Credit Card Review – PenFed Credit Union

After reading some reviews of cards on some other sites, I thought I would add my two cents. For starters, it helps if I don’t make any money from those credit card affiliate programs, as most reviewers do.

PenFed Credit Union is the second largest credit union in the US. After Navy Federal Credit Union. To become a member you have to be related to or live with a member, work for the government, have served in the military or be a member of the National Military Family Association. Which you can become for the low price of a $5 donation!

Now Navy Federal Credit Union also has a great card, but there are no easy ways into that one that I know of. You literally have to have been in the service or be directly related to someone that has been (Father, Mother, Sister, Brother, Spouse).

The card has a 13.24% Fixed APR and a 1-5% Cash Back program. Fixed APR is difficult to find in the credit card world. And a solid cash back program is tough to find as well. I don’t recommend carrying a balance, but if this functions as your emergency credit card, it’s not a bad deal. Plus if you pay off the card every month and you use your card for all your day to day expenses, you can end up with a nice cash back credit (applied AUTOMATICALLY to the card balance at the end of the statement period). I received about $140 back last year and never carried a balance. Recently I’ve been using my debit card because I think having that “buffer” of a credit card (even if paid every month) gives the illusion that you have more money and makes it easier to spend more. Versus having it debit from your checking account, means an instant impact.

Penfed also has a lot of other great services, I recall reading that they had some of the best mortgage rates around.

You also have the added benefit of not supporting a bank that you bailed out with your tax money 😛

Making Money with P2P Lending

The best way to stick it to the big banks? Avoid using them and go to a consumer driven platform. That’s what P2P lending is all about. http://www.lendingclub.com or http://www.prosper.com are the most successful companies around, although I prefer dealing with lending club.

I am currently making 11.27% return on Lending Club, my Prosper loan got repaid early, so I didn’t make very much.  I don’t like the Prosper interface as much either they also had some legal issues that shut down their site for a long time.  Something to do with the FTC. I guess Lending Club anticipated the intervention and shut down early and only for a few months. Prosper was a little slower to react and recover.

The key to either Prosper or Lending Club is diversifying your loans, just like you would with traditional investments. You spread the risk by investing the minimum amount ($25) in as many loans as possible.  I’ve got B grade-D grade loans currently. The B loans have the lowest interest rate, but the best chance of repayment. The D loans a lower success rate and thus a higher interest rate. I haven’t had the courage to go into the E range yet, that just seems like asking for trouble, but honestly if you abide by the same strategy, you probably would get enough of a return to justify a few delinquent accounts.

I currently have no delinquent accounts or late payments from borrowers, but I have had a few early pay-offs. But that is great news for those individuals, since they are getting out of debt! And it is to be expected since that is the number one type of loan people request.

In the end, it is at least worth a little experimentation. I mean, you can’t beat an 11% return! That is a reward worth it alone, but add on top of that that you are helping people improve their lives with a hand up (as opposed to a hand out) and you can actually feel pretty good about it.

You could also lend a large amount to one or two individuals and try to qualify the risks by asking them about their financial situation, credit report, etc. But diversification always can easily win out over intense research. Not just in time (and you will save a lot of time), but also in results.

Strategic Budgeting with ING Direct and Direct Deposit

Start off by calculating all of your regular expenses per month, everything like: health insurance to auto insurance, auto maintenance (averaged), gas (averaged), haircut, groceries, utilities, rent, gifts, netflix, internet, student loans (sigh), eating out and even one for Misc using excel (nothing fancy).

Now you subtract all of that from your take home pay NOT your net pay!

Now whatever is left over (not much!) you can set up to deposit to a second direct deposit account. I am using ING account for what should be “left over” after all my necessary expenses. My strategy is to use my credit card (Pentagon Federal Credit Union) for those necessary expenses (because I pay it from my regular checking account) and my ING direct debit card for anything above and beyond those necessary expenses. Then I can gauge what I’m actually spending on the non-essentials and everytime I go to do it (ie use the debit card) I have to acknowledge consciously that I am spending money on something outside of my normal budget. And once that “extra fund” runs out, no more fun! Conversely though, if I am frugal, that money can build up and can be used to pay off some more debt or transferred into a vacation account or something.

A step further would be to take out the middle man credit card, but I like my 1% cash back and the 30 days to float the transactions. The 1% isn’t a ton, but the 30 days helps with the averaged/non-static expenses like gas and groceries.

I will let you know how it goes for me, but why not give it a shot? Setting up an ING Direct account is free anyway.

Don’t trust organic foods or the organic industry

My first experience with the organic world was with organic milk. I had purchased some Horizon organic milk just because I had always been a milk connoisseur and wanted to give it a shot. I noted a very different taste from what I was used to. I didn’t start exploring the rest of the organic world for a while, but at some point I just assumed things would taste better and eventually at some point I assumed the organic food would be better for me. After all, organic just sounds so much better. Well they picked a damned good word to found a 10 billion dollar industry on; almost as good as the term natural which has already lost most of its credibility.

Pesticides? Yes they use them. They can’t use synthetic pesticides, so they use natural ones. But is that really better for you? There are plenty of dangerous and toxic substances that can be found naturally. Hell, even radiation is natural. The synthetic pesticide industry is using technology to try to make pesticides more dangerous and more effective against insects while simultaneously safer and less harmful to humans.

Hormones? Yup, still there too. The problem is you can’t get rid of hormones from the cows that are pregnant that produce the milk. There are arguably less hormones.  Plus that whole study about kids hitting puberty early has had its authenticity questioned because the same phenomenon is happening throughout Europe and they banned any added hormones. Some scientists think it’s because kids are putting on more fat earlier, which is happening throughout all developed nations.

Antibiotics? Not present in the end product, but they can’t be present in regular milk either. Although it’s true, it isn’t unique to the industry

Better for the environment? Alas, organic food cannot use better synthetic pesticides or chemical fertilizer. So they have to use old school fertilizer produced from living creatures like cows. But that means more methane to produce the fertilizer, which means higher methane emissions.

Better for cows? This just ticks me off; I mean the cows don’t even get any advantages. They merely get “access” to fields for grazing. That doesn’t mean they give them the access! I know a dairy farmer that isn’t organic, but treats his cows royally compared to the huge organic farms like Horizon.

Better for the world? Not if you consider that if all the worlds’ food was organic, we would have even more starving people than we do now. The output of food production is lower and more expensive than the regular stuff.

Locally grown? Not necessarily, just like with regular produce it can come from anywhere in the world. Your best bet to support local growers is to use a food co-op. Or just grow the food yourself in a garden or greenhouse!

Better taste? Possibly… and in some cases probably. But most of time, probably not! There is a certain psychological factor that plays into our decision of how something tastes. But believe it or not, at least organic milk has a real reason for tasting better.  The government allows a significant percentage of powdered milk to be rehydrated and included in bottles/cartons of fresh milk. These mixtures are sold at the grocer without any labeling requirement to inform the consumer. It doesn’t seem fair but it has been that way for a long time, and percentages of reconstituted powdered milk allowed was once tightly controlled. Sadly, that is no longer the case. More and more of it is yucky tasting powdered milk mixed with a bit of fresh milk. But many organic companies like horizon actual use 100% liquid milk, although it probably won’t stay that way.

No added preservatives? Absolutely zero requirement on this. This is what tipped me off originally when I noticed frozen foods touting the organic label. I bought some and read the label when I got home and was pretty upset primarily because I’ve been trying to avoid MSG and other preservatives. And it had a good 3 soy ingredients which is the clever way that companies hide MSG. I fell for the trap by thinking organic was going to guarantee a healthier product. Nope!

The truth is some organic companies may have been founded on higher standards for food quality, but the term organic does not indicate better food.  In fact, many non-organic companies are committed to certain health values too. So save yourself some dough and get the regular stuff. If you want to be health conscious, reading the label is your best bet.  Save your hard earned money and buy the regular stuff!