Prosper.com and Quicken — The workable solution for playmates that don’t get along.

Prosper.com and Quicken (or Money) do not play nicely. In fact, they can be downright burdensome to make them bridge the gap. Here I present my workable solution, but this should be addressed by Quicken, Money, and Prosper.com

The heart of the problem is that Quicken doesn’t understand the Prosper.com model… Sure you can declare a single loan at a time but try that with 10, 20, 46, or more loans. Keeping them all up to date quickly becomes an all day affair. Believe me I tried this approach for 2 months. If the accounts were linked via some automatic download like credit cards, bank, or investment accounts this is the correct way to account for the information today. Yet handling defaults and net gain or loss is much simpler with an umbrella account. Ergo, Quicken should create a new type of account and Prosper.com should implement automatic Quicken download.

I love both Quicken Deluxe 2007 (even require) and Prosper. So what was I to do?

I created a new investment account that I called Prosper.com. This makes it easy to track the money into Prosper the moment it leaves the bank account by setting the category of the bank transaction to [Prosper.com]. Now that the money is in the Prosper.com investment account (as cash), how do you track the individual loans and their performance? The short answer is you don’t.

The long answer is that leaving it in cash is the easiest thing to do. Then when you get your monthly statement from Prosper.com you enter the realized interest earned for the month as a single interest payment. This allows you to track your Prosper.com account globally.

Prosper.com or Quicken if you are listening, please address this issue. Either via a case study or white paper addressing the proper way to account for this information or via a tight integration as a new type of account. Personally I vote for an integration.

As I am sure all Prosper.com lenders track their finances through Quicken (or Money)… I would be very interested to hear if anyone has a better solution than mine.

I found Quicken 2007: The Official Guide to be an excellent guide to Quicken; not only the basics, but also the advanced features.

Update 4/10/07: This is my current approach: Adam Nash Merged with RateLadder to form the Ideal Quicken Solution (without Prosper integration)

7 Comments | December 31, 2006 | Filed Under Prosper.com, Quicken | 7 Comments

Propser.com At 30 Million Lent (or darn close) YTD (since February)

Just how much does Prosper.com make? Since opening doors for business in February, they have facilitated the lending of very close to 30 million dollars. (For this evaluation let’s call it 30 million exactly and ignore late fees.) I grabbed a graph from Eric’s Credit Community to illustrate the progress of the year.

Prosper.com charges the borrower 1%: 300K.

Prosper.com charges the lender 0.5% annually: 150K

(I realize the lender amount is actually slightly less, but given the back loading of this year’s loan I think it is only slightly inflated.)

On top of this they also get late fees in several flavors. Did I miss anything?

Are they making interest on the float?

Now I don’t know how many people work at Prosper.com, but unless the pace of loans increases I would guess profitability is at least 3 years away. For example, let’s say they have 15 people and on average they make 100K each (I think I guessed low on both). That 1.5 million per year in salaries alone. Let alone benifits, office, and datacenter costs.

So unless I missed something large (interest on the float?) I think they are at least 3 years away. On the other hand, once the ship is sailing how many people are really needed to steer?

No Comments | December 30, 2006 | Filed Under Prosper.com | Leave a Comment

#1 by Amount Prosper.com Lender: Pensioner

Eric’s Credit Community has a List of Lenders by Amount Invested. On this list you will find the that the number one investor goes by the name of Pensioner. They have 816K invested with an average interest rate of 26.53% and an ROI according to Eric of 18.74%.

I was reading a blog (My Personal Finance Blog) about this very subject and I would like to comment on the ROI as defined by Eric’s Credit Community.

Eric makes 2 assumptions which make his ROI numbers inflated: not accounting for DTI by using the Experion expected default rates for less than 20% DTI and valuing both High Risk (HR) and No Credit (NC) loans as a 0% return.

I believe this causes the real ROI to be skewed in the higher direction for DTI and the lower direction for HR and NC. In the case of pensioner he has almost no HR/NC and 89% in C,D,E loans weighted D-. Clearly, pensioner has faith in the law of large numbers. I wish pensioner well and I too will be following closely.

Btw, here is my profile: PUnit.

No Comments | December 29, 2006 | Filed Under Prosper.com | Leave a Comment

Review of Late Loan #1

In a previous post I talked about the consequences to my first late borrower: One Loan Late. Not supposed to happen to AA. What does that mean?

In this post I will review the credit information of the late loan. In order to not get sued I will not tell you specific details of the late loan or the borrower…

AA credit @ 14.88% Interest Rate – DTI <=50%

As a reminder my standing orders only find loans with 0 current delinquencies, 10 or less delinquencies in the last 7 years, and 2 or less public records in the last 10.

I think this is another fine example of a quality standing order borrower and interest rate. But maybe this loan is bad? I don't think so. This person has AA credit. A collection or delinquency will severely affect them. I think that Christmas got in the way of paying. I predict they will be caught up no latter than the second attempt.

What do you think?

No Comments | December 28, 2006 | Filed Under Loan Review, Prosper.com | Leave a Comment