Betterment Gift Registry is Cool

Betterment Gifts is one of the coolest innovations in personal finance this year.  If you’re not familiar with the online investing service you can read more about how it works in this Betterment review.

The reason I think it’s such a great idea is that it’s something I’ve wanted for years.  For my wedding, and most of the ones I’ve attended in the last decade, I’ve always thought that the gift giving process could be improved.  It seemed a waste when well-intending guests spent a lot of money on gifts that the bride and groom didn’t want and sometimes just sat in basements or attics for years.

A Better Gift Registry

I would actually sit in weddings and think about a cool online gift registry service where the couple would list out their life goals or needs and then friends and family could give money towards making those happen.  I even sketched up a notebook full of plans for building such a service and registered the domain MoneySmartGifts.com but unfortunately it never got built.

That’s why I thought Betterment Gifts was such a cool idea, it was something I had wanted to use for years.  Although I think the idea is great, I do wonder whether my wife would have been up for using it in our wedding.  Jon Stein, the founder of Betterment, recently used it for his wedding so I emailed the folks there to ask about his experience.  He and his wife used the Betterment Gift registery exclusively, they didn’t register anywhere else. Here are my questions and thier answers:

Did they register for any household items at all?

They itemized gifts on the registry included outdoor furniture and a BBQ for a future deck, as well as furniture for their future apartment. They do plan on using this money to buy and furnish their home, but until they reach their goal of a down payment on an apartment they want to invest the money.

How did they let guests know to use Betterment registry?

Jon and Polina shared the registry via their wedding website (a site that included details of the events surrounding the wedding, and accommodation and travel info.)

Did most people use Betterment Gifts?

Yes, this was how people gave gifts to the couple.

Did he or his wife feel uneasy about asking for money instead of gifts, since it’s not traditional (I ask b/c my wife probably would have)

At first, Jon’s parents felt uneasy about them registering his way. They thought he should be asking for a dinner set or silver, but Jon and Polina live in New York – very few entertain at a 12 seat dining table. It may seem ‘traditional” to ask for gifts, yet this tradition has only been around since the first gift registry in 1924.

Many of Jon’s recently married friends ended up returning their gifts or asking for cash – it just didn’t make sense when they already have homes set up. A gift registry like this better aligns the lasting gift people wish to give, with the goals of the couple. Jon’s parents eventually came round to the idea. They contributed to Jon and Polina’s goal of a future vacation.

We think Betterment Gifts is most comparable to the savings bonds people used to give at special occasions like weddings. Betterment Gifts is the next generation of savings bonds – a gift for the future, with the convenience of modern technology.

If a person has a short term goal, can they set it up to be funded into a low risk or cash equivalent? So the money doesn’t take a big dive right before they pull it out.

If someone is investing in a short term goal they would have a relatively conservative allocation. The idea however, is to invest in long term goals. The investment will be worth more the longer it is invested. That said, a cash equivalent option is on our road map for the future for shorter term goals.

Gift Options

My guess is that most people wouldn’t use Betterment Gifts exclusively for a wedding. I can see some spouses refusing to use it all or maybe just agreeing to use it as one of their registry options.  However a couple decides to use it, I think it’s a great option to have.

Of course it’s not limited to just wedding gift registries, that’s just what I discussed here.  What other ways would you or someone else you know consider using it?

If it sounds like something you might use, Betterment has an introductory offers for the first 30 days for new customers – and they also give you a $25 bonus if you try it out. click here

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How to Use Lending Club to Pay Off Debt

If you’ve dug yourself into a hole in regards to your debt burden it can sometimes be impossible to dig out without filing bankruptcy. The minimum payments, late fees, and interest charges continue to rise to a point that you simply can’t earn enough money in a given month to pay everyone. Your credit score starts to dwindle and with it goes your ability to refinance some of your debt in order to lower your overall outgoing payments each month.

It’s ironic because under most situations, even when you’ve got too much debt, you are still getting offers to take on additional debt to help you juggle your balances through balance transfers and the like. But eventually the amount of debt you are carrying goes too high and no financial institution will throw you a lifeline.

All hope is not lost if you are in this situation. There is one potential lifeline left: peer-to-peer lending.

What is Peer-to-Peer Lending?

Peer-to-Peer lending (or P2P) is where a group of individuals, not a financial institution, lend money out to other individuals. One borrower might have 50 people they are repaying each month and each payment made is split back up amongst the individual lenders.

P2P lending isn’t free because the individuals loaning you the money expect a return on their investment. Yet the rates charged may be significantly lower than what a financing company would charge you. You can get a P2P loan through popular P2P lending websites like Lending Club. Lending Club helps connect people needing to borrow money with individuals looking to lend money for profit, and takes a small cut of the overall transaction.

How Can Lending Club Help You Get Out of Debt?

Since individuals have different risk profiles than financial organizations, you may be able to get a loan at a low enough interest rate to consolidate all of your payments back down to a level you can afford. Instead of owing three different credit card companies debts of 16%, 19% and 22%, you could get one loan through Lending Club at 11.5% and save thousands of dollars in interest.

Lending Club Prevents Adding to Your Debt

One of the benefits of using Lending Club to pay off your other debts is, if done correctly, it can prevent you from adding to your debt in the future.

Here’s how: You have three credit cards with balances of $5,000 (at 16%), $2,000 (at 18%), and $800 (at 22%). If you just pay the minimum payments you will be in debt for over 26 years and pay $12,965 in interest on top of the $7,800 in principal that you owe.

You get a Lending Club loan for $7,800 at 11.5% and use the proceeds to pay off your credit cards. This alone would drop your interest from $12,965 on the credit cards to $1,460 with the Lending Club loan. Your payments would increase from (assuming 2% minimum payments for the credit card) $156 in total to $257.21 with the Lending Club loan, but the extra you pay helps drastically reduce your total interest paid.

Here’s the kicker: your Lending Club loan will last 3 years. To make sure that you don’t add insult to injury by consolidating your debts and then getting new debts, you need to cut up your credit cards. You can keep your credit card accounts open for the health of your credit score if they don’t have annual fees, but you cannot use them. Cut up the cards or freeze them in a block of ice. This is the only way to keep yourself from compounding your debt problem by having new debt on top of old.

Have you used Lending Club to help you pay off debt? How did it work out? Leave a comment!

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5 Characteristics of People Who Get Out of Debt

This article was written by Benjamin Feldman, a personal finance expert at ReadyForZero.com. ReadyForZero is a site dedicated to helping Americans manage and pay off their debt – for free. You can find more of his writing at the ReadyForZero blog.

There’s no denying that it’s hard to pay off debt. So what makes some people successful when others are not? At ReadyForZero, we’ve been studying this question for the last two years as we try to learn how to best help people when they want to get out of debt.

As it turns out, we’ve noticed a few characteristics of those who are successful in paying off their debt. Below we’ll describe these characteristics – and how they can help you too:

1. Have a support network.

Humans are social creatures. We live and die (sometimes literally) based upon our interactions with other people. And that means having a support network is absolutely critical – to everyone, but especially to those who are tackling a difficult goal like getting out of debt. When we talk to people who are making progress paying off credit cards, student loans, etc., they often tell us about the people in their lives who give them encouragement and advice: their mothers, husbands, friends, or girlfriends who celebrate with them when they get the first credit card paid off and who give them advice when they’re struggling.

Your support network takes on a whole other level of importance if you live together with your significant other. In this case, it’s extremely important that you share the goal with your loved one, since your household and finances are also shared. In the cases where we’ve had ReadyForZero users get out of debt as a couple, we always find that both people got on the same page and agreed that the goal was worthwhile – even if they didn’t necessarily agree right from the beginning.

2. Check up frequently.

It stands to reason that people who check up on their progress more often are more likely to be successful in getting out of debt, and that’s what we’ve seen among our users. Almost every time we talk to someone who has paid off all their debt, they tell us how they checked their progress on a monthly (or even weekly) basis. And when we looked at the data several months ago, we found that people who updated or checked their plan in ReadyForZero were paying off debt twice as fast as the rest.

Bottom line: you have to be a little obsessed, or at least care a lot, in order to make this goal happen.

3. Be willing to change your lifestyle.

People who get out of debt usually have to make some sacrifices in order to get there. Either that, or they identify behaviors they must change in order to improve their financial picture. For example, if someone has an expensive car payment and they want to pay off their credit card debt, the first task might be selling the car. On the other hand, if you find that you’re always going over budget because you spend too much money on clothes, you’ll need to find ways to prevent yourself from going to the mall (or department stores).

When we’ve talked with those who successfully paid down their debt, many of them had to make these kinds of behavior changes. And you can too! For starters, read through our Credit Card Debt and Student Loan Debt resource centers.

4. Focus on positive progress (don’t let setbacks stop you).

Even though it’s listed fourth, this may be the most important characteristic of all. The people we talk to about getting out of debt have all said that staying positive was critical to their progress. In fact, no matter what your goal is, you will run into some hurdles along the way. When you’re trying to get out of debt, there will be days – maybe even months – when things don’t go as planned and you will feel like your progress is stalled. These are the times when many people quit. However, if you resolve to stay positive no matter what hurdles you come across, then you will keep your motivation burning inside and you won’t quit.

5. Get rid of your credit cards if they tempt you.

How well do you know yourself? If you are the kind of person who doesn’t have willpower when it comes to credit card spending, you’re not alone. Many of the people we’ve talked to have had the same problem. However, they were able to overcome it by getting rid of the credit cards. While it’s not always a good idea to close a credit card account (because of the impact to your credit score), sometimes you just have to bite the bullet and close it. Or at the very least, use some of these tips to prevent yourself from using the card.

If you are someone who wants to get out of debt but hasn’t been able to, there’s a good chance that these characteristics can help you achieve your goal. The first step is to train yourself to think differently and begin to adopt the attitudes and behaviors discussed above. The truth is, anyone can make progress as long as they commit wholeheartedly to the task at hand. Good luck, and let us know how it goes!

Do you know of any more characteristics of those who are able to get out of debt? Leave a comment!

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What is a Good Debt to Income Ratio?

A common question amongst potential home buyers is what a good debt to income ratio for the loan underwriting process. As important as this question is for home buyers (or those looking to refinance their loans) it isn’t just for this group of people. Everyone should know what a good debt to income ratio is for their personal finances.

What is Debt to Income Ratio?

To understand what a good debt to income ratio (also known as DTI) is we must first understand what this ratio calculates. You need to know two things to accurately calculate your debt to income ratio:

• Your total debt.
• Your total income for a given period of time.

When you are calculating your total debt you want to look at everything like a home mortgage, student loans, car loans, credit card debt, and medical debt. If you owe money to anyone or any financial institution, you need to account for that in your total debt number.

For the ratio’s purpose you’ll want to know what your debt payments are each month as well. This is the number you will compare to your income, but it is still good to know what your overall debt load is as well.

Your total income should be what you make in a month. This is gross income so don’t worry about what’s left after your health insurance, 401k, and taxes come out of the check. (Although if you want to calculate a debt to income ratio after all of this it certainly doesn’t hurt.)

An Example Debt to Income Ratio

Here’s an example to show you how to calculate the ratio.

An individual has the following debt:

• Home mortgage of $900 per month including escrow and taxes
• Car loan of $225 per month
• Student loan payments totaling $300 per month

Their total monthly debt payments come to $1,425.

The same individual makes $4,200 per month gross. That is equivalent to $50,400 over an entire year.

To calculate this person’s debt to income ratio, you simply divide the monthly debt payments by the monthly income ($1,425 divided by $4,200).

The result is 33.93%. This means that about 34% of every dollar that person makes must go to debt payment and that’s before taking into consideration taxes, health insurance, and retirement through their employer.

What is a Good Debt to Income Ratio?

Of course the best debt to income ratio is 0%. That would mean you are debt free and able to use every single dollar you earn toward your daily spending and savings goals like retirement.

However, we all know that getting to 0% debt is really difficult. So what do mortgage companies look for?

Ideally you want to be below 35% debt to income ratio. In the past you could get away with higher debt loads and get approved with a ratio in the 38% range, but that isn’t as common after the financial and housing crisis. Getting below 30% is really good, and getting under 25% is great.

Why Lenders Want a Lower Debt to Income Ratio

So why do lenders want to see less than 35% (or ideally less than 30-33%) on your debt to income ratio? Let’s go back to our example.

Our individual has $1,425 in debt payments per month and $4,200 in gross income. Let’s now take into consideration those other costs like tax and health insurance. Let’s roll taxes and health insurance together for an additional 25% taken out of your check plus another 5% toward retirement in a 401k.

Here’s how the math works:

• $4,200 in gross income
• ($1,050) in taxes and health insurance
• ($210) in retirement
• ($1,425) in debt payments
• Net: $1,515

So you have about $1,500 to handle all of your other expenses: groceries, gas, car insurance, eating out, entertainment. There’s enough money left over to cover those items.

Now let’s look at someone with a 50% debt to income ratio. The numbers are starkly different:

• $4,200 in gross income
• ($1,050) in taxes and health insurance
• ($210) in retirement
• ($2,100) in debt payments
• Net: $840

That’s a huge difference and likely unsustainable in the long run. This is exactly why lenders want to see as low a debt to income ratio as possible.

So while it might not be possible for you to get down to 0% debt to income, the lower the number the better off your finances are.

What’s your debt to income ratio? Are you happy with it? Leave a comment!

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Lending Club Overview: How to Invest and Borrow

Peer to peer (P2P) lending has been taking off in the last few years, and one of the most popular sites facilitating these transactions is Lending Club. Lending Club provides a way for investors to earn a return by helping to fund borrowers who are looking for better terms than what is offered by many traditional banks. Lending Club acts as the intermediary, handling the transaction, collecting fees and figuring interest, processing payments and taking care of all the legal stuff that comes with lending money to someone.

How Lending Club Works

The idea behind Lending Club is fairly straightforward. Investors can invest in “notes” of $25. You can decide how many notes you want to go toward a borrower. The money is used to fund a loan for a borrower. With your contributions, plus the contributions of others, it is possible to raise funds for the borrower. The borrower receives the money, and begins making payments. Most of the time, the loans are three-year loans, but Lending Club has also begun introducing five-year loans.

When the borrower makes payments, your portion of that is distributed to your account by Lending Club, who figures which portion of the payment should go to all of the investors. As investors build up cash in their accounts, they can either use the money to reinvest in new notes, or they can withdraw the money to their own bank accounts. (It is also worth noting that Lending Club now offers an IRA option.)

How to Borrow from Lending Club

Borrowing from Lending Club is quite similar to the process of a traditional bank. This means that, after setting up a basic account with Lending Club, you will need personal information, including name, address, phone number and Social Security Number, among other information. Lending Club will check your credit report and verify your identity. Just as with a loan from another bank, your credit history will be one of the deciding factors in what sort of interest rate you end up with. You will need to review loan terms and confirm them, as well as set up your funding for loan repayment, and acknowledge the Truth in Lending statement offered you. Lending Club takes you through the process, step by step.

As part of your effort to borrow money via Lending Club, you will be asked to specify what you want to use the money for. Crafting a statement that shows that you are responsible, and that you are using the money to help you advance your financial situation – whether you are consolidating debt, paying for college, or financing a home business – can help you draw more investors to your cause. Once your loan is funded, you will receive money.

Investing with Lending Club

If you want to earn a return, you can do so by investing in notes – basically lending to other people. You will need to set up an account and you will need to fund your account. You need at least $25 in order to start investing at Lending Club. You can set up an ACH transfer with your bank, and have the money put into your account. This takes about four days. You can do an instant transfer, using PayPal, but there is a $250 minimum. You can also do a wire transfer, which takes one business day. However, there is a fee that comes with the wire transfer, charged by your bank. Then, you can start looking for people to help fund.

You can search by credit rating, or by using other parameters. When you identify someone that you want to invest in, you can add that note to your order. It helps to consider the the credit rating, as well as the story behind the need for a loan, when making your decision. Once you are ready, you confirm the order and assign the note to a portfolio. Just remember that this represents a risk, and you could lose money if the borrower does not pay back the loan.

Lending Club is quite easy to use and offers opportunities for borrowers and lenders alike.

Have you used Lending Club? What do you think about it? Leave a comment!

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Motif Review | The Ultimate Antidote to Index Funds

This has got to be the most interesting investment proposition to come along in many years. If you’ve got some time — and some spare cash to invest — Motif is definitely something worth checking out.

If you’re like me, the first question that comes to mind is the name — why motif? According to Dictionary.com, the word motif is defined as:

”1. a recurring subject, theme, idea, etc., especially in a literary, artistic, or musical work. 2. a distinctive and recurring form, shape, figure, etc., in a design, as in a painting or on wallpaper. 3. a dominant idea or feature: the profit motif of free enterprise”

How does that relate to investments?

Motif attempts to construct investments based on social investing, which is to say the exchange of ideas between various investors. They have a Motif platform to facilitate investment concepts, so not only can you participate in the process, but new motifs are being created all the time. Investor consensus makes it happen.

How does Motif work?

It would be tempting to say that Motif is similar to mutual funds and exchange traded funds (ETF’s) but that really isn’t true. You are the direct owner of any stocks contained in a motif, even though you purchase them in a single motif and for just one fee.

Investment motifs are built around themes and ideas. The investment starts with a basic concept, say “too big to fail” (you can figure out what that’s about), then builds a portfolio of stocks that are most likely to benefit from the situation. In addition, Motif offers the ability to customize each investment by adding or deleting stocks or by changing the weightings within the motif.

Some of the more interesting investment motifs include:

• Democratic Donors
• Cloud Computing
• The Seven Deadly Sins
• Frankenfoods
• Renter Nation
• Shale Gas
• Chinese Solar

For what it’s worth, the majority of motifs listed have had positive returns over the past 12 months, most of them by double digits.

You can invest in a motif with as little as $250 (presumably with no maximum) for a commission fee of $9.95.

In addition to stock motifs, you can also enter fixed income ones constructed along similar lines. IRA’s, both traditional and Roth, as well as rollovers are available with Motif.

The mechanics of a typical motif

One of the more interesting investments is the Income Inequality motif, defined as “high-end and low-end retailers that serve a society of extremes”. You’ve undoubtedly heard much over the past few years about the 1% who control most of the wealth versus the remaining 99%? Well, this is an investment that’s been built around that prospect from an investment standpoint. As Motif describes it,

Opportunity Knocks In A Two-sided Economy – With a bulge of money on one end and a bulge of people on the other, the barbell economy of the US is now well understood. This was loudly illustrated by the scores of “Occupy” movements in 2011, which pitted “the 99%” against “the 1%.” And income inequality has grown over the past several years. According to the Federal Reserve, the top 1% of US households control 34.6% of the country’s wealth, while the bottom 90% only control 26.9%. The rich have gotten richer, the poor have become poorer, and the middle class is practically a nominee for the endangered species.

Interesting concept, wouldn’t you say? The motif is invested in luxury and discount retailers, including Ralph Lauren, Tiffany & Co., Sothebys, and Steinway Musical on the high end, and Big Lots and several dollar stores on the lower end. Roughly 70% of the motif is invested in luxury retailers, and 30% to discounters. That’s not an even split, but the motif has returned better than 20% in the most recent year.

But be on the lookout…

Though each motif can invest in up to 30 stocks, most of them have less – often far less. What this means is that there isn’t tremendous diversification within a given industry or idea. And while this can mean above average returns in rising market, it could have just the opposite effect in a decline.

Motif only started in 2010, so as interesting a concept as it is, we can’t know if its individual motifs will prove to be enduring investments — there’s just no history here.

The $9.95 commission fee is high in comparison to transaction fees at most discount brokerages, however that is being used to purchase an very unique and often customized investment that is not available at other brokerages.

If you decide to change the stocks in a given motif, there is a charge of $4.95 per transaction. That can get pretty expensive if you make multiple changes.

It’s also important to realize that while each motif comes “pre-packaged”, there is no professional investment management, unlike ETF’s and mutual funds. Motif is not a place for the novice stock investor.

How Motif Can Work for You

Motif probably isn’t an investment concept that you’d want to put all or most of your money into. It’s too highly specialized and the company and its concept haven’t been around long enough to justify a major investment.

But if you have an otherwise balanced portfolio and are looking for some small speculations to add to the mix, Motif could be the place to find them. You might, for instance, keep 90%-95% of your money in your regular portfolio, but add 5%-10% in some of the motifs that you think have real potential. As a speculative investment vehicle — with some diversification within the concept — Motif could be the perfect way to make this happen.

Have you ever invested through Motif? What do you think about it?

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Identity Guard | Identity Theft Protection Overview

Identity Guard is a company that provides identity protection services to consumers.

Why Consider an Identity Protection Service?

Identity theft is a big, serious business.

Credit card and bank account numbers, social security numbers, and website login information are stolen every day around the globe. This sensitive data is then resold on black markets from one criminal to the next. The bad guy (or guys, more likely) at the end of the road commit fraud by purchasing as much loot as possible online and shipping it to a nondescript location, clean out your bank accounts, and try to open new lines of credit in your name.

It’s a massive, sad industry with long repercussions for its victims. It can take up to 26 hours of work to wipe out the damage done by identity theft. There’s a lot of paperwork involved: a police report, certified letters to defrauded creditors, and contacts with the three major credit bureaus to name a few.

An identity theft protection service’s goal is to help you avoid that situation. They monitor various aspects of your financial life and look for suspicious activity and alert you to it.

What Services Does Identity Guard Offer?

Identity Guard offers four monthly plans that offer a varying range of protection.

All four plans include:

• Identity theft insurance – you get paid if thieves steal money from you that is not recovered.
• ID theft recovery assistance – you receive access to an identity theft recovery center.
• Internet surveillance – if your personal information (SSN, credit card info, etc.) is revealed online you’ll be alerted.
• Some online tool access – basic tools to let you look at your credit and plan for your financial future.
• Lost wallet protection – the company will assist you in canceling your credit cards.

After that the benefits you receive depend on the monthly cost.

We’ll cover cost in a moment, but some additional options available to you include:

• Credit scores – quarterly credit scores from the three credit bureaus.
• Credit bureau monitoring – if a new line of credit is opened in your name you will be alerted (from mortgages to car loans to cell phone accounts).
• Public record monitoring – the most expensive plan will monitor public records to make sure you are aware of new aliases, addresses, licenses and registrations, and court cases against you.

How Much Does Identity Theft Protection Cost?

The plans range from $4.99 per month to $17.99 per month. All plans include the first set of benefits listed above.

The second plan is $9.99 and the third plan is $14.99. They offer the exact same benefits except for two notable distinctions. The $9.99 plan offers identity theft insurance, but unlike the other three plans that pay out up to $1 million in insurance, it only pays out $2,500 and has a $250 deductible. I found that kind of strange. It also only offers 1 credit score (the two more expensive plans offer 3 credit scores).

What Alternatives Do I Have?

If you don’t want to pay a monthly fee to have your identity protected there are still options available to you. You can set up a self-monitoring service using AnnualCreditReport.com. This site is the official, government mandated website that lets you check your credit report once per year with each credit bureau. Instead of checking all three reports at the same time you simply space them out throughout the year – once every four months. (If you’re married you can rotate who checks their score and check every two months.)

This won’t provide you instant monitoring, but can give you some peace of mind in keeping tabs on what might be going on with your credit profile.

You can download free tools to help you keep your computer clean of malware and viruses that can assist thieves in stealing your personal data. Some tools of note include AVG Antivirus (Free Edition), CCleaner, and Spybot Search and Destroy.

Do you have identity theft protection? What do you think about Identity Guard? Leave your thoughts below!

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Kapitall Review: A Closer Look

Kapitall began operations in 2008, starting out as an investing game that later became an investment brokerage service. The concept is to introduce people to investing with the game and — once they feel comfortable trading with artificial accounts — to move over to the real thing.

It’s an exciting concept that may have a place in the investment brokerage industry. In this Kapitall review, we’ll look at the features and potential issues with the service.

Kapitall Features

You can open a Kapitall account for free through their website. You can start by playing the games, and then move up to the real thing. Once you do, there’s no minimum initial investment, and no required minimum balance. Transaction fees are set reasonably at $7.95 per trade. The site often runs promotions that will allow free trades at certain times.

Kapitall can be an excellent training tool for novice investors, especially the young. It provides an opportunity to “test drive” investing by doing it on paper before venturing into the real thing. You can try out various investment sectors, trading strategies and portfolio mixes without risking real money. And you can work at it for as long as you like until you feel confident about moving onto the real thing, risking real money.

The video game format bridges the gap from game playing to investing in the real world. It can have serious appeal for the video and online game playing crowd. Since it’s mostly young people who participate in these games, it’s a way for them to try their hand at virtual investing and mastering it before doing it for real.

Kapitall can provide a real training tool for novices, but it can also be a testing ground for more seasoned investors to try out strategies through games rather than by committing real money. Finding out in advance that a strategy won’t work can save any investor money.

Potential Issues with Kapitall

The live version of the site offers very limited investment choices, and it doesn’t provide an option for individual retirement accounts. That could be primarily because it’s such a young company — we’ll have to keep on eye on future developments. In the meantime, Kapitall isn’t an option for investors who want the broadest levels of investment diversification or for those who are primarily interested in investing for retirement.

Transaction fees are competitive but a little high for a upstart company. You would expect a new, small investment firm to offer seriously low rates to attract new customers.

Kapitall is not only a new company, but it’s also a very small one. According to their website, they have only 15 employees, some of whom are software engineers, interface designers, game producers, stock traders and technologists. Not only is it s a small staff, but also one that seems conspicuously short of investment professionals.

Thanks to the Internet we’ve all gotten comfortable with upstart companies and concepts that are completely new. Only time will tell if this excitement should also apply to investment brokerages. Kapitall has yet to weather a significant downturn in the financial markets, so it remains to be seen how it will handle the test of time.

The site makes investing a game, and that can be both good and bad. The concept can make investing less complicated, especially to the newcomer. It can give you the ability to experiment without risk and that’s a complete win-win arrangement.

But at the same time, reducing investing to a game — making it fun — may cause investors to under-estimate the seriousness that investing actually requires. For example, the virtual investing game that works so well in rising stock markets could fail miserably in a protracted bear market.

We’ll probably have to wait for the next market downturn to get the full scoop on Kapitall — it only came out in the withering days of the last serious stock market slide. But until then — and maybe even afterward — it can be an excellent place to learn and hone your investing skills.

Is it worth a try? Most definitely! Check out the Kapitall website to see if Kapitall will work for you.

Have you tried Kapitall? What do you think? Leave a comment!

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Example Letter to a Mortgage Company Requesting a Loan Modification

If continuing to pay on your mortgage has become a hardship, as it has for millions of homeowners, you have some choices. You can of course let the property go into foreclosure, or you can apply for a loan modification from your lender that will make your monthly payments fit better in your current budget.

If foreclosure looks like a reality, you should at least try working out a loan modification before letting it happen.

Hardship Options for Your Mortgage

The US government has a hardship program for certain homeowners called the Home Affordable Refinance Program, or HARP. The program is designed to allow “underwater homeowners” — those who owe more on their mortgages than the house is worth — to refinance even with negative equity. Under the program distressed homeowners can have their loans refinanced to lower rates and their payments reduced.

HARP is designed for homeowners who have Fannie Mae or Freddie Mac loans, but there are programs for other mortgage types as well. FHA has their own program, but many lenders have one as well. If you’re in a distress situation with your mortgage, you need to contact your lender to see what your options are and if a loan modification under one of these programs can be done.

Contacting Your Mortgage Lender

Sometimes that can be done with a phone call, but it often works better with a letter. With a letter, you’ll be better able to explain your circumstances and to provide any necessary documentation to back it up.

In many cases, even if you call your lender, they will instruct you to send a letter to open a case. This is often done because the department that handles loan modifications is in a different location. And whether or not you send a letter to open a case you’ll need to send one at some point in the process. By sending it up front, you get the process going quicker.

Even if you send documentation with your request, you should be fully prepared to follow up on future requests for even more information.

Typical Hardships that Could Lead to Loan Modification

Hardships in regard to mortgages are usually the result of a combination of factors. It could include any of the following:

1. Loss of a job or substantial decline in income
2. Disability or other significant medical event
3. You’re several months behind in your mortgage payments
4. The value of your home has dropped below the mortgage amount and can’t be sold
5. You’re unable to refinance your mortgage through the usual channels

There could be other factors not listed here, but you’ll have to have one or more of these situations playing out in order to have a legitimate hardship. Simply declaring a hardship because you’re underwater on your mortgage isn’t enough by itself.

A Sample Mortgage Loan Modification Request Letter

There’s no standard way to write a loan modification request letter, but if you’re looking for a format, try this:

(Your name)
(Your address, city, state and zip)
(Your home phone)
(Your cell phone)
(Your email address)

Regarding: (Your mortgage loan number)

(Mortgage lender name)
(Specific party or department)
(Mortgage lender address, city, state and zip)

To whom it may concern (it’s always better if you can get a specific name):

(I/We) have been struggling to make (my/our) house payment for (X months or years) and feel that (I/we) can no longer continue to do so at the current payment level. Though it has been difficult for (me/us) (I/we) truly wish to avoid losing the house in foreclosure. (I/we) wish to procede under any suitable loan modification that is available for someone in (my/our) situation.

We were fully qualified to make our house payments when we bought the home, and continued to do so for many years. But since (date of hardship) we have been unable to make our payments (regularly/fully) due to circumstances beyond our control.

(Use this paragraph do describe your hardship — job loss, income reduction, medical issues — whatever it is. Be specific, but limit it to a one or two paragraphs.)

(Use this paragraph to describe your own efforts to improve your situation — one or more refinance attempts, failed effort to sell the home. Be sure to mention that the home is worth less than the mortgage balance.)

Documents are enclosed to support both our hardship and our efforts to fix the problem.

We truly wish to keep our home and are willing to do what ever it takes to work with you to bring our mortgage up to date and to give us a fighting chance to keep it current in the future. Our current house payment is ($XXXX) but we feel certain we can continue to pay our loan if the monthly payment is reduced to ($XXXX).

We will appreciate any assistance you can provide in helping us to make this happen.

Sincerely,
(Your signature)
(Your typed name)

Documents to Include With Your Modification Request

With your letter you’ll want to include any significant documentation that will support your claim. If you attempted to sell your home unsuccessfully, include a copy of the listing agreement. If you applied for a refinance and were turned down, include a copy of the denial notice. If you lost your job, document the date of separation through unemployment records. If it was a medical issue, provide copies of relevant paperwork.

Make sure that you send only copies, never the original documents. You may need them in the future. Also, keep a copy of the letter and copies of specific documents that you sent with it, that way you’ll be able to know exactly what you sent should they call.

When you send the letter, be sure to do so either by certified mail or by overnight courier. It’s not just that you want to be sure that the lender gets the package, but also to minimize the risk that it might fall into the wrong hands. Loan documents and other personal information needs to be safeguarded at all times.

After a few days, follow up with a phone call, and be ready to cooperate in any way that you can.

Have you had an experience with a loan modification request? Do you have any advice to pass on to others?

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3 New Great Mobile Financial Apps

For the longest time if you wanted to track your financial progress on your smartphone you either had to use clumsy internet interfaces or a basic text or spreadsheet editor. Then a few applications came out such as Mint.com that were tailored toward a better user experience on a smartphone. Yet your options for a high quality application that you felt you could trust with all of your personal financial information were still very limited.

But as Google’s Android operating system has greatly increased its market share, the demand for better apps on both Android and iPhone has grown. Thankfully, savvy companies and developers have hopped into the market to provide a growing selection of quality applications. Let’s look at three new companies entering the fray.

1. Adaptu

Adaptu has released an iPhone-only application that ties into the website. A year ago I could not have told you who Adaptu was. But the company burst onto the scene and made a splash by sponsoring Adam Baker’s RV trip around the United States. And they were a big sponsor of the inaugural Financial Blogger Conference. (Did the company exist before this? Probably. But this is when I first really started to take note.)

The site and mobile app act as a mobile wallet. They help predict what your cash flow will be every month so you can avoid paying overdraft fees. It has all of the features you would expect from Mint: you can track just about everything from checking accounts to your mortgage balance.

At this time Adaptu is only available for iPhone users via the App Store.

2. HelloWallet

Instead of competing directly with apps (and companies) focused directly on consumer interaction, HelloWallet has taken a genius approach. The firm sells subscriptions to companies instead of directly to consumers. They’ve found something most entrepreneurs know: businesses usually have a lot more money than individuals.

The idea in selling to company is the company buys the subscription and provides the app and online access to the employees as a benefit. Even if not many users initially use it, HelloWallet has captured the revenue and made the company looks like it cares about its employees.

The app has all of the standard features of tracking your money, but also provides location-aware budgeting assistance. If you’re standing in front of the electronics store in the mall, the app will tell you how much money you have left in your budget to spend at that company.

At this time HelloWallet is only available for iPhone users via the App Store. Plus your company needs to have a subscription to the service.

3. ReadyForZero

The initial concept for ReadyForZero was to help users pay off credit card debt. As users saw success with the model they began asking to track other types of debt: student loans, car loans, and mortgages. While the focus isn’t necessarily on tracking every cent of your budget, the idea behind driving down your overall debt is an obviously positive one. ReadyForZero has raised nearly $5 million in funding to continue growth and expansion; I’m excited to see where they might take things.

You can now download ReadyForZero from the iOS App Store!

Do you have any favorite apps for your iPhone or Android device? Leave a comment!

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