Finance 101: Introduction to Bond Lesson 1

Finance 101: Introduction to Bonds Lesson 1

All of my life I’ve heard about diversifying your assets by having stocks and bonds. I kind of know what a stock is but the other day I wondered, just what’s a bond, and why would I want one? If you have the same questions then stay tuned for the latest installment of my basic finance course: Finance 101.

I actually own some bonds as part of my investment strategy. My last employer offered employees the ability to purchase bonds automatically through a direct payroll deduction on a monthly basis. I figured, hey, why not and allocated $100 each month for about 6 months towards bonds. They were mailed directly to my mom, and I promptly forgot about them until I bumped into an old pay stub last week. I began to wonder, just what the heck did I purchase anyway? Let’s begin with definitions. According to, a bond is “simply an ‘IOU’ in which an investor agrees to loan money to a company or government in exchange for a predetermined interest rate.” Great! So who’s the investor? Well, in this case that would be me or whoever purchased bonds. Sweet! I’m an investor. Now, how do I make money from this? This is where it gets interesting. It all depends on what types on bonds you’ve purchased. […]

Finance 101: What the Heck is Peer-to-Peer or P2P Lending?

Finance 101: What the Heck is Peer-to-Peer or P2P Lending?

This is part two in my Finance 101 series and it’s a long one. This time we’re learning about peer-to-peer, person-to-person, social, P2P or sometimes micro lending. The concept has many names but it’s basically the same thing – you are getting a loan from a private individual instead of a bank. That’s the short, short version for those without the time to stick around for the article. The rest of this post is directed to those who are completely clueless about the process. Read on.

Let’s begin with the most basic. According to Wikipedia, this is a type of lending or borrowing “which occurs directly between individuals (‘peers’) without the intermediation/participation of a traditional financial institution.” I like my definition better. You’re thinking, well how does this work? Let’s look at two scenarios.


Savings Account - Finance 101: Why Banks Want You to Open Accounts

Finance 101: Why Banks Want You to Open Accounts

I’m starting a new series here called Finance 101. When the mood stikes me I’ll cover one basic consumer finance topic that I think will help us as we both get out of debt. Let’s begin this series with the most basic thing…why banks need you to open accounts and deposit money in the banks.

Deposit accounts are your typical savings or checking accounts where you deposit money into an account at a bank. They’re sometimes called demand accounts meaning that they have to give you your money when you ask for it. When you deposit money at a bank, the bank now physically has your cash and gives you some note that says they’re holding that money for you. It might be your deposit receipt, your statement or a passbook. So, the bank now counts your money as their asset but also lists that same money as a liability that they owe to you. What’s just happened is that you have effectively given the bank a loan and now they owe you the money whenever you come back and say that you want it or when you spend it by using debit cards or checks. […]