Catching up with…Dough Roller

Posted by DebtKid :: March 8, 2008 @ 6:18 am

Lightening Round first. Suze Orman or Dave Ramsey? Apple or PC? Pepsi or Coke? Soda or Pop?

Dave Ramsey, but I could live without either. Apple without question. Pepsi (sorry Mr. Buffett). Pop as a child; soda as an adult (I moved east). Funny story. I attended Brown University for a time. One day I approached a street vendor selling hot dogs and soda, and being from the mid-west, asked him what kind of pop he sold. He got a very nervous look on his face, started looking in all directions, and quietly told me he doesn't sell that kind of stuff. I ordered a Pepsi.

OK, now that we know you better...why and how did you get started as a finance blogger?

One year ago, I had never read a personal finance blog. I came across one (2million.com, I think) and started reading them. I manage our own investments, which have grown into a fairly good chuck of change. And I enjoy reading about personal finance and investing. Add in a desire to write, and in May of 2007 I started The Dough Roller. I truly knew absolutely nothing about blogging. I had never heard of Wordpress, Digg, or StumbleUpon. I didn't know html, php, css or anything else about blogging. I learned a little each day, read a lot of books, and here I am. If you want to get a flavor of just how green I was, read 30 Things I Learned in My First 30 Days of Blogging.

You seem to cut a wide swath through financial topics. What two topics are your favorites to write about?

My two favorite topics are investing and what I'll call money & life. With investing, I enjoy studying how others invest and what the best investing approach is for me. That is one of the reasons I enjoy P2P lending and writing about it. With money & life, the key for me is that money itself is not the goal in life. But money can help us achieve our goals, whatever they are. Money can bring about good in the world; it can also bring out the worst in us.

How did your parents’ view and handling of finances affect you today? What do you teach your children about money?

I had a very interesting childhood, which reminds me of the Chinese curse--may you live in interesting times. My parents divorced and remarried before I can remember. I lived with my mom and step-dad, and both were not good with money. A failed business left us near bankruptcy and in fear of losing our home. There were times when we had little food and when the utilities were turned off, but we got by. My dad, on the other hand, owned a wholesale business that did really well. In the 1970s, he owned two homes, drove a Mercedes and a Rolls Royce, and was probably the most unhappy person I've ever known. He would pull up in the Rolls to pick me up for the weekend. I'd enjoy a rather wealthy lifestyle for two days, and then he'd return me to reality. He died when I was 12, in a car accident no less. So if anything, my parents taught me two very important things about money: (1) how not to manage it; and (2) that it can't buy happiness. I guess they were pretty good teachers after all.

You recently did a "smackdown" comparing Prosper and Lending Club. Does peer to peer lending have a role in investors’ portfolios?

I've written extensively about asset allocation. I believe that bonds definitely have a role in almost every portfolio, and P2P lending falls into the bond asset class. So yes, I think P2P lending can have a role in a portfolio. What investors need to keep in mind, however, is that P2P lending is different than any other type of investment that most folks have in their portfolio. Bond mutual funds invest in corporate and government bonds. P2P lending is consumer debt, which carries with it different kinds and levels of risk. The Smackdown piece that I wrote is really just the tip of the iceberg. But as long as investors understand the risks and take steps to mitigate those risks, I think P2P lending can be a great part of a well diversified portfolio. The one thing, in my opinion, that will really cause P2P lending to take off is the creation of a secondary market so that P2P lenders can sell their loans if they want. A secondary market, however, comes with numerous regulatory and investing issues that are too numerous to describe here. (Hmm, maybe that would make for a great blog article.)

If you could go back to your 24-year-old self and give him financial advice...what would it be?

Funny you should ask, because I wrote a post on this topic already--10 Things I Now Know at 40 That I Wish I Knew at 20. But if I could pick just one thing, I would have started investing earlier. Frankly, I would have started investing in high school. I began investing in my mid to late 20s, which has worked out fine. But I wish I had started much earlier.

What's a crazy thing you've done in your life you've never shared on your blog (not too crazy...Lending Club is a family friendly company!)?

I voluntarily took a pay cut of more than $100,000 per year. I'm a lawyer, although I no longer work in private practice. Out of law school I went to work for a very large law firm, worked countless hours, and after eight years, made partner. Two years later, I up and quit. I wanted to spend more time with my family, so I took a job at a company making much less than I did in private practice. Had I stayed at the firm, today I would be making more than twice what I make, but I don't regret the decision at all.