Archive

You recently wrote about saving up for a tank. I love tanks as much as the next guy, but would a tank really be a wise investment?

A friend challenged me six weeks ago to write something different and eye-catching. I have to admit that I can only read about Roth IRAs so many times before my eyes glaze over and I think, "I get it already." I decided to take the most outlandish "investment" idea and try to make a convincing argument for it. I was going to publish it on a normal Friday just for fun, but April Fools was too perfect to resist. For those that missed the post, read budgeting for a tank and let me know if it sounds like a bad "investment."

Each month, you report your "Alternative" Income. Do you have a real job, or is Lazy Man too lazy for that?

I had a real job until October of last year. The previous two years before that, I found that I was under-utilized as the software engineer. I wasn't valued for my business ideas - just by the amount of code that I could churn out. I realized that the "thinkers" (business development people) earned more money and got to go on great dinners with clients. The "doers" (software engineers) earned about 60-75% as much and were stuck working late hours and coming in on the weekends when the servers went down. It simply wasn't a life that I wanted for the next 35 years or more.

Lazy Man and Money gives me an opportunity to develop business skills like networking, marketing, and negotiation while taking advantage of my software engineering skills I already have. In fact I have a whole list of ways personal finance blogging has helped me. In the past month, I've taken a part time job consulting rather than developing software. It's something that I might do more of in the future as I become more of a "thinker."

I think it's great that your wife makes more than you. What do you think?

I'm all for it. We'd be in some serious financial trouble if she made less than me. (I'd simply go back to software engineering.)

On a serious note, before me, she dated some men that were very uncomfortable with her making more money than them. She bought a cheaper car than the one she really wanted because she didn't want to scare them off. If I can be even more serious for a minute, it does get more difficult when there's a large earnings gap. I don't think it's necessarily gender-based as many people would expect. Sometimes I think, "Does she think that I'm living it up all day when she's at work? What else can she think when she comes home and everything is exactly the same way she left it?" It's an insecurity that I'm working on because I don't think she really feels that way.

You don't really seem that Lazy. You've got a great finance blog going, lots of subscribers...tell the truth, are you really Lazy? What's the inspiration behind the LazyManandMoney name?

I'm Lazy in some areas, but not so much in others. I easily spend 50-60 hours a week on Lazy Man and Money and Lazy Man and Health. There's a lot more behind the scenes that you don't see - interacting with other bloggers, commenting on people's sites, reading about better ways to write, reading about new things in blogging - it never ends.

The inspiration behind the Lazy name comes from my lack of desire to do repetitive household chores. For instance, I would come home drape my coat over the couch instead of hanging it up in a closet because I'm just going to go back out in twelve hours. The other reason I took the name is that I wanted to explore easier ways to make money such as using compound interest to your advantage rather than working until you are 87.

What made you start blogging about your finances?

I read about Boston Gal's Open Wallet in a copy of Business Week while at the dentist's office. When I got a computer later on, I checked it out and it fascinated me that someone else would be so open with her finances. I got instantly hooked. I figured that since no one else is writing about this stuff, I could do it and share all the knowledge I have. I later found out that hundreds and maybe thousands of other people are writing their personal finances - I just didn't know it.

Jim Cramer or Suze Orman? Coke or Pepsi?

Cramer by a landslide. I think Judge Judy Suze Orman loses to just about every personal finance guru I can think of - except Dave Ramsey. If my choice was to listen to either of those two, I would probably rather be in $100,000 of debt. I know they are very popular and many people find a lot of value in what they say - there are just some things about them that clash with me personally.

Diet Coke is a solid choice because you can get it anywhere. Pepsi One is a better overall drink though. Sam's Choice Diet Soda from Wal-Mart usually wins because it's 67 cents a two-liter - 33% off of what I usually pay for the other two.

What are your thoughts on the future of peer-to-peer lending?

Hmmm, a couple of tough questions and then you serve me up this cream puff question - I can't figure you out. I wrote an article on that just last week. It's one of the few innovative areas in personal finance so I write about it quite often. I think more people should look at P2P lending as a way to diversify their investments. We've seen stock market and real estate bubbles in the last ten years. We might be in a commodity bubble now as oil, gold, and food prices have sky rocketed due to the falling dollar. The more "bubbles" I see, the more I realize the value of diversifying your investments and P2P seems to be an entirely new asset class. That said, I think people should be cautious with P2P lending - it's very, very new and we don't have an indicator of what the returns might be over the long-term.

What's one thing you could share with us that you've never shared with your readers? (Family friendly of course!)

Well the last four words got rid of all the juicy stuff I was going to write. I struggled to come up with a single thing, since I'm very open on my site. However, once I did, I came up with five:

1. The readers don't really know how much I want to help them. I see people paying high interest on their credit cards and keeping money in low-interest checking accounts and my stomach twists in knots.
2. The readers don't know how excited I get when they leave a thoughtful comment on my site. I do a little dance when someone actually sends me an e-mail. It's pretty funny. I should put it up on YouTube.
3. The readers don't know how I struggle choosing between A) writing about ideas that are unique to me and B) writing about basic ways to get out of debt and/or build wealth.
4. The readers don't know that I have someone very close to me who struggles with a huge amount of debt. I think about how my advice might turn that person's life around, but I'm paralyzed by the thought of a debt intervention. One thing that I've learned is that you can't force someone to take control of his/her finances if he/she is not ready to.
5. Sometimes I like to break the rules. Giving five answers to this question is proof of that.

Being frugal is more than just giving up coffee, right? When someone is "being frugal," what exactly does that mean?

You'll be happy to know that you can be frugal without giving up coffee! I haven't given up my coffee yet, though I have given up trips to Starbucks.

My definition of being frugal is making the best use of your resources in accordance with your goals in life. Right now my goal is to get out of debt, so I try to cut my expenses, leaving more money available for debt repayment.

Other people may have different goals, but as long as they make the best use of their time, money, space, and other resources, they are being frugal.

You have a goal of getting out of debt by this summer – how close are you? What's your best single debt reduction tip?

Unfortunately I'm not even going to come close to getting out of debt by this summer. We've had one setback after another in the last year. My husband lost his job twice, we got some bad advice from an accountant and owe a large amount of taxes... and the list goes on.

Despite the setbacks, we've still managed to keep paying off debt. At this point it looks like we'll be out of credit card debt by September and hopefully the rest of our debt will be paid off by the end of 2009. That's the new goal.

My best debt reduction tip is never give up. Always keep your goal in mind. You will face setbacks. You might not come close to meeting your first goal. But if you are diligent, eventually you'll get there.

You just started Being Frugal last summer, and it's really taken off since then. What's your secret?

My secret is my great readers! They really keep me motivated, and I enjoy interacting with them. Beyond that, I'm just myself. What you see on my blog is exactly what you'd see if you were to meet me in person. I think readers like bloggers who are authentic and willing to admit making mistakes, and I've had to admit quite a few.

To tell you the truth, the growth of my blog blows me away! If I have a secret, I sure don't know what it is!

You don't seem to be a fan of debt at all (who really is?). What are the worst types of debt that should be avoided at all costs?

You're right. I'm not a fan of debt at all. But if I had to pick the worst kind of debt, it would be going into debt for something that decreases in value. It doesn't make sense to me to pay an inflated price (credit card interest) for something that isn't holding its value. I'm also not a fan of car loans, especially new car loans. I'd rather pay cash for a slightly older car than pay interest on a car that loses its value as soon as I drive it off the lot.

I'm on the fence about student loans. I realize it's difficult to get a college education without one these days, but I'm going to encourage my children to explore every other opportunity before taking out loans for college.

What are a few of your favorite posts? (I was a big fan of "7 Things Women Wish Men Knew About Money")

Thank you! I had a good time writing that post. And I have to thank Ron from the Wisdom Journal for suggesting I write 7 Things Women Wish Men Knew About Money.

Some of my other favorites are:
What Little House on the Prairie Taught Me About Debt
Things I’ve Learned About Money by Not Having a Lot of It
There’s No Shame in Renting

Peer-to-Peer Lending: good/bad/evil?

I'm not a big fan of peer-to-peer lending, because I'm not a big fan of debt. That being said, if I had to choose between dealing with peer-to-peer lending or dealing with a credit card company, I'd choose peer-to-peer lending. I really don't like credit card companies.

Being from Oregon, are you a Blazers fan?

I'm not a fan of basketball, so I can't say I'm a Blazers fan. Now if Oregon had a football team or a NASCAR track, we'd be talking!

Thanks for taking the time to interview me. I enjoy the Lending Club Blog, and it's been a privilege to participate in this interview!

Jim, I'm 24. You're in your 20's. What is wrong with our generation’s financial health? From my own mistakes, to what I hear my peers discussing, where did we get so off track? Is our generation doomed to be in debt forever?

I'm 27, going on 28, and I don't think it's our generation. I think it's the generation before us that has set us on this course. Consider the national debt; it isn't a collection of twenty-somethings, it's a collection of mostly forty, fifty, and sixty-somethings setting our national budgets. Then take a look at the mortgage crisis; sure there are plenty of twenty-somethings involved but it's mostly people older than us. A twenty year-old isn't going to be able to refinance himself into a bad decision. I think that the whole credit card debt issue, while bad, certainly doesn't doom our generation quite as much as the fiscal irresponsibility of our government, led by our parent's generation.

What inspired you to start Blueprint for Financial Prosperity, your finance blog?

I actually was trying to start a deals site, which is still alive but barely ticking, and then decided to start writing about money issues and personal finance to supplement it. As things went along I realized that writing about personal finance was more entertaining than searching for deals so I kept at it. Three years later, here we are.

What financial area are you most passionate about?

I'm afraid there isn't any particular area I'm more interested in. I suppose whatever is most appropriate for where I am in my life is what I'm most passionate about.

What topic really makes your blood boil?

I don't like it when people don't take accountability for their actions and I don't like it when people lament their own situations. If you're in $20k of credit card debt, deal with it. Yes it sucks, yes it's a lot of debt, but you weren't complaining when you were spending the $20k to begin with and you need to stop complaining and fix the problem.

If you could pick one superhero to be...who would you be, and why?

Superman, if only for the ability to fly. I hate sitting in traffic, it'd be bada$$ to just fly around anywhere. Plus I could turn back time just by flying around the world (I suppose I'd also need his ability to not have to breathe in space).

You recently got married. Congrats! How have you and your wife handled your separate finances? What advice would you give engaged couples?

Thanks! We combined our finances even before we got married. I think engaged couples should talk and do what's right for them; you can read magazines and blogs and everything for ideas but it comes down to how you two distinct individuals should handle it. There's no right answer for everyone and to shoehorn someone into combined or separate would be a mistake. I think that applies for everything in a relationship, be it marriage or otherwise.

Peer to Peer lending. Good idea, bad idea, or just plain crazy idea?

As a borrower, great, as a lender, jury's still out. I like it because it's a more efficient marketplace. If a lender is willing to lend to someone for 6%, why force the borrower to go to a bank at 8%? We may find out that the default numbers are too rosy or something else but for now it's a good idea overall, especially good for borrowers.

Who is going to win the NCCA tournament this year?

I went to a D3 school, Carnegie Mellon University, in Pittsburgh so I'm gonna say Pittsburgh, though I think UCLA or UNC's got a better shot at it.

Jim’s fantastic finance blog is Blueprint for Financial Prosperity

You are a spreadsheet master. Should the average person use spreadsheets to help manage their finances and investments?

Thanks! My wife and I ditched the commercial software programs like Money and Quicken because we didn’t like the lack of flexibility. So, we decided to set up an Excel spreadsheet to track our finances. I’m sure our method isn’t for everyone but we like it.

Your blog focuses on 401Ks and retirement planning, among other money topics. What are some creative tips you would give to a 25-year-old on retirement planning? A 35-year-old?

I consider a 25-year-old and a 35-year-old in the same boat as they are both at least a couple of decades from retiring. Therefore, my advice would be pretty much the same: Invest AS MUCH AS YOU CAN and invest the majority (80% or more) in equities. Finally, don’t let the downturns get you down.

You've made some custom financial calculators available on your blog. How do you use these? Which calculators are your favorites?

The calculators are really just a useable Excel spreadsheet. I created them for the fun of it. My favorite is probably the one about how much a person can save in their lifetime.

What do you enjoy most about writing on "All Financial Matters"? How did you get started as a finance blogger?

Investing is probably my favorite topic. I also try to cover controversial topics like the subprime bailout.

I got started blogging in October of 2004 as a way of writing a cheap newsletter. I had read an article in the Wall Street Journal about people setting up blogs for their families and I thought it would be cool to use one for personal finance.

What are you thoughts on P2P lending? Does it have a place in investors’ portfolios? (Be totally honest, LC is all about the honesty.)

To be honest, I haven’t given P2P lending much thought.

When you're not blogging...what do you do?

Sleep.

Jim Cramer or Suze Orman? (chuckle...heh, heh)

Neither.

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.