Recently I was planning my training schedule for a big race that is coming up in six months, and it occurred to me that personal finance is similar to a marathon race. We at Lending Club believe that there are many money lessons that can be learned from a marathon. I have put together some ideas that I have on this subject, and in the following days you can read the following posts:

1. Defining and Goal Setting – Many times we hear so much about money, stock market and personal finance that most of it doesn’t get through to us. Defining what personal finance success means to you and setting goals is the first step.

2. Where Am I At Now? – Before determining how much there is to do, you have to determine where you are starting from, and what shape you are in now. Sometimes an assessment of your current financial state turns out to be better than you thought.

3. Where Do I Want To Be? – Once you have figured out where you are now and what you have to work with, the next step is to find out where you want to be. In a race this is usually done for you, but with money, you’ll have to set the goal yourself.

4. Short-Term Focus – In order to win with long-term goals you have to focus on what you can do to achieve those goals on a daily basis. Reverse planning should be used – start with the goal and a date and work backwards.

5. Zero-based thinking – “Knowing what I now know, would I get into this investment, business, partnership or deal again?” If the answer is no, your next steps should be to figure out how to get out of it and how fast.

6. Have a Fun Fund – When the going gets really tough and the motivation drops, you should just drop and do nothing. Finances should not just be all about sacrifices and hard work. Set aside a fund that is dedicated to nothing but fun things to do.

7. Make It Automatic – Training for a marathon should be put on autopilot. You don’t want to be thinking about your workout clothes or where your shoes are. You want the least friction possible. Same principle applies to your finances; make it automatic whenever you can. You can contribute 10% of each paycheck to your P2P loan portfolio on Lending Club, for example.

8. Compete Against Yourself Only – Competing against others will only get you frustrated and demotivated in record time. There will always be somebody that comes along that is better or can do better. The best thing is to make sure that you are only competing with your previous numbers.

9. Support Will Carry You Through – Training for hours can be tough and it’s often easy to talk yourself out of doing it. If you train with a friend, he can carry you through your rough times, and you can carry your friend through his rough times.

10. Win – Set up small wins and big wins for yourself after small intervals, before you achieve your ultimate goal. This will help you to keep focused and will reinforce your behavior and help it become a habit that you automatically default to.

The number of financial products geared towards children continues to grow. Starting children’s introduction to money and finance as early as possible will help them to learn about a subject that generally isn’t covered in schools. Many new product offerings take time-honored traditions like chores, allowance, and the piggy bank and move them online.

One such site, MyRewardBoard.com, was recently discussed in this article. There are many similar offerings with various levels of services, fees, etc. The way these sites generally work is that parents can set up a list of chores, the required frequency, and a value associated with each. Children can then login to see what they have to do, update status when chores are complete, and view their virtual piggy bank balances.

Some sites actually handle real money so that allowances can be paid out in cash, gift cards, or online merchandise credit. Other sites, such as Smartpiggybank.com, allow you and your kids to track their money in a virtual piggy bank without having to handle physical money or calculate interest yourself.

All of these sites have positive attributes, most notably that they open the door to conversations about money with your children. For kids completely inexperienced with money, having real allowances and piggy banks is probably a better starting point. Money is abstract enough without having to add the abstraction of the virtual world.

You can easily create paper copies of the chore lists as well, and kids might get more satisfaction from seeing a star or a fun sticker placed on their lists versus clicking a check box online. I know that when I was younger, I would often take my money out of my piggy bank, count it, and imagine all of the possible ways I could use it. That’s something that will likely be lost as things move online.

Once kids have some real-world experience with money via allowances and piggy banks, I think going virtual is a helpful approach. When kids are a little older, using an online tracking method may provide excellent training for their future use of online banking. It opens up even more avenues of conversations between parents and children. Perhaps you’ll want to show them how you log in to your Lending Club account and manage your P2P loan portfolio.

Showing your children that you have an online account (just like they do) may give them more incentive to learn about personal finance. Whether or not they’ll be better about doing their chores remains to be seen, but if they learn a little extra about money by bringing the experience online, then it will certainly be worth it.

When most people think of investments, they think of stocks, bonds, and maybe those gold coins your grandpa gave you when you turned 18. I like a broader definition of an investment that includes not only financial vehicles, but timesavings and relationships as well.

In those terms, the best investment decision my parents ever made was the original Nintendo Entertainment System (NES). I can still vividly remember finding the box hidden behind a ratty old couch in our basement (Santa always hid the best presents there) at Christmas in ‘88. I don't know if you're able to remember memories at age 4, but gosh darn it I remember finding that Nintendo. I don't think I stopped screaming for joy for at least an hour.

Playing The Classics: Bull Charge!

Over the next 3-4 years my brothers and I spent countless hours playing classics like Duck Hunt/Mario Brothers, The Legend of Zelda (still my favorite game of all time), and Mike Tyson's Punch-Out (I was a master at defeating the Bull Charge of Bald Bull!).

The thing was, when one of my brothers was playing Nintendo, it was very likely that the other two of us were watching or playing together. This gave my parents all kinds of free time that they would have never enjoyed otherwise. Over the years, my parents would occasionally get us new games. I'd guess their final "investment" was around $600. $600 for at least 4 years of distraction for three young boys? Priceless.

And no, my brothers and I didn't waste away playing video games our whole lives. I do think, however, that they played a healthy role in our childhood. In fact, all three of us ended up as three-sport varsity athletes in high school. I like to think some of that has to do with the hand-eye coordination we learned from Metroid and Excitebike.

How Much Time Did The NES Save My Parents?

Assuming a conservative estimate of 3 hours of gameplay each week for 3 years by each of my brothers and I, that's 9 hours a week, 36 hours a month, 432 hours a year. Now assuming at least one brother was watching the other play, lets double that. So, 864 hours of diversion a year for my parents.

2,592 diversion hours over a three-year period. Wow.

So just in terms of diversion hours, the payoff from that initial NES investment is huge. Not to mention the fact that my father would often play with us as well, resulting in all kinds of great memories. Maybe my parents never realized it, but that Nintendo was the best "investment" they ever made.

Need a game console? Get a P2P loan on Lending Club and start making new memories with your own family. ☺

In my recent post about short-term savings, I talked about creating an emergency fund with three to six months’ worth of savings. A great way to implement that savings plan is to use a laddering technique.

To help explain the laddering technique, let’s look at an example using the most classic implementation: using Certificates of Deposits (CDs). CDs have different terms and different interest rates. If you were to implement a CD ladder, you would invest your money in multiple terms, such as a 3-, 6-, 9-, and 12-month CD. Each time a CD matured, you would reinvest the proceeds in a new 12-month CD. So after 3 months, your 3-month CD would mature and you’d buy a 12-month CD. You would then have 3 months left on your 6-month CD, 6 months left on your 9-month CD, 9 months left on your original CD, and 12 months left on your new 12-month CD. An alternative method using CDs would be to buy 12-month CDs every month for a year.

The traditional thinking behind using CD laddering is that you can get the higher returns that CDs offer over many traditional savings accounts, while still having some access to your money. While your money is tied up as you create the ladder, once it’s established you’ll have at least some of your money coming out on a regular basis.

While using CDs to build your ladder is one method, it certainly isn’t the only one. Laddering also works very well for Lending Club person-to-person loan portfolios. You could create new portfolios at different times to own loans that reach maturity at different times. Even simpler, you can just reinvest the money that you receive from your loans each month to achieve the same goal. Since loans on Lending Club are scheduled to be repaid on a monthly basis for 36 months, you automatically have the characteristic of a ladder in that a portion of your investment is returned to you each month. If an unexpected expense arose, you could stop reinvesting the money for a month or two and instead withdraw it from your account.

When you consider the fact that Lending Club person-to-person loans offer lenders better rates than CDs, while still preserving the laddering feature of returning a portion of your investment to you each month, you may find that a portfolio of loans is a better fit for your financial goals than a laddered CD. Either approach is a viable way to build up your emergency fund and one that you may want to consider.

In a very recent article, I talked about the difference between being cheap vs. being frugal. I defined the difference between the two as follows.

• Being cheap - You are unwilling to spend money on anything. Even stuff you need. You go out of your way to save money, even when it might not be a great idea.

• Being frugal - You don't waste money. You spend it on things you need, and save it on things you don't.

Well, Trent over at The Simple Dollar wrote a great article about the major differences. He takes the same standpoint that I did--being cheap is inherently bad, while being frugal is not. He writes:

"In a nutshell, a frugal person seeks to find the best deal on an item that meets the desired level of quality... On the other hand, a cheap person will always take the route of least financial cost in the here and now."

But, as I said before, being cheap is often more expensive that being frugal. Trent agrees. If you are cheap, you buy lower quality items much of the time. When they break, the cheapskate has to spend extra money fixing or replacing them. Fortunately if this happens to you, you can get a good P2P loan on Lending Club for all of your household needs.

Are you cheap or frugal? At Lending Club, we want to make sure you aren't wasting the money you worked hard to earn.