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Integrating Investing
I like investing. I mean, I really like investing. I like to see my money GROW.
After filling out health insurance and 401k paperwork (with my awesome 3% contribution) at work today, it got me back in to the investing mindset. Or fever, whichever you prefer.
You know what else I really like? Lending Club. As a resident of the great Commonwealth of Pennsylvania, I’m only able to invest in notes via their trading platform, not directly. There is some benefit in this minor inconvenience, however. As most of the sellers hang on to their notes for a few months (usually 6 or so) before putting them up for sale, I can see that the borrower has been making payments on time for that many months – ergo, less risk for me, but still pretty good returns. I’ve had one note chilling out for a few months now, with which I’m pulling in an amazing 79 cents per month (sounds paltry, but it’s a 9.07% interest rate).
So, here’s what I was thinking. Getting out of debt in 5 years would be swell and all, but I don’t want to get there 5 years from now and have nothing saved up, apart from my emergency fund. On top of that, only one of my debts (LFCU) has a higher interest rate than what I could be earning through Lending Club. For those keeping track – LFCU 13.99%; Scooter 6.99%; AES 4.21%; Sallie Mae 3.5%.
As a matter of instant weekly gratification, I was thinking of setting aside $30/week for investing purposes. That way, I would be able to invest in a new note every week. I would also be insanely diversified, which should make this a very safe investment vehicle, no?
However, this would also push back my total debt payoff to October 2014, which is 5 months past my 5 year goal. I think this is an acceptable tradeoff that should definitely be worth it in the end, resulting in having earned very nice returns and a nice, fat, diversified portfolio.
Of course, I’m looking for your input, dear readers. In the meantime, since I’ve nothing better to do at 0330, I’ll go ahead and work it in to my spreadsheets until I hear back from you 
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{ 4 comments… read them below or add one }
I think you should not lose focus and get out of debt as soon as you can.
That said, I’m also a big fan of Lending Club, and I would invest more in there if I had more money ready to go.
I agree with Lara – this is a way to detour you from what needs to be done. Plus, it wasn’t that long ago that you were wondering if you had enough cash to make it to pay day.
No matter how you add it up, Lending is not 100% guaranteed. I have lost more then a couple dollars ‘gambling’ this way. Your old path is.
At a very minimum, you need to have a fully funded Emergency fund, before doing this. Better you need to also have all family notes paid. Best you need to be debt free and have solidified savings, then it is truly extra cash and you can really watch it grow.
I have a short attention span. I can’t help it.
I’m also thinking maybe I should just do this with my secondary savings. However, that is mostly made up of change at the moment, and that too, I enjoy watching grow.
I really make myself wonder sometimes, ya know?
The idea was to get my LC portfolio to a point where it would be self-sustainable, passive income – reinvesting the earnings without putting any new money in.
I guess this means you are human – sorry LOL.
We all do this. I think because we all want everything NOW. The goal is to grow and learn from it. This was we can actually atain success. Don’t give up Jake, you have made huge strides lately. You are on the right path and you have an excellent support system with mom, sis, and grandpa. Gain confidence in your ability and make them proud of you too. You can do this!!!
Your so close to feeling like your getting somewhere – keep going!