tier 1 filters and $2,500 worth of tier 2 filters.  That should give me around 150 total notes, I think that’s plenty for diversification purposes.

Tier 1 Filter

Revolving Balance Utilization: 50% or less

Minimum Length of Emplyment: 3 years

Term: 36 month only

Max Loan Amount: $20,000

Delinquincies(in the last 2 years): 0

Exclude loans already invested in: yes

Home Ownership: Mortgage or Own

Interest Rate: C: 15.8%, D: 18.76%, E: 21.49%, F: 23.49%, G: 24.84%

I also add my own filter at the end and I don’t invest in any loans that have a title or description of credit card consolidation, payoff, get out of debt, etc.  This is the majority of loans on Lending Club but I have never like investing in these types of loans.

Tier 2 Filter

Revolving Balance Utilization: 50% or less

Minimum Length of Emplyment: 2 years

Term: 36 month only

Max Loan Amount: $30,000

Delinquincies(in the last 2 years): 0

Exclude loans already invested in: yes

Home Ownership: Mortgage or Own

Interest Rate: B: 12.2%, C: 15.8%, D: 18.76%, E: 21.49%, F: 23.49%, G: 24.84%

I also add my own filter at the end and I don’t invest in any loans that have a title or description of credit card consolidation, payoff, get out of debt, etc.  This is the majority of loans on Lending Club but I have never like investing in these types of loans.

Reasoning Behind My Filters

I think my tier 1 filter is pretty self-explanatory.  I’m looking for homeowners who don’t want too much money and have a decent credit history.  I didn’t really do any in-depth analysis to come up with these filters, I just played around with them over the past few years and relied on past data.  The only changes I made from tier 1 to tier 2 is to increase the loan amount, add B grade borrowers and lower the minimum length of employment.  I did this in part because I needed more loans to invest in so we’ll see how these play out.

The one thing to note is that I no longer invest in 60 month notes.  I don’t think the slight increase in interest rate is worth the additional two years of risk that a borrower could default on the loan.  You can use a site like LendStats to test your filters and see how they have performed in the past but don’t get too caught up in it as past performance is not always a good predictor of future performance.

Off to a Good Start

In just two weeks, I’ve already accumulated 27 notes that meet my filtering criteria and the split is exactly 50% for now.  I have $450 invested(9 notes) in Tier 1 notes and I have $450(18 notes) invested in Tier 2 notes.  I set a recurring Outlook reminder at 10 am and 2 pm to check the platform for new notes and it takes about a minute to quickly log on, check for notes and invest.  I usually find 1-2 tier 1 notes a day and 2-3 tier 2 notes a day.

So that’s the strategy I’ll be using from now on.  I’m probably going to slowly start phasing out my after-tax account since otherwise I’d be investing in a lot of the same notes in my Roth IRA.  Like I said in part 1, I’m going to invest a total of $10,000 and see how it goes.  If things go well after a year or two, I’ll probably open up another Roth IRA in my fiancee’s name(with a sign up bonus of course) and do some more investing there.  Ultimately, I would like to use these accounts as part of my passive income strategy but for now I can be patient.

Readers, what do you think of my investment strategy?  Do you use similar filters or do you just pick whichever loans look good to you?

-Harry @ PF Pro

The post Part 2: Investing in a No Fee Lending Club Roth IRA appeared first on Your Personal Finance Pro.

I’ve been investing with Lending Club for three years now and my returns are still over 10%.  I’ve developed a specific set of filters that I feel give me a distinct advantage over the average LC investor yet it’s nothing ground breaking.  The average investor is doing pretty well according to Lending Club, but I want to do better.  My filters have produced just one default out of 50 loans(37 still issued and current) in my after-tax account and although my initial investment was only $500 3 years ago, I’ve been continuously re-investing interest payments and my account value is now over $700.  That is a pretty amazing return considering the low interest rate environment we’re in.

I wouldn’t dare compare Lending Club to fixed investments like CD’s or even bonds in terms of risk but I’d say there is a very favorable risk-reward trade-off when it comes to peer to peer lending.  Since it’s such a relatively young business, the market has not caught up to it yet and individual investors like you and I can take advantage of that fact.  I’d say the risk is somewhere in-between stocks and bonds but the returns are more closely aligned with stocks.

Most people invest in stocks because they want the high returns that bonds/fixed investments don’t offer.  But with higher returns, there is almost always higher risk.  Stocks are no exception as anyone investing in the past 10 years has seen just how volatile the market can be.  Even though Lending Club has some obvious risks, I don’t see nearly the same volatility that stocks have even though they both produce similar returns.  The lack of volatility coupled with higher returns is what makes Lending Club such a great investment.

Why Roth IRA?

I’m not going to get into a whole Roth IRA debate here but the benefits are pretty obvious in my opinion.  You don’t know how much money you’ll make in the future and you don’t know what the tax rates will be like.  If you diversify your investments between stocks, bonds and real estate then you should diversify your retirement accounts from a tax perspective.  Pay taxes on some of your money now and pay taxes on some of it later.

I decided to contribute $5,000 to my Lending Club Roth IRA for 2013 and I will contribute $5,000 more in 2014.  This represents about 5% of my overall retirement portfolio and even though I’m a huge Lending Club fan, I don’t think it would be prudent for this number to ever go above 15%(for now).

Re-invest the Interest?

Here’s where things get fun since Lending Club pays out monthly cash payments of interest and principal.  Investors can either re-invest that money in new loans or withdraw it to their bank account.  Personally, I plan on re-investing the dividends to start, but eventually I think it could be a great source of passive income.  And the best part would be the fact that the income would be tax-free.  Here’s how:

From 2008-2012, I contributed $5,000 a year to my Roth IRA for a contributions total of $25,000.  Obviously the market has done well over that period so my Roth IRA has gone up.  But I don’t ever plan on touching this money(principal and gains) until I retire.

Since I’ve already contributed $5,000 in 2013 to my Lending Club IRA, I’ll contribute another $5,000 in 2014 for a total of $10,000.   Let’s assume that my $10,000 balance is fully invested at the start of 2015 and I earn a 10% return for the year.

At the end of 2015, I would withdraw $1,000 from my Lending Club Roth IRA.  Up to this future point in my future life, I’ve contributed a total of $35,000 to all of my combined Roth IRA’s.  Since I’m allowed to withdraw contributions at any time tax free, all I’m doing is withdrawing a contribution, my first $1,000.  I can do this for the next 35 years!

So technically, even though I’m taking out the money I made from Lending Club, the government sees it as me taking out the first $1,000 I ever contributed to a Roth IRA.  This is what’s known in the finance world as ‘the fungibility of money.’

Even if I never contributed the first $25,000 to my Vanguard Roth IRA, I would still be able to use this strategy for 10 years and take out $1,000 a year.  After that though, I would have to pay taxes on any withdrawals or leave the money in the account and take it out tax free when I retire(still not a bad deal).

The Fees Associated with a Lending Club IRA

This all sounds too good to be true right?  Kind of, although there are fees associated with a Lending Club IRA, they can be negated by depositing 5k within the first year and 10k by your 2 year anniversary.  Lending Club is actually pretty good about disclosing their fees and the only fee they charge is the servicing charge on each loan.  You will clearly see this fee when you go to place an order and it calculates your expected return(rate – default percentage – fee).

Lending Club doesn’t actually offer retirement accounts so you’ll have to open one through their custodian SDIRA Services as an administrator.  Now these guys know how to charge some fees.  Just take a look at their fee sheet!  There are all sorts of fees for wire transfers and things of that nature but fortunately there is no charge for ACH transfer, so getting your money in and out should be free(I haven’t tried this yet).  And as long as you meet the 5k/10k requirements, Lending Club will cover all the other applicable fees.

The only thing that worried me was the $150 account termination fee, so if you ever decide to close your account you might be hit with this fee.  With certain companies, you can try to transfer out all your money instead of closing the account.  They might require that you leave a certain amount of money in the account, but if that amount is less than the account closure fee it might save you some money to transfer instead of close the account.

Editor’s Note:  This article turned into kind of a monster at over 2,000+ words so I decided to break it up into two parts.  The second part of this article will cover how I invest in Lending Club: what filters I use and why.  I’ll also talk about the best sign-up bonuses currently going on at Lending Club so check back on Thursday.

You can read part 2 here: Investing in a No Fee Lending Club Roth IRA

Readers, what do you think about my new Lending Club strategy?  Do you like the idea of opening an IRA or rolling over your 401(k) to Lending Club?

-Harry @ PF Pro

The post Part 1: Opening a No Fee Lending Club Roth IRA appeared first on Your Personal Finance Pro.