Blogger's Corner: personal finance money management

Yodlee, a company that powers personal financial management (PFM) solutions for major banks and finance portals, now has 34 million registered users worldwide, it told VentureBeat.

And it doesn’t look like Yodlee’s growth is going to slow down anytime soon, especially with the “FinApps,” or financial apps it launched last year, which give third-party developers the power to develop apps that can securely access financial data.

The 12-year-old company has been a leading force for online financial services for some time. It’s the PFM of choice for eight of the top 10 financial institutions, including Fidelity and Bank of America. Yodlee is also notable for powering the data behind personal finance site Mint.com in its early days (which was eventually snapped up by Intuit, and now relies on Intuit’s financial data).

With FinApps, Yodlee is hoping to be a pioneering force once again. More than 250 developers are currently working on FinApps. Those apps can be deployed just about anywhere, from bank websites to social networks. The company tells me that it has about a dozen Facebook FinApps on the horizon, and that it has developers working on FinApps in “core categories” over the next two years.

Savings site BillShrink was on board with Yodlee for one of the first FinApps, which takes advantage of BillShrink’s savings and comparison engine to point out ways for consumers can to save money. The app also uses BillShrink’s targeted marketing engine, something Yodlee says it will be eying more closely as there is plenty of potential for targeted marketing data from FinApps.

Yodlee tells me that it takes less than a month for banks using its current system to make their sites FinApps-enabled. For new customers, it takes about 10 to 12 weeks.

Redwood City, Calif., based Yodlee has raised over $100 million in funding from Accel Partners, Warburg Pincus, and others.

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Almost everybody these days has some sort of debt on their personal balance sheet. There are some who state that debt can be classified into good debts or bad debts. What constitutes a good debt and what constitutes a bad debt? The standard definition for good debt is debt that helps you to make more money, while bad debt is one that makes you poorer.

However, in my personal opinion, there is no such thing as good debt or bad debt. A debt is a debt, which means you owe somebody or some company money. Too much debt is never a good thing, be it good debt or bad debt. Good debt can turn into bad debt overnight. For example, a mortgage loan used to purchase a property which later crashed in value by 40%. Good debt was raised for an investment, but it turned into bad debt because now the house is worth less than the value of the housing loan you owe to the bank.

There are some books which term car loans as one of the bad debts. The financing costs of a car are indeed high, coupled with depreciation of the car and maintenance makes car ownership a very expensive affair. Now, that would be bad debt isn’t it? What if the car is the tool that helps you to make money, it’s a form of transport to get you to various work places. Perhaps the fact that you own a nice car helps to build confidence in your clients so you can close more sales. Would it still be bad debt? Or is it now good debt?

Another example is a credit card. It is often made out to be the worst debt to have, for good reason. The credit card balance left over time incurs the highest interest rate of over 20% per year. A credit card is a great utility for cashless transaction and allows you to enjoy one month of interest free payment if used in a disciplined manner. The reward points and cash back schemes are more incentives to use the credit card as a way of saving money. If you could save 3% for every dollar spent on the credit card, it definitely makes sense to swipe your daily expenses onto the card.

Blogger's Corner

Monday, 1 August 2011

personal finance money management

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