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Monthly Archives: June 2006

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Valuing Blogs

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Being financially minded, I’m naturally curious about new and creative ways of determining value.

Apparently, a way to determine the value of blogs is by counting the number of links and assigning a dollar value to them. This is based on research by Tristan Louis. Louis analyzed an AOL buyout of Weblogs, Inc. and found that AOL valued each link to a particular blog to be worth about $564.64.

If you want to find out how much a particular blog is worth (according to Louis’s scheme) click HERE.

Personally, I think the market for weblog is pretty limited. Most people would be lucky to get anything at all for their blogs, much less $564.64 per link.

Best,

James

Yipes, We Have a Lot of Accounts!

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We have a LOT of bank accounts. Just to give the reader a sense of how many, we’ll break them out by who has which account:

James (6)

Roth IRA
Brokerage
Variable Annuity
Checking – Personal
Checking – Business
DRIP Account
DRIP Account

Miel (6)

Washington Mutual – Personal
Washington Mutual – Business
Variable Annuity
ING Account – Personal Savings
PNC – 2 Business Accounts that are not being used

Jointly (8)

Brokerage
DRIP Account
DRIP Account
ING Account – Joint Savings (Wedding)
ING Account – Household Spending
ING Account – Household Savings
Washington Mutual (Savings route to ING)
Washington Mutual (Payment of Mortgage & Condo Fee)

Just so you know, we’ve had numerous discussions about how to simplify this system. We are considering closing the PNC accounts that are not being used and consolidating the DRIP accounts with the joint brokerage account. This would eliminate three accounts, which still leaves us with a heafty 17 accounts. Not great, but better.

Despite the plethora of accounts, we still find some advantages to saving money in different pots, which allows us to keep track of what we are saving for. We also both prefer to maintain seperate personal and business accounts. While we are very transparent about financial issues, we still both adhere to the model of having some autonomy in our spending.

– Hoping your life is much simpler.

James&Miel

Our Division of Finances

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Balancing finances within a coupled relationship is certainly more of an art than a science. Despite the fact that each couple takes a different approach, we thought it might be helpful for some to share how we’ve managed our financial split.

Some couples take some time to tip toe through the mine fields the financial elements of their relationship. James & I took the approach of diving right in. It has certainly been a balance throughout our relationship, adjusting to circumstances as they have changed over time. In the first few months James’ took on more of the household expenses as Miel’s first paycheck came in after moving to DC, now with James in school Miel pays more of the monthly expenses.

Initially we split the rent according to the percentage of salary to total household income. That meant when we first moved in together it was basically a 60/40 split with James paying a higher percentage of the total expenses. This has been used in principle, but has been applied in a way that best suits our finance styles. Some people who use such a model would dump all or part of their pay check into one account and then work from there. We apply this principle to rent and then have taken care of various bills according to what makes the most sense for us, while maintaining separate everyday checking accounts.

Initially, Miel paid for all the groceries and James paid for going out. This gave Miel the freedom to make choices at the grocery store and James the ability to steer the direction of restaurant choices (by no means entirely). James then took care of the electricity bill and Miel the internet bill. We’ve each still maintained our own cell phone bill.

Now that James is in grad school full time, we’ve reworked our system. We now split the mortgage in half, and James gets $300 a month out of savings for incidental expenses (metro, school books, food, etc.), the electricity bill and for some entertainment if he can squeeze it. Miel covers the rest of the household expenses.

Our financial split will continue to change in various patterns as our lives change. We appreciate the fact that we can both be flexible in making our arrangements work well for both of us.

If you’re trying to balance your finances and found this helpful, let us know. If you have another way that works well for you, we’d love to hear your tips too.

-Miel&James

Outbid at Prosper!

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It seems my initial expectations about prosper were somewhat off the mark. When I first got on the service, I didn’t entirely understand prospers loan bidding process and assumed that I every loan I bit on would be accepted.

However, since my last posting, I’ve lost out on four of the eight loans I’ve bid. Rats. I’ve investigated the process and it seems that successful bids are 1) made early and 2) lower than borrowers asking rate. My plan at this point is to lower my bid rate by a quarter of a percentage point. If it doesn’t work, I’ll make a note of it and post again.

In terms of a final comment, the bids I lost out on seemed to be for better quality borrowers. I like this. It means that prosper has a structural mechanism whereby people with better credit get lower loan rates. Lending systems should reward personal responsibility.

Best,

James

James’ Grade for Carleton Sheets: D +

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Carleton Sheets is the famous ‘No Money Down” guru. He’s a big proponent of using no-money down techniques to purchase real estate. Basically, Carlton advocates finding motivated sellers, using highly leveraged purchasing strategies, and creative techniques like getting cash back at closing and flipping to acquire real estate. To share these strategies, he sells a series of books on CD. They retail for about $9.95 on his website.

I have serious concerns about Sheet’s methods, so I’m happily awarding him a grade of D +.

This might seem like a harsh grade, but if you’re a frequent reader of our blog, you’ll see that I can back up my ratings.

1) Sheets’ approach tries to get something for nothing. Basically, Sheets says you should purchase real estate for no money down and rent it out. The problem with highly leveraged properties is that one must pay interest on the leveraged money. There usually isn’t any way around it. Every dollar you owe interest on puts pressure on your rental profit margins. The more you borrow, the less your profit.

In other words, there is no such thing as a free lunch. What is more realistic is savings up an adequate downpayment or investing wisely and using the proceeds to fund your real estate purchase. Trying to get something for nothing is just silly.

2) Sheets’ business is selling advice, not investing in real estate. Most of the traffic on the internet I’ve read suggests that he doesn’t actually do a lot of real estate investing. Instead, his webpage seems more focused on selling his books on tape. This would be okay, but Sheets styles himself as a real estate expert. The impression this gives is misleading. If he is a promoter, he should be up front about it.

In all fairness, I would have given Sheets an F. However, I had a really first rate real estate agent who swears by his stuff, so I adjusted my grade accordingly.

Happy Investing!

-James

p.s. If you want a more thorough criticism of Sheets, here it is.

p.s.s Click here for some Sheets fun.

p.s.s. My agents name was Brian York. If you want someone who is experienced in handling multifamily properties in the DC area, I highly recommend you check out his site: Federal City Realty.

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