Prosper Lending Update

Back in March, I got a Prosper loan to consolidate some debt. I managed to get a really good interest rate and I believe it's saved me a fair bit of money, as well as made me feel better about where my interest is going. 

If you don't know about getting loans from Prosper, check out my borrowing guide here. 

When I got my loan, I reinvested $100 in April and then added another $125 to my account since then, so I now have $225 invested in Prosper. 

I have that money split across 5 loans. Two of them are Credit Grade A, one is a B and the other two are C's. I've been lucky enough to have had no late payments (except one that was 3 days late), and no defaults so far. 

So how much money am I making? 

Well, my average interest rate is nearly 18% on these loans. I am very selective about who I invest in and I tend to find loans that close at a higher interest rate from people with a good proven credit history. 

Of the $225 invested, I have already had $31.43 that has been paid back, which I then went ahead and reinvested again. I've received $10.97 in interest alone in four months, which is pretty good for a relatively small investment of money. I'm currently making about $0.11 a day with Prosper. 

Why do I invest in Prosper?

I love the fact that I am helping other people deal with their financial struggles by investing this money. I would rather invest in people than in big companies. I know that Prosper is unsecured, but that is why I am keeping a very diverse portfolio and why I am incredibly selective about who I loan money to. I intend to keep reinvesting in Prosper, but it is unlikely that I will put any other money into it until my debt has been paid off and my savings goals have been reached. 

The downside of lending with Prosper is that you can't pull your money out of you need to. Therefore, it's not a good place to keep, say, your emergency fund. 

What do I look for in a listing?

I look for effort and information. I like to see people really put time into their listing. I like to know personal details. If you are consolidating your debt, I want to know how much of it is on what credit card and what the interest rates are. I want to see your budget and I want to hear your story. I want to hear your goals and what efforts you are making to put this money to go to good use. I will almost never invest in someone with previous delinquencies and in the event that I do it has to be because they have explained where they came from and what happened. 
I hate spammy titles telling me to look at the listing. I like it to be simple and straightforward. I hate typos and grammatical errors.
Basically, I want to be able to get to know them and trust them, and have faith that they won't let me down. 

You can get a sign up bonus for joining Prosper by following this link.

Twelve Cents a Day

Twelve cents isn't a lot of money. Really, it's pocket change, and many would scoff at such a tiny amount. But to me it's progress.

I get twelve cents every day for doing absolutely nothing. 3 cents is interest from my ING Saving account, which has 3% APR and 9 cents is interest from my Prosper investments, which have an average of 17% APR. 

The interest that I gain from both of these amounts is constantly increases as I add to the principle investment, as well. But even if we don't count me saving extra money, it's still a huge building block and I greatly value it.

You see, if I take that interest and only that interest, and put it into a savings account at 3% APR that compounds monthly, after 5 years I would have $236.69. Ten years would be $511.49. 

And in 30 years, when I'd like to retire, it would be $2,132.60. Thats not bad for twelve cents day that I do nothing to obtain. 

Of course, by the time I retire because of inflation that will probably be the cost of a bagel. Maybe with cream cheese.