Lending Club

When your money starts piling up in a savings account with a 0.5% interest rate, you know you need to take action. On a friend’s recommendation, I checked out Lending Club, an organization that facilitates loans between individuals (more information from wikipedia’s article on Lending Club). Rather than paying 29% interest to a credit card company, for example, a borrower can post a request for a $10,000 loan to pay off the credit card at a 15% (or other) rate, and a suite of investors can choose to fund that loan in small increments. Collectively, they provide a loan to the borrower — and they also collectively absorb the risk associated with the loan.

It’s quite an interesting concept. You can review each individual loan in which you might want to invest, which details all of the relevant information about the borrower, including their credit score, a loan risk rating, the interest rate (assigned by Lending Club), the amount of debt they currently have, their credit history, etc. You can then decide how much money to allocate to the low-risk (but lower return) loans versus the high-risk (but potentially higher return) ones. I opted for a conservative mix of mostly lower risk loans, to try it out.

I opened an account with $1000, which is now spread across 40 notes ($25 each). My instinct would have been to make larger investments in fewer loans, but this seems to be the default strategy recommended by the site, so I’ll see how it goes. Browsing the loan options was almost as interesting in a social sense as in a financial one. Each person has their own story and personality associated with their loan request. The vast majority of the loans I saw were for debt (usually credit card) consolidation purposes. (Some people have frighteningly large revolving credit balances, like $50,000!!!???!) Other common loan types were home improvements, wedding expenses, and medical expenses. Some were to pay off an existing Lending Club loan that had a higher interest rate — which seems a smart bootstrapping process; after making some payments, your credit rating may improve and thereby qualify you for a lower rate. I think it definitely makes sense to take advantage of such an opportunity, as a borrower.

For me, as an investor, the cost so far has been my $1000 plus the 30 minutes it took to browse and select 40 loans. The site does offer an automated portfolio builder (given a specified risk level) which provided a starting point, but I was unwilling to blindly accept its choices without at least reviewing them. I replaced some with others that seemed more attractive (or meritorious). The site offers the ability for investors to post questions to the borrowers, which are publicly visible; these conversations were often more useful than the initial description of the loan on the borrower’s part.

After selecting my 40 loans, I was given the following summary:

  • Average interest rate: 10.88%
  • Expected default: 1.51%
  • Service charge: 0.6%
  • Projected return: 8.76%

I’ll keep an eye on it to see just how good that projection is!

One other aspect of the account creation process I found interesting was that to open an account you have to certify the following:

I currently reside in one of the following states: CA, CO, CT, DE, FL, GA, HI, ID, IL, KY, LA, ME, MN, MO, MS, MT, NH, NV, NY, RI, SC, SD, UT, VA, WA, WI, WV, or WY;
I have an annual gross income of at least $70,000 ($85,000 if residing in CA) and a net worth (exclusive of home, home furnishings and automobile) of at least $70,000 ($85,000 if residing in CA); or a net worth of at least $250,000(determined with the same exclusions) ($200,000 if residing in CA), OR, if I live in Kentucky, that I am an “Accredited Investor” as determined pursuant to Rule 501(a) of Regulation D under the Securities Act of 1933, AND,
I will not purchase notes in an amount in excess of 10% of my net worth, determined exclusive of my home, home furnishings and automobile and if I live in California and do not satisfy any of the above tests, I will not invest more than $2,500 in Notes.

This makes me wonder what happens if you violate this certification. What if my AGI dropped below $85,000? What if I invested more than 10% of my net worth? What if I moved to Oregon? Would they cancel my account? Reject my money? And where did this kind of “certify that you’re a sensible person” requirement come from? There’s a story there, I’m sure.

Mathematics and music

My friend Jon Stokes recently posted a delightful mapping from chess moves to music, including several compositions based on famous chess games. This is exactly the kind of geekery that I find most enjoyable, a quest that seeks both interesting new patterns and interesting new ways to experience what we already know. I also learned the word polyrhythm, which occurs when two different rhythms are played against each other. This is frequently found in African music, but apparently occurs even in music by the Beatles (e.g., “Happiness is a Warm Gun”).

He then followed this post by mapping the Fibonacci sequence to music, yielding a lovely fugue and some interesting analysis. I hadn’t known that the Fibonacci sequence modulo 7 produces a repeating sequence — and handily (for 4/4 music), one of length 16! More fun fodder for the future, should I ever be teaching recursion again. I’m charmed by this process of converting an abstraction into the auditory equivalent of a visualization (auditorialization?).

Nice work, Jon!

I fixed my touch-lamp!

I’m delighted to report that my first soldering project is a brilliant (lit.) success. After picking up a soldering station and a coil of silver solder from Fry’s yesterday, I was all set to make my attempt at replacing the bad triac that rendered my touch-lamp useless. I’d previously desoldered the bad triac and removed it, so all I needed to do tonight was solder the new one in.

Or rather, all I needed to do was solder it in, correctly the first time. Fry’s was woefully lacking in desoldering equipment so I had no way to properly undo and cleanup any mistakes I might make. Also, Fry’s didn’t have any helping hands, so I had to find a creative way to hold the circuit board fixed while I wielded the soldering iron in one hand and the solder in the other. It turns out that two pencils, a rubber band, and a weight were sufficient.

Here is the circuit board before I began soldering:

And here is the result:

Critique: To my completely inexperienced eyes, I think I might have used a bit too much solder. It was a little tricky to get my soldering iron’s “screwdriver” tip positioned to heat precisely one of those posts at a time; a smaller tip would have been easier, I think. Also, by all reports a good solder job should leave you with very shiny clean connections — but these dulled when they cooled so I’m not sure if there were impurities or I didn’t keep it hot enough or some other issue. So it was with great apprehension that I plugged the lamp in, but voila!

You can’t tell from this static image, but it DOES work, flipping between off-low-medium-high brightness when you touch any metal part of the lamp. Yowza!

Here’s the other side of the circuit board, with the new triac clearly visible (and correctly oriented, or the lamp wouldn’t have worked):

I know that you generally clip the wire ends of components after soldering them in, but the triac’s ends were pretty thick so I just left them there. To anyone with more experience, would you clip these as you would resistor wires?

Replacement triac: $1.19
Soldering station: $39.99
Silver solder package: $3.99
Sweet, sweet success at something I’ve never done before: Priceless

Cracking the ISBN code

There are all sorts of ways to look up a book in the library: by author, by title, by subject, by call number… But today, a patron approached me with only the book’s ISBN and asked me to locate it for her. Fortunately, the catalog system does permit searches on ISBNs (and even better, the computer had a numeric keypad to make entering it easy), and I quickly found the book, got the call number, walked the patron through the shelves, and whipped out the book, as if by magic. :) As I was leaving, she asked, “What is this thing, this ISBN?” and I realized that I didn’t actually know anything about ISBNs as a concept, not even what the acronym stood for.

An ISBN is an International Standard Book Number. The original (non-international) Standard Book Numbers, created in 1966 for booksellers, used 9 digits. Its derivative, the ISBN, has grown from 10 to 13 digits, as ISO, the international body that governs such things, noticed that more and more books were being created.

Even more interesting, the 13-digit ISBN has structure. It consists of:

  1. a GS1 prefix (978 means book publishing)
  2. a group identifier, which seems to indicate its country of origin
  3. a publisher code (one of 628,000)
  4. an item number
  5. a checksum or check digit

Take for example the mouth-watering book Geographies of Mars. The ISBN found on its back cover is 978-0-226-47078-8. We know therefore that this is a book (978), from an English-speaking country (0), by publisher 226 (University of Chicago Press), and it is item 47078. Because the publisher code takes 3 digits, by convention the item gets 5 digits.

The checksum, ah, now that’s fun. Checksums are commonly used to detect whether or not something was lost in transmission. A checksum value is computed over a block of data before it is sent, and then the receiver can compute the same value on what was actually received and see if it matches. If not, it requests that the data be re-sent. (Note that the error could have occurred in the data or in the checksum itself, which is also transmitted; either way, it’s safest to retransmit the data.)

Here, the checksum (digit) is computed over the first 12 digits in the number. This allows bar code scanners to confirm that they’ve correctly scanned the number, or to rescan it if not. (Or a manual entry system to alert the user if they type in an invalid ISBN.) The algorithm for the ISBN checksum reads like an exercise for an introductory CS course (oh wait, someone already thought of that, and someone else, and someone else…):

Each digit, from left to right, is alternately multiplied by 1 or 3, then those products are summed modulo 10 to give a value ranging from 0 to 9. Subtracted from 10, that leaves a result from 1 to 10. A zero (0) replaces a ten (10), so, in all cases, a single check digit results. [from wikipedia]

So for my example book, we have 9+7*3+8+0*3+2+2*3+6+4*3+7+0*3+7+8*3 = 102. Then 102 mod 10 is 2, which we subtract from 10 to get 8. And sure enough, the final digit in the ISBN is… 8! Checksum complete!

And now I’ll be able to answer that question about ISBNs promptly, should it ever come up again. Next up: memorizing the Dewey Decimal System.

Avoiding the side crampie

I’m now officially training for a triathlon. This is the Pasadena Sprint Triathlon, supposedly good for beginners and pre-beginners like me who’ve never even seen a triathlon from the sidelines. As preparation (and honestly, because it is fun), I’ve been doing some morning runs (well, jogs) around the neighborhood. I have a 2.1-mile loop that’s absolutely gorgeous just as the sun is coming up; it heads up into the residential foothills of the San Gabriels, where the houses are reclusive, sprawling, and well-spaced (and oh-so-pricey). I walk on some of the steeper uphill parts. The downhill run, however, is pure joy, feeling the strength of my body and the delight in motion. It is pure joy, that is, except that I’ve started getting a side stitch about halfway through. It’s irritating to have my legs saying “more more faster faster” and my abdomen saying “STOP NOW NO MORE OUCH PAIN DRAT!”

Wikipedia also has something to say about this. It actually has an article about the side stitch and its many alternative terms. Apparently, there is a common theory that the side cramp (a stabbing pain under the lower edge of the ribcage) is caused by internal organs pushing down on the diaphragm, but this is unlikely since the sport it most often manifests in is swimming. The side ache may actually be caused by contraction of the liver or spleen, restricting blood flow, or an irritated peritoneum. The side sticker usually manifests on the right side (fascinating! It’s happened on my right side both times), although wikipedia marks this claim as “[citation needed].”

Advice for avoiding the side crampie (my favorite term) includes both drinking lots of water and avoiding food and drink 2-3 hours before exercising, strengthening the diaphragm and core muscles, warming up and gradually increasing exercise pace, etc. There might be something to the last one, as I’ve never gotten exercise related transient abdominal pain (ETAP) during Jazzercise, which is carefully scheduled to ramp the exertion level gradually up and then back down.

Wikipedia also provides tips for dealing with a side stitch after it happens. One is to jam your fingers up under the ribcage to press on the painful spot. Interestingly, that’s exactly what I did reflexively when it happened. This made it feel better as long as I was pressing but didn’t do any good after I let go. Apparently the main way to stop the pain is to slow or stop your exercise and wait for it to subside. No good! This tip seemed particularly interesting: “While running, exhale when your foot strikes on the opposite side that the side stitch is located. For example, a side stitch on the right, exhale hard when your left foot strikes the ground.” I’ll have to try that one. If nothing else, the effort of focusing might distract me from the pain.

Ultimately, gradually getting in better shape should help avoid any recurrences of the side stitch. Clearly, more practice is called for! Otherwise my triathlon debut on March 19 may be a bit of a fizzle. :)

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