Could I Retire Now?

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Last month my alternative income was larger than my expenses.  This is the first time that has happened.  If I could continue to do that I could potentially “retire” now.  It would be more accurate to call it semi-retirement.  I’d still do things to make money I just wouldn’t have a job and I could set my own schedule.

There are several factors that keep me from being able to retire now though.  The first is that last month my income was unusually high and my expenses were unusually low.  In a normal month my expenses will still be higher than my alternative income.  Also, once I’m finished with school I’ll have to start repaying my student loans.  I’ll be on an income-sensitive repayment plan so my payments might not be more than I’m paying towards debt now but there is a chance they will go up.  One more thing is even if I do get to where my alternative income is usually higher than my expenses I need to have a safety net for emergencies and unexpected expenses.  Right now I only have about $3,000 in savings outside retirement accounts.  I don’t consider that anywhere near enough.

For me to be able to retire I need to increase my income so it is consistently more than my expenses.  My expenses are already pretty low so I can’t cut much more there although I do believe I could still lower them more.  I need to focus on increasing my income and saving money outside of retirement accounts and I still have a long way to go on those.  The fact that my income was higher than my expenses last month though makes me feel good about my chances of retiring at 50.

My Bankruptcy Experience

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In 1996 I declared bankruptcy.  That was the culmination of a series of bad financial moves.  I was only about $20,000 in debt which doesn’t seem like that much to me now but at the time seemed like an insurmountable amount.  My credit card companies kept hitting me with late fees,over the limit fees and punitive interest rates so even though I was making monthly payments my debt just kept getting larger.  I don’t blame the credit card companies for my getting into debt but they did help push me into bankruptcy.  I tried to work with them but they wouldn’t cut me any slack.  With the credit card companies offering no flexibility on the repayment terms the situation seemed hopeless. I gave up and declared bankruptcy.

The bankruptcy law has changed since I declared bankruptcy so someone filing today would probably have a different experience.  The lawyer fees and court fees together were about $500.  I’m sure it would cost more now but it was a lot to me at the time and it was a struggle to come up with the amount.  The bankruptcy hearing itself was pretty simple.  None of my creditors showed up.  The judge asked me if I had any assets. I replied that I did not and that was pretty much the extent of it.

The aftermath wasn’t too bad either.  I’m sure my credit was very poor after that but I wasn’t applying for any loans so it didn’t really matter.  I was able to rent an apartment while the bankruptcy was pending.  The apartment management didn’t really care about the bankruptcy.  I was told as long as my rental history was ok then there wouldn’t be a problem.  My rental history was fine because I always considered my rent payments more important than credit card payments.

My credit today is great.  My credit score is 731 and has been in the high 600s/low 700s for several years.  I receive credit offers all the time but right now I have all the credit cards I need. Even before the bankruptcy came off my credit record my credit was better than average.  I didn’t do anything specifically to try to improve my credit but just paying my bills on time seemed to do the trick.

After the bankruptcy I got a secured credit card which I was eventually able to convert to an unsecured card.  I received a lot of offers for secured credit cards after I went bankrupt and most of them offered terrible terms.  If you’re going to get a secured credit card make sure you look carefully at all of the potential fees.  I’m not sure if having the secured card helped rebuild my credit sooner or not.  Not having a credit card at all is also a reasonable strategy to consider if you’ve just declared bankruptcy.

All in all my bankruptcy experience wasn’t that bad. I wouldn’t do it again in the same circumstances though. Hopefully I’ve learned enough since then I won’t be faced with that situation ever again.

Oral Arguments

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Oral arguments are presentations you make before a panel of judges stating the legal reasons why your client should prevail.  It isn’t the same as a speech because the judges will frequently interrupt you with questions about your case.  As a law student you usually have to do an oral argument during your 1L year as part of your  legal research/legal writing class.

I had to do an oral argument during my 1L year but when I transferred my current school said that my former school didn’t say anything about oral arguments in their class description.  They made me take another class that requires oral arguments.  I didn’t want to take it but it is required for graduation so I did so.

I got one of my oral arguments done today.  In this class you have to do two oral arguments and I’ll be doing my second one in a couple of weeks.  I really hate public speaking and I don’t think that is going to change.  When I’m a lawyer I might occassionally be required to speak before a court but I’d prefer to keep those occassions to a minimum.  I doubt I’ll ever feel comfortable with public speaking and for now I’ll be happy to get my oral arguments behind me.

Alternative Income: Peer-to-Peer Lending

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Peer-to-Peer lending (P2P) also known as social lending is a way for people to borrow or lend money without going through a bank.  The main P2P site is Prosper.com.  Another P2P site, Loanio, just recently launched.  Lending Club is another P2P site but it is not currently accepting new lender registrations or loan committments and its future is uncertain.  To get a good idea of how these sites work read the faqs and overview articles on their sites.

These sites can be a good way to make extra money and have worked out well for me.  I have nine loans with Lending Club and two with Prosper and haven’t had any late payments or defaults yet.  The average interest rate on the loans is over 11% which compares very favorably with the negative return of my stock investments.  Some people view these loans as risky but I don’t think they’re overly risk for the return on investment.  If you just want to keep your money safe you can put it in an ING Direct or FNBO Direct savings account.  You’ll only recieve 2.75% APY or 3.50%APY though which doesn’t compare well with the over 11% returns available from P2P lending.

I haven’t invested much in P2P loans yet because I wanted to see how they would perform.  It has only been ten months since I started making loans but I’m pleased with the results so far.  I’ve seen other bloggers who’ve had bad results.  I made loans mostly to people with high credit grades and relatively low debt to income ratios which seems to have helped reduce my risk.  Or maybe I’ve just been lucky.

I plan to invest more in P2P loans once I start making extra money.  The monthly payments would work out very nicely if manage to retire early.

The $25 referral bonuses the P2P sites give is also a nice source of income. I’ve already made more in bonuses than I’ve invested in loans so I’m kina freerolling now.  If you’d like a referral for a $25 bonus send me an email or leave a comment.

Refill Your Printer Ink Cartridge

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New ink cartridges for your computer printer can be very expensive.  The cartridge for my printer costs about $35.  Refilling your printer ink cartridge rather than buying a new cartridge saves you quite a bit of money.  You can buy a refill kit for about $10 depending on what type of printer you have.  I haven’t used a refill kit but I’ve had friends that have used them successfully.

The other option is to have a store refill the cartridge for you.  I recently had my printer ink cartridge refilled at Walgreens and was pleased with the process.  The cost is $10 for black ink and $15 for black ink.  I had a coupon for $3 off ink refills plus a $5 off $20 purchase coupon so I effectively had the cartridge refilled for $2.  A $33 savings over buying a new one.  It took a half hour for the cartridge to be refilled.  When I got home I just popped it back in the printer and it printed great with no problems.

I’m sure there are other stores that refill ink cartridges but you probably can’t get a better deal than at Walgreens.   They frequently have coupons, register rewards, and free after rebate items that can allow you to buy stuff for free or even make a little money.  Check out Money Saving Mom for details on how to get the best deals.  I’m too lazy to come up with my own scenarios but picking the best ones off her site works well for me.  Even if you don’t want to bother with the deals you can save a lot of money by having your printer ink cartridge refilled.