Posted by André Nosalsky :: December 21, 2007 @ 10:43 amWhen I first started exercising on a regular basis, there were many things that could throw me off of my training routine. It could be that the weather was wrong, or I forgot my clothes, or my friend canceled or a number of other reasons.
Then one day I decided to sit down and look at the entire process and see where the decisions were made and where things could go wrong. After this, I removed any point in the process where I could stumble. For instance, just in case a friend didn’t show up, I always brought my iPod. Or if I forgot my clothes, I made sure that I always had extras in the locker room. This way, my training became pretty much automatic.
The same can be applied to the Money Marathon.
1. Set up as many accounts as you need – Look for banks that make it really easy to open up as many accounts as you want. Some banks let you open up a new account online with a click of a button.
2. It’s proactive saving – You should take money and put it towards your savings before you have to worry about bills, your mortgage and other expenses.
3. Look beyond savings accounts – You can set up automatic transfers to your savings accounts. Most of investments companies have automatic withdraws and transfers also.
4. Automatically reinvest – Set up your accounts so that any interest or income you receive from investments and savings are automatically reinvested for you. This way you will start compounding your investments and they will grow at a faster rate.
5. Continue paying after paying off debt – If you are paying off your credit cards, here is a good strategy to save money. After you pay them off, keep on making the payment, but now redirect it towards your p2p lending account on Lending Club, with a small portion going towards your Fun Fund.
6. Predict unexpected costs – If you drive a used car, plan for having one major breakdown per year that’ll cost $500 and set aside the money. Set up an emergency account to automatically handle any kind of a cost that might otherwise throw you off your Money Marathon plan.
The goal of automating your Money Marathon is so that human nature or any emergency will not appear in the middle of it and stop you from crossing the finish line. How is your training progressing thus far?
1 Comment
It's all well and good for Lending Club to promote automatically reinvesting account earnings. One should never leave funds in a position where it is not earning a return. So it is rather dismaying to note that Lending Club puts it's lenders in that very position. Cash received from loan payments are placed in a position that provides no return. Certainly one can promptly withdraw loan payments immediately upon receipt but even then the transfer time required to receive the money and then reinvest it in another position can take at least four days. All in all it's not very convenient or rewarding for a lender. I would rather accumulate the funds in my cash account and reinvest the monies in new loans. But I'm not excited about leaving the funds in a non-earning position until it's practical to initiate a new portfolio.
I believe Lending Club needs to take it's own advice on behalf of it's lenders: "Automatically reinvest – Set up your accounts so that any interest or income you receive from investments and savings are automatically reinvested for you. This way you will start compounding your investments and they will grow at a faster rate."
I suggest that Lending Club pay a reasonable money market rate on cash account funds that are awaiting loan placement or withdrawal. That's what PayPal does and PayPal pays a competitive rate to boot. Even a below market rate would be welcomed if not totally satisfactory.
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