Odnal - Building wealth, bit by bit

I’ve created a standalone PHP application that can be used to snipe bids on Prosper. Sniping is the practice of bidding on loans as late as possible so that your funds aren’t tied up unnecessarily. The portfolio tool that Prosper provides bids on listings as soon as they meet all of your criteria. Such a listing may have 7 days left, so your money is committed to that bid for those seven days.

With bid sniping, you program your bids to be placed only during the last hour that a listing is available. This ties up your funds for a shorter period of time, meaning that you can bid on more listings, or have less cash sitting in you non-interest earning cash balance.

This tool is still in an early beta testing period. I believe that it functions properly, but provide no guarantees that it won’t bid on everything that comes along :). Also, note that the listing information available via the Prosper API doesn’t contain all of the fields that their portfolio tool does.

Installation requires you to have your own web hosting. (I’ve confirmed that BlueHost meets the system requirements if you don’t already have a hosting account).  Hosting the program yourself is the best way that I know of to verify the security of your Prosper password since it is currently required for the API calls. Care has been taken to encrypt your password when it is saved in the database, and whenever it might be saved on disk or displayed in debug output. Again, however, I make no guarantees that your password is not obtainable. Any person with access to both your configuration file, and your database would be able to decrypt your password. I make no guarantees that an attacker would not be able to read your password via this program. Also, an attacker may be able to read your password due to vulnerabilities in other applications installed on the same server as your program.

The project page is at http://odnal.com/prosper-bid-sniper/ with links to download it on that page. There are still a few things that need to be worked out, but it is functioning well enough now so that others can get a feel for how it works and can hopefully contribute in the form of new features and completing known issues.

I just discovered Restaurant.com where you can buy gift certificates for local restaurants at a discounted price. Most restaurants offer $25 gift certificates for $10 as well as $10 gift certificates for just $3. Some restaurants have other amounts available as well. The gift certificates are printed on your computer, so there is no additional charge for shipping.

That sounds like a pretty good deal. But it gets better.

Once you go to the checkout page, simply us the promotion code ‘SAVINGS’ to receive 50% off your total gift certificate purchase. That makes the $25 gift certificates just $5.00 and the $10 certificates just $1.50. But why stop there? Since restaurant.com has an CJ affiliate program you can get bonuses from sites like MyPoints or eBates.com. The best one I found was a 15% rebate from eBates.com - Making the actual price for your $25 gift certificate just $4.25, and the $10 gift certificates just $1.28.

Using those discounted prices for the gift certificates, here is a chart of some check amounts and how much you would save with each one.

The gift certificates often have some reasonable rules for use. Common restrictions include not being valid for Friday or Saturdays, or for alcoholic beverages. Also, there are sometimes minimum transaction amounts. For example, many of the restaurants require a minimum check of $35 to redeem a $25 certificate. It looks like some restaurants automatically add an 18% gratuity as their way of ensuring that the tip is based on the full check amount.

Most of the restaurants that offer gift certificates are local restaurants that are not associated with chains or franchises. These are businesses that are using the discounted gift certificates as a way of winning new business.

I just bought a $25 certificate for Chevy’s which I have eaten at before and enjoyed (the only chain that I noticed) , and another $25 certificate for a new seafood restaurant in the mall that we have been meaning to try for a couple months now.

On Saturday I posted a simple way to always make money on UpDown.com.   I’ve been thinking through that some more in the past couple days, and wrote a little tool to help me decide which stock would have historically done the best in my scenario.

The goal is not necessarily to select the best performing stocks, but rather to avoid diversifying, and select a group of stocks that all perform the same.   That way if the stocks to well, your portfolio will do better than the more diversified S&P 500 and your virtual portfolio should outperform it, meaning that you make real money.   If the group of stocks do poorly your own portfolio will do poorly, but the portfiolio of your partner, who has mirrored your own portfolio, will do well, and they will earn money.

I wrote a quick tool to help me pick a group of stocks.  Simply put in at least 5 stocks, and how much money you would invest in each of them, and it will tell you how they have performed if you would have purchased them 3, 6, 9, and 12 months ago.   I compares those to how the S&P 500 has done during the same period.

The tool is available here, and a sample with 200k in each of Google, Microsoft, Cisco, EMC, and Oracle is here.

A couple weeks ago I was busy with side projects and got a little behind with this blog and all of the financial blogs that I read.    Since then I have had a difficult catching back up because of all of the excellent posts.   Here are some of my favorites from other blogs in the past few weeks:

Moolanomy had a good post about the factors in deciding to prepay a mortgage

Get Rich Slowly had an interesting guest post about teaching your children about advertising

Although I don’t anticipate needing it any time soon, I thought this post on Beautiful Resumes was something I may reference the next time I redo my resume.

Five Cent Nickel had an interesting post about Middle-Class Milionaires

Free Money Finance: 8 Ways to save on groceries

Some great ideas for teaching kids about money

PaidTwice recommends taking a catch up day

I enjoyed Lazy Man’s linkified If I had a Million Dollars

UpDown.com is a fairly new website that combines a virtual stock portfolio with social networking. After signing up for a free account, they give you a virtual $1 million to invest in the stock market. Your goal is to beat the S&P 500 each month. According to a Moolanomy interview with Michael Reich, the site’s Co-Founder and CEO, their vision is to take advantage of the data that they collect to create real investment products that mirror their consistently performing top-members’ virtual portfolios.

The greatest part of the site is that members who outperform the S&P, are rewarded with real cash. There are no fees or financial risk for joining, and no way to ever lose money. They simply reward you for outperforming the market. My own portfolio modestly outperformed the S&P last month and I earned a little bit of money from it.

I just thought of a way to earn some risk free money using this site. This is incredible, and requires only about 30 minutes to set up. I’ve read through their Terms and Conditions and don’t believe that it violates any of their rules (although they do have the right to terminate accounts for no reason).

This method requires you to have an UpDown.com account for yourself, and for you to coordinate your investments with somebody else who has their own account. All you have to do is perform the exact opposite transactions at the same time on each account. For example, if you buy 500 shares of GOOG, you coordinate with your partner to Sell Short 500 shares of GOOG at the same time. When you sell your shares, have them ‘Buy to cover’. If you make sure to do this for every transaction that you perform, then no matter what the market actually does, one of the two accounts should outperform the S&P 500, and the other won’t.

Since the S&P 500 is made up of a wide variety of funds, theoretically, we’d see the biggest gain (or loss) by creating a portfolio of stocks that are very similar to one another. One of the rules on UpDown is that you can’t have more than 20% of your portfolio in a single stock, so my suggestion is to choose 5 stocks in a similar industry and buy $200k in each one. Coordinate with your partner to Short Sell $200k in each of those 5 stocks at the same time.

Over time, if the stocks you chose do well then your account should outperform the S&P. If the stocks do poorly, then your partner’s portfolio will do well. Either way, one of you should earn some real money and you can split the earnings. All you really need to do is set this up one time, then sit back and let it work. To continue earning money, you have to remember to log into your account each month.

There are also other ways to earn money on the site. Obviously, the better your portfolio does, the more you earn. You can also earn money by submitting quality stock analyses, and having people vote for them. They also have a referral program where you earn 10% of what your visitors earn.

So what are you waiting for? Start by signing up for a free account using my affiliate link.

(See my follow up post, and my quick stock-picking tool)

I’ve been thinking about this question for a several weeks now. PaidTwice has started the Snowflake Revolution, which is a aggregation of blogs that talk about snowflaking. I’ve been looking for an excuse to join, but I’ve not really been sure if the concepts apply to me since I don’t have any debt.

In case you are unfamiliar, the term ‘Snowball’ refers to Dave Ramsey’s recommendation to make minimum payments on all of your debts except one. You then focus all of your available money on paying off that one debt. After eliminating the first one, you take the money that you were paying to it, and attack your next debt. As each debt is paid off, your ’snowball’ gets bigger and bigger, making it easier and quicker to pay off the other debts.

The concept of ‘Snowflaking‘ is an extension of the debt snowball. The idea is make payments immediately (or at least as quickly as possible) towards reducing your debt. Instead of accumulating your extra money in your checking account and sending it once a month with your regular payment, you make payments towards your debt, as soon you earn the money. Sell something on eBay? Make a payment towards your debt. Earn some extra money from a side job? Send off a payment towards your debt. You get the idea.

I believe that it snowflaking a powerful idea and would like to find some way to use it in my own financial situation. It eliminates the temporary excess cash in your regular spending account, meaning that you can’t spend it on things not in your budget . It is effectively the modern-day version of avoiding money that is ‘burning a hole in your pocket’. In our world of instant gratification, the frequent payments help us to see that progress is being made and provide motivation to continue.

Now, the question I have is if Snowflaking and Snowballing can be applied you are out of debt. The debt snowball is traditionally targeted at eliminating debts. To apply the snowball concept to things other than debts, you would invest your extra money into retirement, education, and general interest-earning accounts in order of either interest rate or importance.

These types of accounts are those to which I would normally have a fixed, monthly deposit. I might put $200 per month into a Roth IRA, and $100/month into a 529 College Savings account. A purist would say to not make any automatic monthly payments towards these accounts and would, instead, focus on funding one at a time until you reach either a legal or budgeted limit.

An alternative to the purist view would be to keep the monthly contributions going, but to really consider what the minimum amount for those automatic transfers are, and to make them as small as possible. You could then still focus your extra money each month towards your chosen savings account until you have reached your limit minus the sum of the remaining the automatic payments for the year. I personally like this method better, knowing that I’m contributing at least something to each of my investment-type accounts.

Snowflaking to a investment-type account might be a challenge in some circumstances. In know that it is more difficult for me to enter investment transactions into Quicken than for a checking or savings account. All of the small transactions would be a pain for bookkeeping and would negate any incentive for me to do it. My solution for that is to use a high yield savings account to temporarily hold my snowflaking payments until I can deposit them monthly to my investment account.

Using these methods, I’m hoping to increase the amount of money that I save each month and investing it where it makes the most sense for me.

The first round of March Madness at Free Money Finance has ended.  I submitted my post about using a prepaid cell phone, but got pretty stomped by Travel the world Cheaply.  I had only 9 votes while the travel article had 23.

Oh well. It was my first such attempt at promoting one of my posts outside of my own blog.  I’ve only been writing now for a couple months and I’m realizing more and more how much time it takes to write a quality post.  I am working on a couple of ‘big’ posts now that I hope to have finished in the next couple of days.

I did see some spikes in my site’s traffic due to the contest, and according to FeedBurner, I have some new subscribers, so thank you, and greetings to those of you who are sticking around.

I haven’t had the opportunity to write here much because I’ve been busy with some side jobs.    I do a little bit of work with freelance web development and have had the opportunity to work on a couple of those this past week.   When those are available, they pay pretty well, so I spend most of my free time in the evenings work on them.  That is when when I have been writing posts for this site, so this blog hasn’t gotten much attention lately.

The good news is that I’ve made about $500 from my side projects, which is always good.  I think I’m officially done with them now,  I’ll be back to trying to write more here.

My Post about Saving $350 per year on Cell Phone service is up against Travel the world Cheaply.  At the March Madness Competition at Free Money Finance.  If you enjoy my blog, I’d ask that you head over there and vote for my post.

If my post wins, FMF will donate $500 to to Operation Family Fund which assists families who have been affected by the war on terror.

I got involved in running for exercise about 4 months ago. I bough my first pair of shoes from a local running store for $109. I knew that was expensive at the time, but it really was necessary because they provided good customer service by helping me to find the right shoes. I also didn’t mind spending a little extra because that particular store does a lot to sponsor the running club that I’m a part of, and they sponsor a lot of local races.

The shoes are supposed to be good for about 300 miles, and I just passed that during my run on Monday. Coincidentally, I injured my ankle a little bit during that run, so I joked that when they say 300 miles, they really mean it.

So I went online to order a new pair and found that the same store was still selling them for $109. I’m always looking for a deal and started looking through some price comparison sites and found the same pair for only $53 at runningwarehouse.com. They even included shipping for free. I went ahead and ordered a second pair because it was such a good deal.

I do like to support the local running store, so my plan is to get a pair of shoes from them every 12-18 months. I’ll go to the store when I need the service that they provide in recommending the correct shoe. When I’m happy with the current type of shoe that I’m using, I’ll buy them online and save some money.

I figure that I’ll go through 3 or 4 pairs of shoes each year, so that adds up to $150-200 in savings.