A couple of weeks ago, I reached for a gallon of milk and nearly fell over. It wasn’t that the milk was heavy or the floor was slippery. No, it was the price tag that caught my eye. The gallon of milk was $4.50. I realize that by choosing to live in northern California, I’m going to pay more than much of the nation. However, I was not prepared for the $4.50 price tag. It’s not just the cost of milk that has gone up, but the cost of food in general. It’s not just food, but it’s gasoline as well. If that’s not enough, I’m looking forward to a future with a broken health care system (I have no confidence it will be fixed by the time I’m ready to start depending on it… in 30 years).

I can look at all these things and cry, or I can do something about it. What can I do? I can invest in the companies that make money off of me. When gas prices go up oil companies make more money and their stock goes up. By buying stock in those oil companies, I hedge my oil prices. Jeremy from Generation X Finance wrote a great article about hedging oil.

Last year I became concerned with the rising costs of health care. I decided to invest in Vanguard’s Health Care ETF (VHT). I haven’t invested enough to offset all my future health care costs. It is impossible to totally offset future health care costs as I don’t know what potentially expensive care I might need.

Lastly there’s the cost of that milk. It turns out that it’s pretty difficult to invest in specific foods. However, it doesn’t mean I can’t hedge the cost of rising food prices. One way to do this is to buy PowerShares Agriculture index. It invests in contracts for sugar, soybeans, corn, and wheat. Nicholas Vardy from Seeking Alpha makes a great case that demand for food will rise while supply is being reduced. His conclusion might have been premature as it’s performed well recently.

There are more costs that are rising out of control. If I had children, I would like to buy an ETF or mutual fund that invests in colleges. Unfortunately, such a thing doesn’t exist. If you could hedge the rising cost of any one thing in your life, what would it be?

—

Lazy Man has been a lender at Prosper since February 2006. His lending has been written up in the Globe and Mail, Canada’s largest national newspaper. He is the author of the personal finance blog, Lazy Man and Money. He enjoys watching Boston sports while sipping diet cola.

Good personal finance requires education, perseverance and at least a little luck-but really, it all comes down to planning.

Even the tiniest decisions stem, at root, from personal values. Your values teach you to dream-and, for some people, it stops right there. Good decisions-financial, personal, spiritual-come from defining goals that reach those dreams, and then making smaller goals that can be reached through set plans. Then comes the hard part, in which you stick to the plan. We make education and then career plans, marriage plans and family plans and life plans. And, of course, we have to make all kinds of financial plans.

Spending plans

Even for those who don’t budget, some kind of planning is necessary. I think a lot of people use stricter budgets when they’re getting on their feet, and then when they’re confident that they can live within their means they loosen up.

I’ve found that making a flexible plan and then tracking my spending in serious detail works best for me. Who I am deep in my soul is someone who will forgo groceries for happy hours-which I figure is fine as long as I don’t spend over a certain amount. So I just let myself know how much I have to spend, and then spend it how I see fit. Even a simple spending and saving plan is better than wantonly spewing your money around town.

Debt plans

A lot of personal finance writers and bloggers don’t classify debt as “good” and “bad”-they think of it as “marginally less bad” and “slavery.” I say debt is only a problem if you don’t plan it adequately. (You know, like drinking too much. Or getting pregnant.)

Certainly you don’t want to casually rack up $50 or $100 more than you earn on a credit card each month until you’re thousands of dollars in debt-but loans for houses, cars, education, or businesses are often necessary, and you can make credit cards work for you if you know how much you’re putting on them and why.

That’s the trick: how much and why? The requests for Prosper loans that come with detailed stories, plans and budgets are just fascinating-and they show that it’s more than possible to use debt responsibly if you make a solid plan.

Big plans

Dreams for your life are about a lot more than money-but nothing can make them come true like a solid plan. One of my favorite feelings is paying for a vacation I’ve carefully saved for-it’s a reminder of what’s within reach with just a little time and effort. All you have to do is figure out how you’re going to get there.

—

Melissa Eastlake is a contributing writer at Queercents, a syndicate of personal finance writers serving the lesbian, gay, bisexual and transgender (LGBT) community. Since its launch, Queercents has offered up daily tips and financial commentary to over 250,000 visitors.

Meet Bob and Fred. Bob and Fred both have $40,000. Both want to buy a new car, and use anything left over for investing. Bob spends a month researching new cars - he picks out the exact features and colors and styling he wants. He has that budget of $40,000, but he’s determined to get a great deal. He calls dealers all over his town and pits one against another. He haggles, he researches. Finally he finds the perfect deal. He knocks it out of the park - he buys a perfect car for a lot less than list price - $22,000 for a $25,000 car. Since he’s already spent so much time hunting for cars he just tells his broker to drop it in a “good mutual fund” for him.

Fred, on the other hand, goes out one afternoon and buys a normal, non-luxury sedan without spending any significant time researching, other than to make sure the car meets some minimum standards. He doesn’t haggle much. He knows what basic features he needs, but he doesn’t feel like spending day after day driving all over his city trying to knock another $100 off the price. Why? Fred has other things to do. Fred’s spending his free time studying investment possibilities. He spends $24,000 on a $25,000 list price car. He invests the other $16,000 in carefully researched investments that he identified while Bob was haggling over wheel covers.

Who “made” money? Bob certainly feels he has a nice little chunk of change, “saving” $3000. Fred, on the other hand, didn’t save much on his car, but spent time planning his investments. He identified some great places for his money instead of just dropping his hard-earned savings into a mutual fund his broker’s company is promoting this month. (Editors Note: I wonder if either Fred or Bod saved money with a Prosper auto loan?)

One of the biggest concerns you may have about Prosper (I had it myself) is “how can I possibly spend enough time researching loans and making sensible investments?” Would you ask that question about investing in a stock or mutual fund? Probably not - there is an assumption that stocks and mutual funds are “safe.” You may not feel a need to research GE’s debt or financial statements before investing in their stocks. I am sure many Enron investors were unconcerned by the fact that they didn’t understand what Enron actually did. But any investment requires serious study and examination.

If you don’t feel you have enough time in your life to study investments - be it real estate investments, making a P2P loan or a stock market purchase - let me ask you a simple question: have you seen an episode of a sitcom this month? There’s 30 minutes. If it’s a rerun, there’s 60 minutes of your life that could have been spent making yourself richer. I know people will say that they need to relax. I turn on an episode of The Simpsons from time to time myself. But if you do that, make sure that it’s not time taken away from studying and research in your financial future.

Another reason people find they don’t have enough time to research their investments is a lack of focus. If you try to become an expert in the entire Fortune 500 and real estate investing and the best mutual funds and 15 different alternative investments, you won’t ever have enough time to master them all. You’ll be a dabbler. You can’t focus on just one area, of course; diversification is one of the cornerstones of the personal finance temple. But pick specific industries or types of investments on which you can focus your attention. I work in the financial services industry, and I have always enjoyed following industry news, so it makes it easy for me to follow the news about that market. I don’t do much real estate investing, but I do follow my local market and the markets in cities where I have some knowledge simply because I visit frequently. I used to spend time trying to research 100 different means of gaining alternative income but then I realized it was better to focus on a few I’m interested in - like P2P lending and creating content (writing, developing websites). I found no reason to keep studying the best ways to sell on eBay because I have no passion for doing it.

So the next time you think you don’t have time to study your investments, make time. Whether it’s the market, real estate, peer-to-peer lending or even your own education, good investing requires time - and if you get as much enjoyment out of investing as you do from watching a favorite rerun of Seinfeld, you’ll always have time.

—

Steve S. is the author of Brip Blap, a blog about personal finance, health, career management, productivity and self-improvement. He lives and works as a contract governance and audit consultant in the New York City area, and has lived in Germany and Russia. He is an active lender at Prosper.

The other day, I went to my first Debtors Anonymous meeting. I know, I should remain anonymous, but this stuff is just too helpful not to share! I am only outing myself here. So, I definitely realized, after five minutes that I certainly do need to be in this twelve step program for self improvement, but I also realized how lucky I was that I have fairly little debt comparatively and also that I am smart enough to know just how I will go about getting out from under debt. It turns out; I just needed the little reality push of knowing I need help!

In that very first meeting, it finally sunk in that I must get out from under some of these high interest rates. I got these cards after my car dealership had made my credit report look screwy as they made way too many inquiries finding me a good rate (more on this in another post!). Later, I was rejected by better cards with lower rates when I needed money fast for a creative project- the making of the third album of my songs. Somehow, my creation felt urgent enough to accept an interest rate as high as 23%!

I was using credit cards for years in order to establish any credit history at all, being a young person. My department store card was the first recommended for this purpose. But I am what Debtors Anonymous calls an “under-earner” and so I have been paying off my cards slowly, sometimes only the minimum for about nine months and only recently did it occur to me that this is ridiculous and there must be another way.

The way, for me, it turns out, is to be my own loan consolidation officer, in a way. I have had good luck with credit union loans and their low interest rates and so I will be taking out a fixed loan in the exact amount that will immediately pay off my multiple debts- canceling those accounts and leaving me with one low-rate loan payment and my car payment. Two things to deal with instead of five (Dept. Store Card, Visa, Personal Loan, A Hefty Medical Bill and Car Payment). (Editor’s Note: A Prosper personal loan can be an excellent source of a debt consolidation loan.)

These high interest rate accounts will be paid off and fade from my credit report. I only have one payment of general debt under a rate of 12 percent and my one car payment. My next step after improving my credit this way over the next six months will be to re-finance my car payments for a lower rate too. (Editor’s Note: Prosper loans can also be used for auto loans, for an example see Refused by Credit Unions, Yes by Prosper.)

—

Moorea Malatt writes with QueerCents LGBT financial blog.
She is a folk musician, performance artist and Certified Life Coach.
www.mooreamalatt.com
www.queercents.com

Prosper is excited to add a new collection agency AmSher.  For people wishing to switch to this new collection agency be sure to update your default collection agency, standing orders, and portfolio plans that you are using.

AmSher is a family business. The firm started in 1939 as a credit-clothing store, later expanded into the credit furniture business and, in 1986, evolved into the nationally ranked receivables management firm. AmSher is headquartered in Birmingham, Alabama with a second collections location in Tulsa. They are licensed to collect in all 50 states.

The Dough Roller gives A Visual Guide to Lending Money with Prosper’s New Portfolio Plans 

Prosperous Land breaks down safer and riskier loans in Mr. Toad’s Wild, Prosperous Ride

RateLadder explains Accounting for the New Agency Test in Quicken

Personal Loan Portfolio requests Review My First Prosper Loans and Win a Book!

The Digerati Life says We’re On Sale: Time To Buy America!  

Blogging Away Debt gives us Saving Money on Groceries - A New Strategy

bripblap asks are you ready to own a company?

Freakonomics wonders Has This Been the Best Primary Season Ever? 

Lazy Man and Money muses Britney Spears: A Small Factor of the Recession? LazyMan also wrote a guest post at the Writer’s Coin where he tells us How [to] Manage Multiple Blogs

Moorea of QueerCents ponders Femme Economics: The Beauty of School

GenXFinance takes A Look Back at the Past Year of Mutual Fund Reviews and Their Performance

The Frugal Law Student loves a new way of using GTD (getting things done) on Windows.

—

RateLadder is a Prosper lender and has been since July, 2006.  He has a passion for p2p lending.  He owns RateLadder — My Prosper.com Journey and other P2P Lending Adventures, P2P No Bank the P2P Blog Aggregate, and ProProsper — Professional Tools for Prosper Lenders featuring SQL access to Prosper data.