Five Questions – Lending Club, Green Mutual Funds and Having Fun

Five Questions July
Table of Contents
  1. Bonus Question:
  2. Question One:
  3. Question Two:
  4. Question Three:
  5. Question Four:
  6. Question Five:
  7. Show Notes
Table of Contents  
  1. Bonus Question:
  2. Question One:
  3. Question Two:
  4. Question Three:
  5. Question Four:
  6. Question Five:
  7. Show Notes

We love to answer questions from our listeners, and sometimes we make a whole episode around it. Today we answer five questions about drinking on the job, Lending Club, borrowing from family, green mutual funds, having fun, buying a first home,

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Bonus Question:

I have noticed that you tend to be drinking beer on each of the podcasts, let me just first say, fuck I’m jealous.I would like to know what kind of job I can get that will let me drink beer in the morning (without the whole judgey this guy is probably an alcoholic vibe). If you do respond to this email, please don’t use my name as my current job frowns on asking questions like these.

This question is great. You have to work for yourself or work for some hipster-ass startup that has beer on tap all the time. But even then they’ll probably give you the stink eye if you’re drinking it at 8 a.m.

Question One:

Do you feel Lending Club is still a prudent investment given the recent scandal issues they’ve run into? Will it have long-term impacts on the business and the quality of loans? I’m considering a 50/50 split of my available investment funds between Betterment and Lending Club (in addition to my 401k where I’m already contributing 12%). – Matt

So, a little background in case you didn’t hear. LendingClub CEO Renaud Laplanche resigned after it was found that the company had altered application dates on some large loans. It was also found that Laplanche “failed to fully disclose to the company’s risk committee a personal interest he held in a third party fund while the company was considering an investment in the same fund, which purchased LendingClub loans.”  Tisk-tisk

That said, after a full internal analysis of company reporting, it was found that 99.9 percent of loans were above board. Since the companies stock has plummeted but their loans were not effected.

Many people were fired, so the few bad eggs are gone. Although Andrew lost money with his stock, he still has some money invested in loans. Thomas thinks he will wait this one out and see if and when the company gets back on its feet.

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Question Two:

Need advice on relative claiming we owe them money. Last year my wife & I became debt free and were on our way to saving a down payment for an investment property.

Now my mother-in-law is demanding a large sum of money from my wife.  She kept every receipt from when my wife was 18 onward (she’s 36) and now wants to be paid back. The list includes things like brakes on my wife’s first car and new basketball shoes from her senior year.

My wife never signed anything but apparently verbally agreed at the time to pay back some of this money. I realize that from a legal standpoint we probably owe nothing, but I feel as though morally we are responsible for whatever my wife agreed upon. Just where should the line be drawn?

We can probably all agree that this is a pretty terrible parent. At first glance, the situation can make you cringe, but you have to ask yourself, what is really going on here? Is her mom desperate for money or is she just crazy? Keeping receipts for 18 years shows intent like she has been waiting deviously to cash out.

Staying out of it would be the easiest thing but because they are married paying back this loan will be affecting both of them. The guys think that the most important aspect is to try and salvage the relationship. Sit down and have a talk with the mom and try to come to some middle ground. If she needs financial help, she should just ask, and they can figure it out together. Don’t lead with anger and find her intent before making any moves.

Question Three:

My name is Matthew, I’m 25 and just recently married and am on my way to having my first child. I have been looking at buying a house but after recently finding your podcast I’m not sure if I’m heading in a bad direction.

We don’t have a lot of debt.  I have a good credit score and make around $70,000 a year while my wife makes $24,000 a year. We don’t have a lot of savings. The loan I was looking into is a Navy Federal loan which is 0% down with no PMI but 5%  interest, which sounds high.

I’m looking into $230- 275,000  homes. Should we go for it with that loan or rent and save up.

Matt

First, 5% isn’t inherently bad, but I think you’re looking at the wrong number. It’s really a monthly payment/cash flow decision. If you buy a 230k home with 0 down and no PMI you’re looking at a monthly payment of about 1,430.

Sure it’s affordable about your joint income, but I don’t know your spending/saving situation. Also, with a child on the way, you’ll have considerably more expenses so something to consider.

My biggest worry is your current saving situation. Do you have anything saved at this point? Don’t get caught up in the false need to own a home. In most cases owning the home, you live in is a terrible investment compared to most everything else.

Owning a bank $200k+ is nothing to take lightly. I’d think long and hard about why you’re doing this now. Being that you’re so young it may make more sense to stay flexible and save. Then you can always upgrade/downgrade your lifestyle without the burden of this crazily expensive house.

Question Four:

Hey guys! Just started listening to your podcast. I am loving it! I have never invested before and am hoping to start. One of the problems I have with mutual funds is that I don’t know all the companies I am investing in. Do you have any advice on finding more “green” mutual funds? Thanks so much! -Annie C.

There are a few companies that bundle groups of companies in funds based on their ideology. Motif is an online broker that build buckets of stocks or ETFs to reflect an investment theme or innovative trend. You can choose a prebuilt one or build your own.

Simply Wall Street also has an option to choose companies that fit certain parameters using their grid view tool. Check out the clean energy party here.

Question Five:

Hey LMM, Currently I am struggling with getting myself to use the money for fun. I am using my income to the maximum capacity to pay off a car loan, save for retirement, save for a future graduate degree and fund my current degree. It’s all productive, but I’m stretching things too thin and have difficulty spending money on fun things like travel.

Not sure if others get caught up in making their money work for them in different ways and forget to have fun with it. Looking for some strategies to make sure I save for fun things.

For the love of beer,
Aaron

There are many people with this same problem. They are generally very financially secure but also want to let’s say travel more. Once they feel financially secure, its hard to start spending money on fun things because they fear they will veer off course.

Start by allocating time for fun and find some free or cheap actives you enjoy. There are so many fun things to do that don’t cost a lot. You should work hard and play hard; that’s why Thomas recommends high-density fun. Few people look back at their life and think they should have spent more time working.

We also recommended looking into the Southwest Companion Pass. It will allow your significant other, mom, sister, etc,  travel for free with you for five years with minimal effort. Effectively combining traveling and saving, perhaps tricking your brain into letting you play responsibly. Worst case you just take all those savings and buy a rental property in another state – it will force you to travel!

Show Notes

Thank you to FreshBooks for sponsoring this episode.

We spend a lot of time trying to help empower folks to get their personal finances in order. Here’s the thing; if you’re an entrepreneur who’s not on top of your business finances, your personal finances are likely suffering too. This is why you need a healthy dose of FreshBooks in your life. FreshBooks is the ridiculously easy cloud accounting software made specifically for small business owners who need to find a better way to deal with their paperwork. Go here for a 30-day unrestricted free trial.

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