Free Software & Other Stuff - No Need To Pay Anymore (PhotoShop, Google, Tax Prep, Coupons and More)!

There is nothing like free to get my blood flowing. There is a reason that this single word is one of the highest cost words on Google AdWords since I don't know of anyone in this world that doesn't like free stuff. So, I thought I would try to summarize some of the coolest free stuff I've found on the web (mostly software, but there is tons of free stuff that everyone should know about). Please feel free to add cool, free stuff you've found in the comments section.

Free PhotoShop Software
Adobe USA (the parent company of Photoshop) just announced a free version of its famous Photoshop software online, Photoshop Express! I've used Photoshop for years and can tell you it is a truly excellent program. In fact, they are also throwing in 2GB of free online storage so you can upload your pictures and use the free software.

Google Apps
It seems like Google is adding something new to its free online applications on a daily basis. Google offers some of the coolest applications on the web. From the more boring stuff like Google Docs and Spreadsheets to really cool stuff like Google Picasa, Google SketchUp (really cool 3D software), and, of course, the best of all, Google Earth (WARNING, if you download Google Earth, I can promise you endless hours of lost productivity).

Free Tax Prep Software
I wrote about this in an earlier blog post, but wanted to touch on it again since we are rapidly approaching the dreaded April 15th. Why pay for this service when you can get it for free (if you meet certain income levels). If you can't get it for free because of your income, check out the tons of low cost online options (that's what I use). P2P-Loans.com has also created a quick and dirty webpage to give you a few good options on the Tax Prep software side of things.

Coupons (online and offline)
You have to be careful when searching the billions of free coupon sites on the web because it's very easy to get lost. But, never buy anything online without a coupon. It's as simple as searching Google for "Name of Store/website Here" + "coupon code". For example, I recently bought something at Dick's Sports at their local store. I found a great printable $10 off any $25 purchase coupon. I've used this coupon 10 times already saving me $100 in total! I bought my wife a present from Nordstrom's the other day (online) and saved 25%! This is free money, people, so don't miss out. It only takes 2 minutes to find a legit coupon.

Other: Endless Hours of Searching for Free Stuff
There is no shortage of websites that offer free stuff, so I would encourage you to search for this stuff online (Click Here to get started). I've actually found some pretty neat things online, so I would encourage you to check it out. Good luck, happy hunting and thanks for checking us out.

Help, My Credit Score Just Fell Off A Cliff (and I didn't even do anything)!

As you may not know, Fair Isaac (what's so fair about them, I don't know) recently updated its FICO score formula and it is being rolled out by the three primary credit agencies. While there are many views on whether these changes are good or bad, the one certainty about all of this is that your credit score is probably going to change. Here's our quick and dirty on how this might affect you:

If your credit is currently being bolstered because you are an authorized user on your parents credit card account, you are probably going to get HAMMERED! One of the largest (and most negative) changes to the formula is the removal of the benefit you get from being on someone elses account as an authorized user. Some credit analysts belive as many of 25% of all Americans with credit could be negatively affected by this one change (that's about 40 million people whose credit score could fall). The good news is that it may take a number of months before all the credit card companies, banks, etc. begin to use this new score (so, get some new credit while you can - P2P-Loans.com has some great credit card offers if you are interested). Getting credit now (while you can still piggyback with daddy's good credit) will allow you to start building your own on-time credit file.

However, there are some positive changes to the scoring methodology as well. For example, the system treats a single large slip up (even as much as 90 days) as an “isolated delinquency” to individuals with a 10-year credit history. Routine late payments of less than 90 days will still damage your report but at least now a legitimate mistake won’t haunt you so severely.

Also under the new system, multiple credit inquiries in a short period of time won’t be so damaging to your credit score, as now they will be weighted less heavily in calculating the overall number.

Finally, the new system rewards borrowers who demonstrate the ability to stay on top of both revolving debt (credit cards, home equity lines of credit) and installment loans (Prosper Loans, student, auto or boat loans, mortgages). Even if you show a wide range of loans but a solid history of paying them on time, expect your score to jump up as well. Go figure, if you pay on time, you have a good score!

Just as a helpful refresher, here is what we do know about the FICO system (even though the exact numbers are closely guarded by Fair Isaac) and what the rough weighting is for certain types of credit data used:

- 35% — punctuality of payment in the past (only includes payments later than 30 days past due)
- 30% — the amount of debt, expressed as the ratio of current revolving debt (credit card balances, etc.) to total available revolving credit (credit limits)
- 15% — length of credit history
- 10% — types of credit used (installment, revolving, consumer finance)
- 10% — recent search for credit and/or amount of credit obtained recently

GOOD NEWS - Your Home's Value is Falling! (huh?)

The rapid decline in housing values has been a bit shocking for many folks and has resulted in a lot of lost wealth (did we ever really have that money to begin with)? According to Standard and Poor's Case-Shiller index, home prices have dropped an average of 14% since March 2007 and more than 30-40% from the peak in some areas (viva Las Vegas condo living). But, there is a silver lining in all of this morass - your property taxes should be falling, too! In Florida, for example, property taxes have soared along with home prices. A $500,000 home in Tampa, Orlando or Miami, which is a 3-4 bedroom home in a reasonably nice area (hardly a mansion) will set you back some $10,000 in taxes per year (yes, you are renting your home from the government despite being told you are a "homeowner" - but that's another posting)! That same house would have cost you $200,000 and $4,000 per year in taxes a recently as 2002 and is now worth $400,000 or less (if you can find a buyer).

But, there is a catch! It's not the "true value" of your home that matters when it comes to taxes, it's the assessed value. This is where it gets tricky - places like California have wierd laws such as Proposition 13 and Proposition 8, which serve to confuse the heck out of homeowners. I have a friend that had to take his local property appraiser to court TWICE! in order to get his property taxes reduced. He won on both occasions, but it was not without a fight. In this time of strapped municipal budgets and a slowing economy, I would encourage you to do your homework and be sure that your property is assessed at the proper value since your government is more likely to leave your values too high. With prices expected to continue to fall over the next 1-2 years (especially in once hot markets like Florida, Las Vegas, California, etc.), now is a good time to make sure you aren't paying your local government too much of your hard-earned money.

If you'd like to learn more about your state's property tax system, go grab a six-pack and get hammered because you must be crazy...just kidding. You can visit http://www.assessor.com, which offers quite a bit of information on this topic as well as links to many local property appraiser offices. If your office is not on this page, head to www.P2P-Loans.com and use the Google search box at the bottom of the page. Enter "'your county name' property appraiser website" and you will most likely see your local site pop up.

I Need Money (Don't We All) - Read On To Learn How to Get Some...

As you probably know by now, I tend to blog about things that I find curious, interesting or about P2P lending, Prosper, etc. Well, I recently came upon what I felt was a pretty useful collection of some of the best financial sites and tools on the web. So, naturally, I wanted to share it with my loyal fan base (thanks for reading, Mom!). Seriously, I've found that the best way to accumulate savings (and ultimately wealth) is to focus on living within your means and cutting a mean bargain when you make large purchases or other financial decisions (cars, homes, jobs, etc.). That's what I found so cool about these sites/tools.

The source of these links was CNN Money, but I added my own color commentary for your enjoyment.

Your financial life: Track it. Improve it.
New ways to keep tabs on your inflows and outflows can make a big difference to your bottom line. Did you know that saving $0.99 per day beginning when you are 25 years old will get you over $187,000 in cash when you retire (10% annual return assumed)!

Buying a new ride will never be the same
The new resources put you on more equal footing with car dealers. If you buy a car every 5 years (about average) and save $1,000 each time by using these tools, you will save over $100,000 between the ages of 25 and retirement (same 10% assumption)!

Where you can go for advice you can trust (really)
Before betting the farm on some hot new investment, head to these Web communities. Make sure you don't lose the nearly $300,000 I saved you above...=)

Create your own "network effect"
When searching for a new job, it's easier than ever to get on the inside track. Few things will be as important to your financial future as your job. Make sure you are paid what you are worth!

Get the lowest price on anything
Before you plunk down hard-earned cash, you can quickly see which stores are offering the best deals. Remember how much $0.99 per day is worth...?

Know your home's future
Is a neighborhood you're interested caught up in the housing bust? How do the schools rate? This information is a few clicks away.

Click your way to the right school
Get the latest stats and even take a virtual tour to find the college of your dreams. Don't waste your money on an average school. Do your homework (before and during school).

So, What the Heck Does This Fed Rate Cut Mean to Me?

I was in the process of writing a blog posting on this very topic when I stumbled accross this well-written article from Bankrate. So, I thought I would share it with you. Enjoy!

Who wins, who loses in Fed's rate-cutting spree?
By Chris Kissell • Bankrate.com

When the Federal Reserve meets and changes rates, we all have questions: What does it mean to me? Will my mortgage rate go up or down? Is this a good time to refinance? Bankrate is here to help. We've looked at five categories -- mortgages, home equity loans, auto loans, credit cards and certificates of deposit -- to determine if the Fed's moves made you a winner or a loser. Here's a look at mortgages:

Winner: People locked into a good loan rate
When the Federal Reserve cut the federal funds rate dramatically in January, many soothsayers speculated that mortgage rates would plunge in response. Instead, mortgage rates actually rose significantly, reminding everyone that changes in the federal funds rate do not directly control the direction of mortgage rates.

Now that the Fed has cut rates by 75 basis points (that's 0.75% for you newbies), it's anyone's guess where mortgage rates will go. But Richard DeKaser, chief economist for National City Corp., is betting the cost of carrying a mortgage won't be going down substantially any time soon.

"We've seen the lowest for mortgage rates," he says. "We're going to be in the range of 6 percent for the balance of the year."

Time may prove DeKaser right. If so, consider yourself a winner if you locked into a mortgage before January's rate cut, when mortgage rates were near historic lows.

Winner: Homeowners whose loans are about to reset
The Fed's rate cut won't directly affect people with fixed-rate mortgages. But it will lower the payments of most homeowners with adjustable-rate mortgages.
This will be a boon for countless Americans with subprime mortgages who fear their next reset could leave them facing foreclosure.

"The Fed's actions in their own right are going to reduce the burden of mortgage resets," DeKaser says. "So that will help directly."

Loser: Fixed-rate mortgage shoppers
Way back in January, times were good for people shopping for a mortgage. Mortgage rates were near historic lows, making it cheaper to borrow.
Of course, not everything was rosy. The U.S. credit crunch and falling home values made it difficult for some borrowers to take advantage of sinking rates. Nonetheless, many homeowners and homebuyers had a window of opportunity to lock into historically low borrowing costs for many years to come.

For now, it appears that window has slammed shut, leaving those who failed to act earlier feeling like losers.

Take action
The Federal Reserve slashed the federal funds rate dramatically in late January. How did mortgage rates respond? They rose, fast and furiously. The moral of the story is simple: Don't make mortgage decisions based on Fed actions, such as this week's rate cut. Instead, take the appropriate action given your individual circumstances.

"Trying to time the market is historically a fruitless exercise," says Bob Walters, chief economist at Quicken Loans. "If it saves you money to convert your ARM or to lower your fixed rate, then by all means do so."

How "Rich Kids" Are Investing Their Money

A recent study released by Northern Trust shows that young millionaires ("rich kids" in their 30s aka Gen X - we are launching a GenX Financial website in the future, so stay tuned) have more diverse investment portfolios than their older, Baby Boomer counterparts - huh? I thought that young investors were supposed to take more risk?

According to the study, the Rich Kids that have some how accumulated portfolios of $1 million or more (must have made their money in Real Estate...errr...foreign currency trading) allocated 23% of their portfolios to investments such as hedge funds, private equity, real-estate investments and commodities (oh, that kind of risk). Maybe we should add Prosper Lending as an alternative asset category. That compares to 14% for the old folks/Baby Boomers and 10% for the REALLY old folks (over the age of 62). What's really interesting is that the rich kids like CASH. The report shows that they had 17% of their portfolios in cash, compared to 13% for the ancient ones (can you guess how old I am right now). I have to be honest - hedge funds and private equity sound sexy, but the fees are a killer and I suspect the funds that lowly millionaires (as opposed to multi-millionaires) have access to are not the creme de la creme.

So, what can we learn from this? I think the obvious conclusion is that the young rich kids like to keep a lot of cash around to buy cool stuff and old folks still remember the Depression as well as the great bull market of the 1990's. I'm kind of kidding, but I would conjecture that most young, wealthy investors remember when their margined brokerage accounts were being liquidated as the dot com bubble burst (and are paying close attention as the financial markets are in a bit of trouble now). That may be an exageration, after all, I'm talking about current young millionaires, not the ones that went broke back then, but I think it serves to highlight a valuable lesson (don't invest in bubbles). Spread your investments around so that no one category makes up more than 20%-25% of your assets (US stocks, your company stock (should be more like 5% for this one), bonds, international stocks, cash, small vs. large cap, etc.). Remaining diversified will help you weather the storms that we call bear markets (yeah, we're in one now) and will help you become a rich kid (or old fossil if it's already too late for you).

P2P Lending Grows in Popularity as Banks Slow Lending (Are Individual Lenders Suckers or Savvy?)

By now, you've certainly read about the credit crunch that has engulfed the world. Banks are running low on cash to lend and in some cases (such as Citigroup) our largest banks are dancing dangerously close to the fire having to rely on sovereign investment funds (can you say Saudi Arabia) to bail them out. But, with consumer and small business loans scarce, credit card companies reducing or canceling credit lines and banks refusing to write new home equity loans, what's a small business to do?

A recent Wall Street Journal article (see below) talks about how small business owners are turning to P2P Lending sites (such as Prosper, LendingClub, Virgin Money and Zopa to name a few) for capital. But, for lenders on Prosper, are we the suckers or the savvy investors by making these loans? The banks are likely turning away some pretty good credits and borrowers on P2P sites tend to pay a higher interest rate relative to a more traditional small business bank loan that might be backed by assets in the business or a personal guarantee by the business owner. At the same time, delinquency rates are very high at Prosper (upwards of 20%+ of funded loans in some months - visit LendingStats or Eric's Credit Community for details).

I published a blog posting on January 22, 2008, which summarizes my personal experience as a Prosper lender. My firm hope is that Prosper and the other P2P Lending sites will continue to be a good place to invest; however, the jury is still out on this one. P2P-Loans' future is counting on it!

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Where Either a Borrower Or a Lender Can Be Small-Business Owners Turn To Online Networks for Funds As Banks Tighten Credit
By JANE J. KIM

When Jeff Walsh wanted to refinance the small-business loan on his coin laundry, he didn't want to take a chance that his bank would reject his application. "I just bought a house in 2007 and was a little nervous about what the bank would say about my debt-to-income ratio."

Instead, the 31-year-old from Schaumburg, Ill., recently borrowed $22,500 on Prosper.com, an online lending network that matches individual borrowers and lenders. The interest rate on Mr. Walsh's loan: 10.25% -- several percentage points below what he says he would have had to pay at a bank.

HIGH FINANCE FOR THE MASSES

Read a Q&A with the founder of Prosper.com. As the credit crisis spurs traditional lenders to tighten credit standards and raise fees, more small-business owners and entrepreneurs are turning to so-called person-to-person lending networks -- with names like Prosper, LendingClub.com and Zopa.com -- to help keep their businesses going. The unsecured loans are tiny, usually no more than $25,000. But borrowers say they are able to get loans more quickly and with less paperwork than at a bank. And people with good credit are able to lock in lower rates -- often 8% to 12% -- than they would otherwise have to pay on credit cards or unsecured bank loans.

INDEPENDENT STREET BLOG

Have you used peer-to-peer lending? Read the latest post, and share your thoughts. Person-to-person lending is a small but fast-growing corner of the Web economy. New sites are jumping in, including Virgin Money USA, majority-owned by Sir Richard Branson's Virgin Group PLC. Roughly $100 million in new P-to-P loans was issued in the U.S. last year, a number that is expected to jump tenfold by 2010, according to Online Banking Report. Recently, some larger financial institutions have begun to take notice of P-to-P lending...

(article continued at WSJ.com)

Forget Mailing Your Keys to The Bank: Live in Your Home Free (at least for a while)

I don't normally re-post blogs, but I found this posting from the WSJ and found it particularly interesting. In fact, I have some experience with this area as I know someone in my local market that has executed the home squatter strategy to near perfection over the last few years.

This person owns a second home (it's actually a condo on the beach) and has had foreclosure proceedings started on him on 3 different occasions. Each time, he's taken the bank for a "rent-free" ride for 9-12 months. During each of these processes, he negotiated a "new deal / payment plan" with the bank, which ended in dismissal of the foreclosure proceedings. The net result of his actions has been effectively free rent for nearly 3 years (e.g. no cash payments) on his second home since the back payments, interest and penalties/fees were simply added to his mortgage balance (which he may or may not make payments on going forward). I suspect he'll try this again in a few months, and maybe the bank will wise up (doubtful). Or, maybe he will just continue to live in the condo as long as he can continue to play this game (in reality, he cannot afford this second home without playing this game with his bank).

With so many folks upside down on their homes (their home is worth less than their mortgage balance), one might expect to hear about more of these cases going forward. Let's hope that the banks will show a little compassion since many folks in foreclosure today are not gaming the system (per the story above), but genuinely need their help to keep their families in their homes.

Here's the blog posting and a link to the blog (there are some interesting comments on the actual posting, so I encourage you to visit).

Why Walk Away? Mortgage ‘Squatters’ Stay in Their Homes
by Lauren Baier Kim

We’ve written about homeowners who are walking away from their homes instead of paying back their mortgages as home values fall. But why give up your house when you can continue living in it without paying a cent? That’s essentially what some people are doing, according to a recent post on the Big Picture blog.

The blog shares the observation of one South Florida developer, MW, who says that in “the very best neighborhoods of Florida,” owners of houses valued in excess of $2 million have ceased making mortgage payments and are essentially squatting in their luxury homes. And thanks to a backlog of foreclosure cases in the local courts, they may be able to live in their home for months, maybe even years, before the banks can take action (many have also quit paying property taxes and insurance, the post notes).

The post reminds us of a December Journal article written by Amir Efrati about a family in Cleveland who fought off foreclosure in the courts and continued to live in their home for 11 years without forking over a single mortgage payment. Ultimately, the bank foreclosed on the house, the family was evicted and the house was sold to another family, Mr. Efrati says.

There’s a similar tale on Bloomberg.com of a Boca Raton, Fla., resident who hasn’t paid his $1.5 million mortgage since 2002, but still has ownership of his home because the bank can’t prove that it owns the mortgage note. The article says that homeowners across the U.S. have seen foreclosure cases against them dismissed because of lenders’ inability to prove ownership of mortgages that have been pooled into securities and have changed hands multiple times, sometimes with poor documentation.

Of course, many people stay in their homes for a year or two while awaiting eviction. But with so many folks holding negative equity in their homes, should we expect to see more of this? — Lauren Baier Kim