Money Blue Book

My Dream Of Becoming An Internet Entrepreneur and Working For Myself

I am a part time (almost full time now) blogger who spends a great number of hours working on the Internet from home every night. For more than a year now, I’ve been quietly earning a sizable and consistent amount of money through blogging and my internet marketing efforts. As a multi-year veteran now to the world of making money online with a blog, I’ve joined a rather unique and eclectic group of young and emerging internet entrepreneurs – individuals who have not only successfully harnessed the power of the Internet to generate real money, but who have managed to turn seemingly unassuming websites into rather lucrative income producing automatons. While the phenomenon of blogging for money on a part time basis is certainly not new, the idea that one can actually become a full time professional blogger (a problogger of sorts) and generate not only a stable, but a sustainable income at a high velocity through mere blogging alone is quite a surprise to many (particularly among my friends and family).

I’m sure many of you are already well aware of a number of fairly successful bloggers and established Internet entrepreneurs like John Chow, ShoeMoney, and Darren Rowse of Problogger fame – online personalities that dominate the so-called “make money online” niche. Most of these semi famous Internet tycoons have been in the news for some time and have had many years to perfect the art of both online and mainstream personality-based sales pitches. Much of their mystique, self perpetuating hype, and authoritative attention stems from the sheer amounts of money they have raked in through their blogging and online entrepreneurial activities, and the continuous reminders of their financial success to their readers in the way of monthly income reports and screen shots of high dollar amount affiliate income checks. However, the ones you usually don’t hear about are those of us like myself who also run pretty successful operations of our own, but who have generally chosen to remain contently semi-anonymous and out of the lime light. While I’ve enjoyed a pretty lucrative career thus far in terms of the income streams that I’ve been able to pull through my collection of websites and online businesses, I made the conscientious decision early on to remain in the online shadows and out of the way in terms of real world publicity and attention. Not vying for the social media spotlight for ego-stroking purposes has allowed me to quietly generate a pretty prolific online business without the complicated hassles of unnecessary attention or even the critical scrutiny that the well known online bloggers at center stage face. Have you heard of the term “Millionaire Next Door” ? Well I’d like to think of myself as the “Blogger Next Door” – one of a growing number of unassuming and self made entrepreneurs who enjoy their relative anonymity and are content to blend in with everyone else in cyberspace while they quietly build their online fortunes.

Working From Home As A Full Time Blogger Is A Difficult, But Emotionally and Financially Rewarding Profession

My goal today is to simply break out of my usual personal finance subject matter for a moment and perhaps share some tidbits to encourage and inspire fledgling writers and aspiring entrepreneurs who have been quietly sitting on the sidelines – individuals who want to believe, but are afraid to take the first baby steps towards the world of self employment and Internet-based incomes. Admittedly, the journey from entry level writer and semi techie egghead, to nearly full time super affiliate power blogger is a very difficult and time consuming process, particularly in the early stages. Despite its rather ephemeral and unestablished nature, the seemingly unrealistic fantasy of being able to work from home and generate a full time income from just blogging alone is very real. While I have yet to make the final leap to full time blogger (I’m still a part time attorney), I am living proof that working from home and working for yourself is entirely and ultimately possible.

I stumbled upon blogging and the whole online business model a few years ago in 2006 quite by accident. One day I was tinkering with my free personal Xanga blogging account (this was back in the old days when Xanga.com was still popular) and I suddenly noticed the banner ads and affiliate links in the website margins for the first time. Examining the html source code, I finally realized and discovered that there was a whole marketing and income producing mechanism underneath it all that was quietly profiting from all of the user generated content that Xanga consumers were creating. From then on I decided to investigate further and figure out how the blog content and advertisement scripts were integrated into a workable business model – and the rest is history. A blog, or a weblog as it is officially called, is nothing more than an online diary of sorts sorted in reverse chronological order according to article post dates. Blogs are uniquely advantageous for monetization purposes because of the regularly updated and archived nature of their content. Simply put, Google, Bing, Yahoo, and all of the other search engines love blogs for both the fresh and timelessly relevant content they churn out, and generally prefer to rank them very highly for organic search engine traffic – which when translated into practical terms, equals dollars and cents for savvy entrepreneurs.

Now that I’ve worked for myself and have finally tasted financial success and professional freedom, no longer will I ever go back to working for someone else. No longer will I ever want to go back to the emotional and professional constraints of working the traditional full time desk job and devoting my efforts towards benefiting someone else’s company or firm.

I attended law school and graduated to eventually work as an attorney (law school is overrated in my opinion). But anyway, in one of the lawyer jobs I held before I pursued my dream of becoming self employed, I used to work for an overbearing and very unprofessional alpha-female attorney. Despite my best professional efforts at the job, I felt absolutely miserable working as an associate attorney at her small solo practitioner law firm – and never felt so unfairly scrutinized, treated so condescendingly, and persistently set up to fail. But because it was her law firm and because she was my boss, and also because I wanted to keep my precious full time job, I humored her belligerency and endured her belittlement and unreasonable demands for weeks and months. Despite my seething frustration, the fact remained that it was her personal law firm and I was merely a replaceable cog in a bigger machine – and thus I swallowed my pride and did as I was told. But eventually I had enough of the disrespect and quit the firm, literally storming out at the end of one working day without looking back – going from having a full time job that paid the bills to immediate unemployment.

Now that I am a semi full time blogger who runs a variety of part time real life business ventures and operates his own part time legal practice on the side, I use tragic memories of my working past to motivate myself. Whether you no longer want to work for anyone else or whether you were forced out of your previous or current job due to the economic recession or as a consequence of layoffs, it’s time to consider chasing the dream of becoming self employed and finally throwing off the shackles and emotional constraints of the traditional “trading hours for dollars” working life. It may be a scary first step to take, but the potential rewards and financial upside are worth it.

How Much Money Do Bloggers Make From Their Blogs? Answer: Depends On Blog Niche, Your Tech Savviness, and Effort That You Put Forth

When I talk about bloggers, I’m not referring to full time freelance bloggers and online newspaper writers who crank out articles for others. Those types of freelance writers who produce text based content for blogs that are owned by other people only generate a few dollars or perhaps just a measly $1.00 to $5.00 per blog post that they write. In this article, when I’m talking about bloggers and webmasters who are able to generate a very good part time income supplement or even a full time living from their blogs, I’m talking about those who own their own blogs and websites – entrepreneurs who serve as both website owner and chief content producer.

So how much income exactly do average bloggers earn from their blogs assuming a reasonable measure of built up success? That’s not an easy question to answer. Because the amount of money that bloggers make from their blogs varies so greatly depending on the type of advertisers that a website can attract, that statistic is highly dependent on the subject matter of the blog. As a general rule of thumb, the most lucrative and financially rewarding websites and blogs tend to be those in the financial niche where credit card issuers, online banks, brokerage firms, insurance companies, and mortgage lenders are better equipped in terms of financial capacity to pay a lucratively high price to affiliate publishers for customer and new sales referrals. While not as financially lucrative, other blog content niches such as entertainment, gossip, fashion, clothing apparel, legal services, health care, weight loss, shopping, computers, electronics, and dating are certainly financially worthwhile in their own rights and can be immensely profitable as well. However, successful online entrepreneurs who are able to multi task and pour in significant amounts of time and effort on a consistent basis may be able to target different content niches with a diverse portfolio of actively updated websites. Obviously the greater the content diversity from a variety of different websites with appropriate targeted traffic to match, the greater the pool of prospective advertisers to generate income from. The key is to also truly enjoy what you write about. The blog traffic, blog comments, and relevant advertisers will naturally flow thereafter.

Making a decent full time income online by working as a blogger is very much possible but it does require an enormous amount of time investment and educational self training, especially upfront during the initial stages when the financial rewards are still miniscule or non-existent. Whatever you do, absolutely do not quit your full time day job until your part time blogging efforts start paying off. I started blogging part time while I still had a full time day job – spending my off hours teaching myself the intricacies of blogging, website design, and Wordpress blog optimization tricks. It also took a great deal of time to learn the fundamentals of Adobe Photoshop graphic manipulation and the intricacies of basic Wordpress PHP programming for blog theme tweaking purposes. While the barriers to entry are extremely low for blogging as a profession and almost anyone and his/her grandma can get started at any time without paying a dime, there is no guarantee that the process will be easy (and I can almost assure you that the journey will be difficult and sleep depriving). A five figure income per month is possible if you pick the right niche and work extremely and exceedingly hard, but it’s not the norm. Most of you (more than 95%) will probably fail due to blogger’s block, frustration, and lost of interest – but the ones who can persist will succeed in time. Nothing in life is guaranteed but if you put your mind towards blogging and don’t burn yourself out – $100 a month, $1,000 a month, and perhaps even $10,000 a month of passive income is reasonable with the correct mix of content, the right blog niche, and a lot of search engine traffic generation luck.

Much of the information needed to get you started as a professional blogger can be obtained online for free and there is no real need for you to purchase or spend money on E-books or on the make money online books being sold at bookstores. But if you really want a good primer to get you started, I’d recommend something like Darren Rowse’s book – ProBlogger: Six Figure Income Blogging. Anyone who is a wannabe blogger knows about the original pro blogger himself – and ranked by experience rather than age, he’s the granddaddy of us all. Alternatively you can always just visit your local public library and borrow the books for free. But my advice is to just follow your favorite bloggers online and read through their past blogging post archives to get the information you need. You’ll get more real world practical advice on blog writing techniques, search engine optimization tricks, and website business maintenance pointers from these updated daily blogs than you’ll ever glean from mere stale books alone. The world of blogging for income and the fickle nature of search engine traffic generation techniques are constantly evolving so it’s best to stay updated on the latest news by reading from actively updated blogs and websites than from constantly reviewing some ancient textbook on the subject.

If you want to know exactly how much money I currently generate from my online businesses and from this personal finance blog in particular, unfortunately, I won’t be able to share that information in great detail at this time. If you must know a little bit, I will put this forth – this personal finance blog generates in excess of $100,000 in organic net profits per year, most of it without substantial effort on my part. I do not pay any money for advertising, I absolutely do not sell text links, I don’t do paid reviews, and I don’t engage in any pay per click Google Adword advertising – it’s all organic search engine based. Regarding the specifics of my income breakdown, I wish to stay silent on that for now. Perhaps in the near future I will share more about my online income sources and real life business ventures in greater detail with readers. For the time being, I don’t plan to share any pictures of fancy checks or reveal the specifics of my income sources from my blogging operations – you’ll just have to take my word for it. But it’s perfectly okay if you don’t believe me. Like I mentioned early on, I’m not interested in capturing attention or attracting a loyal zombie following – just hoping to inspire a few people and motivate some of you to a call to action.

Never Stop Learning And Chasing Your Entrepreneurial Dreams

To get the blogging and website business know-how you’ll need to run a successful blog, you’ll need to strive towards constantly educating yourself on all aspects of blogging. The facets are broad as blogging encompasses everything from the fundamentals of writing to grammar, basic web programming, graphic design, salesmanship, multi tasking, negotiation skills, and efficient time management. It will take months, even years before you will become a fully self trained expert on the blogging business. I started the early research and tinkering process in 2006, but didn’t start running my first few successful online blogs and start seriously generating a stable income sufficiently large enough to replace my day job wages until 2008. From the time I truly started writing and promoting this particular financial blog you are reading, I didn’t generate a sustainable full time income until 12 months thereafter. There will be times when you first start out that you will feel like no one is reading your work and that you are writing for yourself, but that’s okay. We’ve all been there before and that’s perfectly normal in the beginning. It’s a lonely process at the start but with time, your efforts will pay off. Meanwhile, to this very day, I still spend hours and hours every day reading blogs about blogging and scouring the web for any new morsels I can uncover about website optimization, how to generate more search engine traffic, and how to capture blogger traffic. As far as I’m concerned I will forever be a work in progress. There is so much to learn and my self driven educational enrichment will never cease so long as I continue to blog for a living and make money online (view my beginner’s primer on how to get started).

Free Monthly Lottery Drawing: The American Dream Card From HSBC (info)

Since I was a little kid, I’ve always dreamed of hitting it big and winning the lottery. I’m not talking about winning the Texas Holdem poker pot at your buddy’s house, or lucking out at grandma’s Bingo night, but rather about  landing one of those mega jackpots – the ones you see on TV that feature the screaming people holding the oversized checks – the Powerball’s and the Mega Millions lotteries. Alas – I’ve yet to experience success in any type of sweepstakes or lottery drawing other than that one time I won my elementary school’s carnival raffle as a kid (and even then my “prize” was simply a free lunch and movie date of sorts with my school principle). But certainly one can dream right?

For many people, winning a multi million dollar lottery jackpot is truly the ultimate once-in-a-lifetime fantasy. In light of spiking unemployment rates and the ongoing recession, some people now even see lotteries as their best and only chance to ever gain a personal net worth of a million dollars or more. But unfortunately for them and the millions of people who participate in the daily and weekly lottery drawings, the odds are astronomically stacked against them – so much so that their chances of being struck by lightening or even drowning in their own bathtubs are much higher than that of ever winning. Participants of the popular Powerball lottery currently face an unfathomable 1 in 195 million chance for the top prize. Players of Powerball’s biggest rival, the Mega Millions game, face slightly better odds at 1 in 175 million, but still face a daunting uphill climb to the pinnacle prize.

Play The Lottery Only If You Can Afford It, and Play Only For Fun

The terrible combination of staggering odds and irresistible lures of behemoth jackpot rewards of $300 million or more is precisely why these multi-state lottery games have exploded in popularity over the years, and are now legalized and widely available in the majority of U.S. states. Rather than raise taxes and offend mainstream taxpayers, state governments seem content now to fleece the participants of lottery games with heavy taxes to pay for government expenses like new prisons, new schools, and public transportation costs.

Unfortunately, it’s also been said that state lotteries and legalized gambling activities sanctioned by politicians and governments are nothing more than taxes on the poor and the addicted. A variety of online statistics show that nearly 20% of lottery players contribute more than 80% of the revenue that multi-state lottery games rake in – and that disproportionately, the majority of participants are lower income, minority men who have less than a college education (which explains why it always seems like those on the lower rung of the socio-economic ladder tend to win these lotteries on TV). While wealthier folks do occasionally snap up lottery tickets for amusement purposes, it’s frequently the financially poor and downtrodden who pump their weekly pay checks and life savings into chasing the elusive and nearly unattainable lottery windfall.

When it comes to playing the lottery, there are two important rules of thumb – play only if you can afford it, and secondly, play only for fun. A live lottery drawing is a wonderful rush of adrenaline inducing amusement, but remember, it is just a game – one with such distantly long shot odds that even with the advantages of multiple lifetimes, the odds of winning it all are still incredibly slim. Furthermore, be forewarned that while money can certainly solve a wide host of life’s problems, bear in mind that too much of it at once has been known to inflict massive chaos and misery on those who are ill prepared to handle the emotional windfall and public attention that ensues. Don’t believe the Powerball curse? Don’t believe that all of your fair weather friends, envious enemies, distant uncles, and hand out desiring cousins will be coming out of the wood work to clamber for some of your new found cash? Then take a look at this news story of 8 recent lottery winners who won the lottery but ultimately squandered their new found fortunes, filing for bankruptcy years later. If their testimonies don’t dissuade you from playing the lottery and hoping to land it all, you might as well follow these lottery pointers for the most efficient path to winning the jackpot:

The Not-So-Secret Secrets To Winning The Lottery:

1) You Must Play To Win: Like many things in life, you must pay to play, and assume some measure of risk for the big pay off. Each Powerball and Mega Millions ticket only costs a $1.00 to play, but if you don’t actually go out to your local supermarket, gas station, or convenience store to purchase one, you have absolutely zero chance of winning, no matter how slim the odds are to begin with.

2) Buy Just One Ticket Or Two Tickets Every Week (At Most): The key to winning a major lottery is to always be a participant and prospective candidate to win by simply playing. There is no sense in ever buying multiple tickets to any one lottery drawing to increase one’s odds. With Powerball odds of 1:195 million and Mega Millions odds of 1:175 million, changing that 1 into a 2 or 3 isn’t going to make a noticeable dent in your long shot odds. There is no appreciable statistical difference between odds of 1 in 195 million chances and 5 in 195 million chances – your odds are still incredibly slim. However, there is a huge difference between odds of zero in 195 million and 1 in 195 million. The key to winning the lottery is to just be a player, not try to increase your odds of striking the jackpot. Think of it this way – with a single ticket, your odds of losing are likely 99.99999%. Even with hundreds of ticket entries, your odds of losing likely only improve marginally to 99.99998% – still pretty unfavorable. But with that one lone ticket, at least you have a chance.

3) Lottery Numbers Are 100% Random: Presuming that there is no hidden conspiracy among the lottery conductors to rig the lottery balls and barrels in those live drawings – the presumption is that the final lottery drawing numbers are determined by random luck and chance. Unless you can somehow calculate wind velocity, drag, angle, and physical trajectory to such a degree that you can mathematically calculate how the individually numbered ping pong balls will end up in the lottery machines, there is no sense trying to predict the final number.

If you opt for the self selection method when picking your numbers during the ticket buying process, there is no sense fussing to ensure that you have a broad mix of numbers with an ample mixture of high and low numbers, or odds and evens. The final selected numbers are determined at random – plain and simple. Feel free to pick your lottery numbers based on your own propriety formulas derived from special dates and numbers such as birth dates, wedding anniversaries, and juxtapositions of your house number or a family member’s age. But if you want to save time – go with the automatically generated number options. Or in the alternative for better tracking purposes, you can stick to playing the same sequence of numbers your entire life. Randomly generated and self selected numbers all stand the same equal chance of winning. Unlike the creation and algorithm generation of credit card numbers, the outcome of lottery numbers follow no precise formula.

4) Past Number Results Have Zero Bearing On Future Results: As I indicated above, lottery results are generated at random depending on how the numbered balls land during those televised drawings. The lottery machines do not search for particular numbers or combination of numbers which have not been selected in the past. They have no memory of past results. There is no real meaningful pattern in past and future lottery numbers and you will be better off saving your money rather than going out and buying useless books on lottery number picking strategy.

5) Lucky Charms and Lucky Numbers Are Useless: Go out and purchase rabbit foots, four leaf clovers, and kidnap leprechauns all you want – they are simply amusing talismans that have not been proven to yield any tangible results beyond abstract and completely unverifiable notions of luck. Seek lottery number inspirations from your dreams and prayers, or go with numbers that you found luckier than others if that will make the lottery game more inspirational or exciting for you. But do bear in mind – it still boils down to pure 100% unadulterated luck and good fortune.

6) Reduce Your Lottery Odds By Playing the Quick Picks: In almost all cases, the scratch off tickets that you frequently find in supermarket vending machines and at gas stations feature better odds than your run of the mill Powerball and Mega Millions lottery tickets. The potential jackpot pay outs for the quick pick scratch offs are much lower, but the odds are much better than those for the mega multi-state lotteries.

Instead Of Gambling Your Life and Betting Against The Odds, How About Playing The Sure Thing?

The sight of that beaming person on TV holding up that gigantic check and presenting all those zeros for all to see is no doubt quite a tantalizing scene. It certainly is an infectious and dazzling lure, and a very powerful television media message to those of us sitting on our sofas at home watching the spectacle. But frankly, such a fruition in our own lives is not statistically realistic and within the realm of practical possibility. It is certainly tantalizing enough of an incentive that I am personally willing to pluck in my fistful of dollars for a few lottery tickets whenever the Powerball or Mega Million jackpots rise to ungodly sums every blue moon, but in terms of my day to day life, I try to focus on the lifestyle decisions that emphasize savings and paying down debt that really do matter. Certainly, go ahead and play for fun on occasion if you wish, but don’t make it into an addiction or bad habit, especially if you can’t afford the financial cost of even putting food on the table. If you truly want to jump start or improve your financial life and fix those money troubles, there are things you can do today where the odds of financial success are not so prohibitively onerous. Yes, those actions are not as sexy or glamorous as the dream of winning the lottery, but the favorable results of those actions are more within the realm of possibility for people like you and I.

If you really want to improve your monetary situation, instead of chasing the unattainable home run hit of a lottery jackpot, why not pay yourself the money you would have spent on lottery tickets by saving it or investing it for the future? Try depositing the cash you have set aside into a high interest savings account or opening a discount broker account and investing the funds in the stock market. With high interest bank accounts and tax advantaged investment options like Roth IRA accounts and 401k’s, there are numerous ways for you to take advantage of the amazing power of compound interest to grow your fledgling investment into a lottery jackpot size reward many years down the road. As some financial pundits and gurus have astutely pointed out, if you take that $150.00 a year you would have spent on lottery tickets and put it into a tax deferred IRA or 401k plan at age 30, you’ll have grown it to $28,000 by age 65, assuming a reasonable 8.00% rate of return. To turn your investment into a hefty $500,000 nest egg, you’d only have to save away a little less than $100.00 a month starting at age 21. Think of it – which one of these two scenarios is more likely – that you will be able to find an extra $100 a month lying around to save up or invest, or that you will hit the 1 in almost several million odds of even snagging the lower end 6 figure lottery jackpots? Play the lottery for amusement purposes if you wish to be entertained, but don’t make it a fool’s bet for your financial salvation.

If you have a high yield savings account or have funds invested in a certificate of deposit, no doubt you will have noticed that interest rates on formerly high yielding bank deposits have been dropping for months now. Thanks to this ongoing economic recession, interest rates have been steadily declining, much to the frustration and chagrin of aggressive savers like myself. While certain faithful online banks such as Ally Bank (formerly GMAC Bank) and Everbank continue to offer competitive rates that are as high as the market place will permit, the vast majority of bank rates have plummeted across the board. With many so-called “high yield savings rates” now only offering rates in the 1-2% APY range, it’s getting more and more difficult for any serious cash investor or fixed interest rate chaser to make money on existing balances while remaining in these types of declining accounts.

While high yield savings accounts and CD deposits (with their formidable FDIC insurance guarantees of up to $250,000 and steady rates of return) will continue to serve important and irreplaceable roles as reliable short term cash savings options for consumers, those seeking a higher rate of return may want to start looking elsewhere. Despite this type of depressed market, a variety of rather compelling CD alternatives have emerged as serious high interest contenders, all worth a review.

High Yield CD Rate Alternatives May Not Be Fully FDIC Insured, But Many Still Offer Safety, Security, Liquidity, and Low Risk Opportunities

Before you decide to move away from traditional bank savings and CD accounts, it’s important to think about how much additional risk you are willing to assume in your new short term savings vehicle. If you want maximum protection from loss and want absolute peace of mind, then it’s best to stick with your existing flexible savings accounts and CDs, albeit at current unimpressive rates. But if you are willing to harbor slightly more risk or give up some liquidity (degree of immediate access to your money), investing in financial products such as peer to peer loans (as a lender) or money market funds may enable you to get a much higher rate of return, while still enjoying a historically proven track record of safety. But keep in mind that the potential returns on such savings alternatives like mutual funds, bonds, and p2p loans are higher because the account holder is agreeing to assume more risk than one would with a bank savings account or CD. Such alternatives do not get the same iron clad FDIC insurance protection of up to $250,000 that all reputable banks in the United States enjoy. FDIC insurance via the federal government ensures your bank based checking, savings, and CD accounts won’t be lost even in the event of a catastrophic bank failure or bankruptcy. While some of the high interest rate alternatives like credit unions and brokerage accounts still afford account holders a measure of protection against unexpected loss with their equivalent versions of the FDIC, not all such alternative investments do.

Please keep the risk, liquidity, and interest rate tensions in mind as you review the potential possibilities below in your pursuit of higher interest rate deals and offers. Stay away from much riskier and more potentially volatile investments like stocks, mutual funds, index funds, foreign currency CD deposit accounts, and gold investments. While these are great investment assets for portfolio diversification purposes, when it comes to savings account alternatives and comparables, you ought to stick with steady deposit options where the risk of loss can be greatly minimized and controlled.

List Of the Best CD Rate and High Interest Savings Account Alternatives:

1) Peer To Peer Lending High Yield Rates – If you’re searching for a way to earn a fairly steady average rate of return in excess of 9.05% APY, you may want to consider investing money with popular peer to peer online lending sites like Lending Club (see review). Lending Club.com’s online application is free and it doesn’t cost anything to sign up and review the online platform features for yourself. Social network lending, also known as P2P lending, offers a way for ordinary and willing consumers to lend money to cash strapped borrowers and local entrepreneurs at competitive interest rates. While the lending website administers the actual loaning process and handles the fees and charges with the borrower, it’s the consumer lenders like you and I who get to pocket the potentially high yield interest rate earnings. While per my review, Lending Club.com is one of the few P2P lending sites today that’s actually undergone and completed the SEC filing and quiet period process, other up and coming social lending alternatives include Prosper.com, PertuityDirect.com, GreenNote.com, VirginMoney.com, and Loanio.com.

While unlike savings accounts and CD rates, P2P lending loans provided by sites like Lending club are not FDIC insured or absolutely protected from loss, average interest rate yields have averaged over 9.00% APY over the past 18 months. Because as a prospective social loan investor you get to decide the quality of the personal loans you wish to extend, it’s possible to diversify your risk among numerous small loan accounts and vastly minimize your risk of loss. Much of this was learned from my own personal experience. As a Lending Club loan investor and participant for more than a year now, I have more than $1,000 invested into several high quality loans (loans acquired by borrowers with high FICO credit scores and trouble-free credit reports). My annual interest rate across all of my outstanding note investment have consistently earned me a steady 8.00% APY, with no defaults as of yet.

While I wouldn’t recommend plunging one’s entire life savings, emergency funds, or new home deposit, into Lending Club or peer loan investments, from a high yield savings account investor stand point, the potential interest rates they offer are rather compelling. The whole practice of social micro lending is still not fully in the eyes of the mainstream media yet, but this CD alternative is likely to grow in popularity in the coming years.

2) Online Savings Account Rates (Become An Aggressive Interest Rate Chaser) – Online savings accounts, high yield reward checking accounts, and certificate of deposit accounts offer something that no non-bank alternative can match – and that’s solid FDIC insurance protection from loss up to the $250,000 per account limit. If you’re determined to stick with the top online savings accounts due to the FDIC protections, high liquidity, and ease of transferability that they afford, you may wish to consider being more aggressive in your approach towards bank rate chasing. Aggressive interest rate chasers usually open more than a few (10+) high yield direct accounts with the top online banks, and monitor interest rate changes and fluctuations closely (almost obsessively) for the best deals. When there is a noticeable interest rate shift, aggressive bank rate chasers will quickly take advantage of free ACH features to execute an electronic bank transfer in pursuit of the higher rate account. Of course, when all rate offerings across the board are in the doldrums like they are now, this rate chasing strategy doesn’t always make sense. The hope for many is to simply capture those special limited time rate promotions by online banks looking for a surge in customer deposits and willing to entice with extraordinary rate offers.

3) CD Rates (Consider Longer Term CD Rate Offers) – Chasing higher fixed CD rates require banking consumers to sacrifice liquidity in exchange for higher potential interest yields. The basic premise behind certificate of deposit rates is that they offer progressively higher rates the longer you are willing to forgo access to your deposited funds. The longer the CD account term, the more interest rate money the bank is willing to provide you in exchange. Take the high yield Ally Bank CD rates for example. Their best saving account rates are currently around 2.25% APY, while their best 1 year classic CD’s are offering 2.80% APY. Extend the CD term to 2 years, and the CD rate jumps to 2.90%. Extend the CD deposit term even higher to 5 years, and the interest rate surges to 3.50% APY. If you truly want to maximize your CD rate yield, you will have to consider longer duration CD terms such as 3 or 5 year CD’s over short term 12 month ones.

Those rate chasers seeking to capture the high interest returns of longer term multi-year CD deposits can inject some liquidity into their fund accessibility by adopting the ever popular and highly touted staggered CD ladder strategy. Another way to maintain some liquidity but still earn high CD rates with longer term accounts is to look into a no penalty certificate of deposit such as the ones that Ally Bank and other online banking institutions provide. No Penalty CD’s offer high CD rates with the freedom of no-fee early withdrawal. Also, look out for frequent online promotions and special CD deals by up and coming online or local banks looking to snag new accounts and time deposit customers. Those special CD rate deals they tout frequently are 2 to 3 interest rate percentages above and beyond current market rates.

4) Credit Unions and Local Community Banks – While online banks (”Direct” banks) generally offer much better interest rates than traditional brick and mortar banks due to their substantially lower overhead costs, you can frequently find exceptional and even exclusive banking deals by going local. While local credit unions and neighborhood banks often have limited bank branch locations and access, they compensate for their smaller presence by touting checking, CD, and savings account rates that are as good or even better than those offered by the best online banks. But keep in mind, oftentimes, local credit unions and banks like SECU, Navy Federal, PenFed (Pentagon Federal Credit Union) cater to specific segments of the community such as teacher’s unions, state or federal government employees, public or private university employees, or members of the military – and thus often have stricter bank membership and account qualification requirements. But despite the extra hoop jumping and limited membership demands, the bank rate deals they dangle are worth it if you can find them and qualify. Best of all, credit union accounts are protected from loss by the National Credit Union Administration (NCUA), an FDIC insurance-like entity.

5) High Yield Checking Account Rates (Reward Checking) – While high yield reward checking account rates have steadily declined the way savings and CD rates have, they remain much higher than even the best long term CD rates, frequently as high as double the top rates. However, most of these high interest checking accounts have several major account limitations and drawbacks. They frequently have stringent debit card usage requirements (at least 10 debit card transactions per month), and they usually cap checking account balances at a maximum of around $25,000 (although maximums as high as $250,000 can still be found). Balances are permitted in excess of the maximum limit, but only the funds within those limits will earn the highest special checking account rates. While I highly recommend taking advantage of reward checking account rates, I do recognize that they can be cumbersome alternatives for some consumers – primarily due to their strict debit card usage requirements. If you are a big credit card user like myself, being compelled to use a debit card to make a sizable number of monthly purchases can be a big burden.

6) High Yield Money Market Account Rates – If you wish to remain a high yield savings account rate chaser, you might as well take a look at high yield money market accounts as well. Essentially, money market accounts, or MMA’s as they are frequently called, are hybrid mixtures of checking accounts and savings accounts. While offering the high competitive rates of savings accounts, they also offer the check writing benefits of traditional checking accounts. MMA rates will rarely blow you away or wow you with their interest rate yields, but many local credit unions and online banks like EverBank have been pushing special high interest promotions for their money market offerings of late.

7) U.S. Treasury Bills, Notes, and Savings Bonds – Backed by the full faith and credit of the United States government, federal government-issued Treasury Bills and Savings Bonds enjoy rock solid protection against loss and forfeiture. Treasury Notes and Bonds are debt obligations issued by the U.S. federal government. The revenue generated from the bonds are used to raise capital income to pay for the federal government’s routine operations and expenses. Because of the lack of default risk, Treasuries typically offer lower interest rates than most other forms of securities, however the longer term notes and bonds offer pretty impressive rates that may sometimes match or even exceed ordinary bank rates. With their FDIC-like protections, Treasuries are worth a look. Check out TreasuryDirect.com for your Treasury security needs – it’s the only official financial website that lets you buy and redeem securities directly from the U.S. Department of the Treasury in paperless electronic form. But before you buy, remember to consider the liquidity issues and wisdom of locking up your money into long term Treasuries.

8) Consider Paying Off Credit Card Debt - If you are sitting on top of some idle cash or mulling what to do with the extra funds in your savings account that’s not earning the high yield interest rate you’d like, how about using the extra money to pay off some high interest debt, especially credit card debt if you have any. Besides, unless you’ve got a ton of cash in those savings accounts, chances are, an extra few interest rate points earned by shifting them into alternative investment vehicles isn’t really going to net you all that much in extra savings anyway. You might as well put it towards paying off debt like your high APR credit card balances, home mortgage obligations, or even your student loans. Don’t abandon the need to maintain at least 9 months – 12 months worth of emergency funds in your stable savings accounts and CDs, but using available funds to pay off presumably higher interest debt is always a good decision.

Please let me know of any more good deposit alternatives other than savings accounts and CD’s that offer higher rates but still offer a reasonably comparable level of safety.

Borrow Money Or Invest In Interest Earning P2P Loans With Lending Club

With the lowering of interest rates by the Federal Reserve in response to the current economic climate to the lowest levels we have seen in years, the interest rates offered by high yield savings accounts and high interest certificate of deposits are now simply not as attractive as they once were, only a few years ago. With the stock market still suffering from unstable price swings and massive volatility across all sectors, it makes present day sense to look towards alternative investment ideas to make some money.

While I have been a quiet Lending Club member for a few years now since the online company opens its doors to loan investors, I haven’t felt the need to review the program until now. Until recently, the top high yield savings account and best CD rates at most banking institutions offered a reliably consistent rate of return on deposits. But with market turmoil ever present and the specter of worsening bank failures looming, I’ve begun to turn my attention to other investment possibilities in an attempt to diversify my portfolio risk and seek a higher rate of return. The ability to earn a reasonably competitive interest income with the added ability to diversify risk via peer to peer lending networks like Lending Club and Prosper is becoming more and more attractive. At the very least, P2P lending programs offer potential profit seeking investors like myself the ability to play the role of the banker and help people out with their loan needs, while at the same time earning interest income that’s higher than what’s currently available in a regular savings account or bank CD.

What Is Lending Club and What’s P2P Lending and Borrowing All About?

Lending Club is a person to person, also known as a peer-to-peer, lending website that matches ordinary borrowers with ordinary local lenders (who are ordinary people themselves) through a pairing system that combines social networking, a computerized search algorithm, and manual credit worthiness checks. Essentially, Lending Club is a way to offer low interest loan rates to borrowers with good credit, while at the same time offering willing potential lenders like you and I the ability to earn a reasonably high interest rate of return with a relatively low risk of default on the loans that we extend to these borrowers. It’s an alternative way (that’s growing in popularity) for ordinary Americans to borrow money, get qualified, and get funded for loans expediently without the complex hassles of applying for traditional bank loans or having to deal with the riskier side of 0% balance transfer credit card offers or getting mired into the clutches of payday loans. On the whole, Lending Club offers borrowers better interest rates than can be obtained from any credit card offer, even those that purport to be low interest.

The whole business concept behind P2P lending networks like Lending Club is built on the premise that borrowers will be less likely to default to members of their own local communities. The Lending Club online system offers anonymous borrowers and local micro loan lenders a way to find each other and get matched up based on personal preferential demographic factors like geographic location, educational and professional background, and activity within a particular social network like Facebook (the social networking site where Lending Club had its upstart roots).

Still don’t believe Lending Club or peer to peer lending and borrowing programs are legit? Just take a look at a recent article from the Harvard Business Review, which notes the remarkable rise of peer to peer lending programs and documents the rise of such emerging programs as the next big wave of important financial innovations in the coming years, especially in light of the ongoing economic recession and the collapse of traditional lending institutions. It looks like P2P lending is here to stay, one way or another.

My Lending Club Experience – Investing In High Interest Bearing Loans

As a person who’s always up for trying out new financial products, I signed up for Lending Club when it first came out and have been using the online service ever since. So far, my Lending Club experience has been pretty positive, yielding fairly respectable returns in the process. Currently, my entire Lending Club participation has only been that of a lender and I have yet to participate as a borrower. However, while I can’t comment on Lending Club through my own personal experiences as a borrower, I have had numerous extended online conversations with actual people who have used the Lending Club service for their borrowing needs, primarily to help pay down existing high interest debt. Most of the Lending Club borrowers I’ve come into contact with have been pretty receptive to the user-friendliness of the Lending Club online platform and pleased with the convenient access to reasonably priced loans that the website affords, particularly when compared to last ditch lending alternatives like car title loans or payday cash advances.

One of the reasons why I slightly prefer Lending Club over other peer to peer lending networks – is its non-eBay auction-like nature. Having to engage in a convoluted bidding process for loan offers or loan investment prospects would inject too much complexity into an online loan matching process that’s trying to cater to the ordinary masses. Fortunately for investors in particular, Lending Club offers its loans on a take it or leave it store front basis. If you find a loan and the credit characteristics and interest rate of return strikes your fancy, you can buy it on the spot, or pass.

As primarily an experimental investor and cautious lender, I have mostly sought out high quality, lower risk of default type loans. As a relatively risk adverse lender with an infrequent appetite for riskier loans, I am not to keen on the prospect of any of my loan investments ever defaulting. However, at the same time, I understand that it’s a trade off – safer loans generally yield much lower interest rates of return, while riskier loans almost always yield much higher rates of return to compensate for the higher risk of default and nonpayment. The vast majority of my Lending Club loans as a lender have been A-grade, personally-chosen loan investments. Thus far, I have stayed away from using Lending Club’s computerized LendingMatch program to pair me with desired loans. I guess I have confidence in my own ability and prefer to retain control, rather than let some computer software do the leg work for me.

Currently, I have a little more than $800 invested into numerous micro loans with local borrowers. I’m always on the look out for high quality, attractive loan prospects but unfortunately, they are not always available. When they do become available, I try to snap them up quickly. These A-grade Lending Club loans have become quite a set of high yielding cash cows for me. Thus far, I’ve been very lucky and relatively fortunate as none of the Lending Club loans that I’ve extended have been significantly late or have entered default. Intriguingly, my Lending Club loans have earned me a steady interest rate of almost 8%, which is 2-3 times higher than what I earn with my best CD rates, best high yield savings, and even best money market accounts. As Lending Club continues to grow in popularity, its borrower base will inevitably grow larger in size, and the volume of attractive loan investments are bound to increase. If my default-free track record holds, I may decide to dabble in slightly riskier Lending Club loans in the near future to see if I can snag a higher rate of return but still maintain my default-free streak. Stay tuned!

For those wondering about the prospect of income taxes levied on the earnings off of Lending Club loans – yes, you are personally responsible for paying ordinary income taxes on all interest income that your Lending Club investing activities generate (you are issued a handy 1099 form at tax time).

Setting Up A New Lending Club Account Is Free and Quick

Opening an account with Lending Club is easy and efficient, and as expedient as opening a new online bank account. To open an account and start lending money through Lending Club, you simply submit your personal information, bank name and bank transfer account numbers, along with some optional background information. Thereafter, the account registration process wraps up with the obligatory bank test deposits to verify true bank account ownership

Opening a new Lending Club account for borrowing purposes on the other hand entails a stricter registration process that necessitates that the applicant provide a Social Security Number and other identifying information for a full credit report and  FICO credit score background check (try looking up your own free FICO credit score beforehand). Though Lending Club imposes a rather strict set of prime standards for borrowers, this attention to credit quality over mere quantity ultimately ensures a better experience and loan exchange for both lenders and borrowers in the long run.

Borrowing Money and Getting A Loan From Lending Club

For prospective qualified borrowers, Lending Club offers an attractive way to obtain a loan at comparatively affordable rates – offers that beat out most personal bank loans and credit card interest rates. However, do be forewarned that Lending Club’s qualification standards for borrowers are high grade and rather stringent. Lending Club pretty much only wants prime, or near prime borrowers with good to excellent credit. Those with very bad or subprime credit are probably out of luck when it comes to Lending Club, and will probably have to resort to less than advisable, bottom tier loan alternatives such as bad credit credit cards or payday loan borrowing.

The process of applying for a Lending Club loan is surprisingly straightforward. Approved Lending Club borrowers get a 3 year unsecured fixed interest rate loan, with repayment obligations managed by Lending Club. There is no haggling or negotiations to contend with as you simply submit an application for a loan, and based on your FICO credit score, credit report, and background check, you are offered a fixed interest rate loan to accept or reject. At Lending Club, you can borrow anywhere from $1,000 to $25,000 as an unsecured loan, to be used for just about any purpose, including but not limited to, high interest credit card repayment or small business financing.

To get started as a Lending Club borrower, simply open a new Lending Club account as a borrower, and submit a loan application. At the time of registration, Lending Club will obtain a credit report and FICO credit score check of the borrower in order to rate and assign a credit risk grade (ranging from A thru G) and determine the appropriate interest rate the borrower can solicit on the site. Once approved, the borrower is free to list his or her loan request on Lending Club for prospective lenders to review and examine. During the credit risk scoring process, particular attention is paid to the borrower’s credit rating history, the amount of the desired loan balance, and the borrower’s current debt to income ratio.

Lending Club’s standards for borrowers are high and the program only currently accepts members who can meet the followings status and credit history requirements:

• Must be a U.S. resident.
• Must have a FICO credit score of at least 660, with a debt to income ratio (excluding mortgage) below 25%.
• Credit history report must indicate that you are a responsible borrower.
• Have at least 1 year of credit history, showing no current delinquencies, recent bankruptcies (7 years), open tax liens, charge-offs or collection accounts in the past 12 months.
• Must have no more than 10 inquiries on your credit report in the last 6 months.
• Must have a revolving credit utilization of less than 100%.
• Must have more than 3 accounts in your credit report, of which more than 2 are currently open.

For their middle man loan matching services, LendingClub charges a processing fee (ranging from 0.75% to 3.50% based on Lending Club’s assessed credit risk grade), which is included in the annual percentage rate (APR) and is subtracted from the loan proceeds prior to disbursement to the borrower.

Lending Money and Earning A Comparatively High Interest Rate On Lending Club Loans

To qualify as a Lending Club loan investor, you must meet and satisfy certain preliminary state and financial suitability conditions – translation: you must belong to an approved state and/or pass certain income and net worth requirements. With exemptions for certain states such as California, you generally must have an annual gross income of $70,000 or a networth (including your home) of at least $250,000.

As for the state residency requirement, you must be a resident of one of the following states below. Your state not on the list? Fear not – Lending Club has submitted proposals to all states and new ones are being added as they are approved.

• California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Louisiana, Minnesota, Mississippi, Montana, New Hampshire, Nevada,New York, Rhode Island, South Carolina, South Dakota, Utah, Virginia, Washington, Wisconsin, West Virginia, and Wyoming.

As a prospective Lending Club loan investor, you can start with as little or as much money as you’d like. Once you have opened a Lending  Club account and transferred in the appropriate funds for lending purposes, you will be asked to indicate your level of risk tolerance (credit risk ratings that range from A – G) and prompted to search for loans either manually, or get matched up with prospective loans with the aid of Lending Club’s computer algorithm based LendingMatch software. The Lending Match program generates a suggested loan portfolio based on your level of risk desired and your connections with the borrowers in your account. As mentioned above, I have chosen to stick with manual loan evaluations (with great success thus far) as I feel more comfortable with my own ability to assess loan prospects than entrust that duty to a random computer program.

Those who are new to peer to peer lending may wish to start with small incremental investments and tinker a bit with the seesaw effect of risk and interest rate of return, before diving into larger denominational investments. Those who get the hang of it may actually find the loan investment hunting and evaluation process rather interesting and personally rewarding (remember, you are potentially helping out someone who is in desperate need of a loan to get his or her life going again).

There are two loan components that will be of paramount importance to prospective Lending Club loan investors – the interest rate of return offered, and the rate of default risk. The current range of interest rates that Lending Club lenders and investors can potentially earn varies from 7.37% to 20.11% (depending on how risky the loan is in terms of risk of default, as determined by the automatically assigned Lending Club loan grade.

The worst case scenario for any Lending Club loan lender or investor is the dreaded loan default, which occurs when the borrower refuses or is unable to fulfill the obligations of his or her loan principle and interest rate repayment. Lending Club’s website indicates that the current overall default rate is less than 3%. However, and probably due to my personal strict and stingy loan evaluation tactics, I have yet to experience a loan default on my Lending Club loan investments. On the downside, I probably earn a much lower interest rate of return on my loan investments than I would be able to garner if I opted to invest in slightly more riskier B and C grade loans.

As a Lending Club loan investor, one of the general statistics and trends I track closely is the company’s continuously generated performance stats for all loans. As you can see from the current Lending Club loan stats, Lending Club does a pretty commendable and transparent job of providing updated statistics relating to all late and defaulted loans for all members to review and assess. As the updated loan default statistics demonstrate, rather surprisingly perhaps, the vast majority of loans (particularly the A graded ones) are current and not late or in default. The B and C loans are also not as horrendous in terms of late payments or defaults as one may have assumed. Those who are into mathematics and willing to play the odds of probability may find it worth the slight risk of partial loan default to capture the higher interest rate of return on their investments. As always, smart Lending Club investors ought to spread their loan investments around to minimize the chances that one unexpected loan default will torpedo their entire Lending Club portfolio.

Lending Club Loans Are Now More Liquid Than Ever And Can Be Traded Like Securities

As Lending Club has completed the SEC registration process, all Lending Club notes and loans issued on or after October 14, 2008 can now be purchased and sold as securities, as they now represent Lending Club security investments rather than direct loan obligations of the underlying Lending Club borrower.

Now instead of waiting for the 3 year locked in loan commitment notes to reach maturity, they can now be traded on the secondary market through Lending Club’s trading platform agreement with FOLIOfn Investments Inc, greatly enhancing their liquidity and versatility as investments. While only loans and notes issued after Lending Club’s October 14, 2008 SEC registration date may be traded, in due time, it is reasonable to expect the number of trade-able notes to balloon in the coming future.

For those concerned about the safety and security of their invested loan funds as a lender in the event of a Lending Club failure or bankruptcy, Lending Club actually addresses this issue on their webpage. According to Lending Club, in the event the company, for whatever reason goes out of business or is no longer able to continue servicing loans, in order to ensure continuity, Lending Club has a backup servicing and successor agreement with Portfolio Financial Servicing Corporation (www.pfsc.com) for PFSC to take over loan servicing.

While the Lending Club business entity itself is still burning through venture capital cash like it’s going out of style, particularly as it focuses on promoting the growth and adoption of peer to peer lending, I personally think the concept of P2P social network lending is here to stay. Whether companies like Prosper or Lending Club will be around forever, or whether they ultimately will be bought out by more traditional banks eager for a piece of the peer lending pie, remains to be seen.