Prosper part 2

I made my request for a loan through Prosper. I have gotten no bids yet but have gotten messages from four different groups on there, all offering to take me into their folds. The groups form to create lending and borrowing power. I am frankly at a loss to figure out which group I should join. It appears that going it alone is a lot more difficult. People want more of an assurance that the loan will be paid back and when one is part of a group that assurance is there. Rather like group insurance.

So this will be the next challenge: to figure out which group.

Prosper.com

From some other personal debt sites on the web I just learned about prosper.com. This site gathers people who need money and people who have money to lend and puts them together. The borrower asks for a specific amount of money and gives a max interest rate. The lenders bid on the loan. Prosper puts together the "winning" bids for the final interest rate and the borrower makes one loan payment per month, deducted from her bank account. Loans are spread over a three-year period, which is, interestingly, the length of time Pay it Down (see book at right) says we should strive for to reach debt-free status.

Prosper gets a fee for putting the pieces together. I just asked for a $3000 loan at 12% interest max. For this loan, Prosper will take a $30 fee, if it is funded.

New credit card

Over the past year my credit score has gone from about 590 to 690. So now I get many offers for cards in the mail. After checking bankrate.com (I love that site) for what's available, I settled on one that had come in the mail, and yesterday I went online to accept the offer. I got the 8.99% interest rate that the letter had offered (with an asterisk - depends on credit) and I noticed that they charge a fee of 3% for balance transfers. I figure that still is going to put me way ahead if I transfer a balance from an account with an interest rate of almost 33%. Which, I might add, should be illegal.

I therefore also requested a transfer from that high-interest account. I will find out in about three weeks if that has gone through. I don't see that there will be any problem. And I am proud of myself for doing this. I have other high balances on other high-interest cards that I need to deal with too, but I will be happy for this moment.

The tax money

I got my refunds and I have spent almost all of them. I put $1000 into an account for future new furnishings (I am trying to replace my home with another home). I paid a lot on several credit card accounts. I have made several small purchases as well. I am sure some of them, maybe all, were unnecessary, but I am getting pleasure from them so I don't regret it.

My credit card debt is now under $9,000. That's a lot but I'm encouraged.

Sunk Costs and Regret

The book, The Paradox of Choice: Why More Is Less, has invaded my brain. In a good way. The discussion of regret and of "sunk costs" in particular are concepts that are well worth thinking about.

"Sunk costs" are those costs you have already paid for an item or service. People in this country have a tendency to pay too much attention to sunk costs as a determinant for future actions. For example, if you bought a ticket to a concert you will likely feel compelled to go to the concert because you paid for it. The better way is to make the decision to go or not go based on what you actually want to do. The money is gone either way.

Yesterday I paid for new lenses for my current eyeglass frames. I paid a lot for these lenses and as soon as I left the store I started to regret it. But it is done. Regret serves no purpose, unless it is to use it to decide how I will approach such purchases in the future.

I have a rule about not buying an item from someone over the phone or at the door the first time that person calls or comes by. That rule has served me well. It gets me out of having to make a decision until I have given it more thought. I simply tell the person, "I have a rule...". That person usually says, "Yes, but if you buy now you'll get this deal. If you put it off you lose the deal." I shrug and say, "Well, that's too bad but that's my rule."

I can now make a rule about such things as these glasses that when the purchase is some amount over what I expect that I will delay the purchase. I may still buy them, but I'll feel better about it. As for this time, I refuse to dwell now on the negative aspects. I have simply created a new rule that will help me in the future and I will enjoy those new lenses.