I’ve Paid For This Twice Already…

3 Social Lending Networks

More and more people are looking to borrow money in order to launch startups businesses and develop new products and services. Fortunately for them, an increasing number of entrepreneurs out there out there looking to invest in projects they think could make a splash. These groups are now looking to online social lending networks in order to cut out the middleman (in this case, banks) and optimize the money being put forth. Because of these lending networks, it is more likely you will be able to launch a business, make sound investment, and calculate your target retirement amount amount based on a structured loans. Here are the top three social lending networks:

Lending Club—A peer to peer lending network that connects borrowers and lenders through social media. Borrowers put forth an initial fee of anywhere between 2.25 percent and 4.75 percent in order to create a listing that describes the type of loan they are looking for. On the other end, lenders can peruse through the different loan requests until they find one that sounds interesting to them. If they decide to lend money they will pay 1% of the borrower’s origination fee.

Pro: Provided you have a good credit score, the Lending Club offers better interest rates than banks.

Con: LC is highly selective and rejects 90% of borrowers who apply for loans.

Prosper.com—Lending Club’s biggest rival began like the mixture of eBay and an auction service but has since transformed into a more Lending Club-like business model. For lenders, Prosper.com currently offers seasoned returns of 10.46% and the ability to diversify their portfolio. For borrowers, Prosper starts their rates at 6.59% APR for unsecured loans. They also offer fixed loan rates ranging up to 35.84%.

Pro: Lower origination fees and the ability to make monthly payments

Con: Borrowers may not have as good of credit.

Zopa.com—Zopa is the leading UK-based lending network, although they are currently developing operations within Italy and Japan and has partnered with six US credit unions. The word stands for “zone of possible agreement.” The service itself is very similar to Lending Club and Prosper.com, with the principle difference being that it is more structured like an online auction.

Pro: Better interest for borrowers, better returns for lenders

Con: Has not expanded to the US yet.

These three peer-to-peer social lending networks are symbolic of the larger trend toward social media and crowd-funding, both of which are challenging banks. The trend appears to not have left entrepreneurs by the wayside. If you’re looking to borrow money or invest money and are somewhat suspicious of banks you should take a long hard look at networks like the Lending Club, Prosper.com and Zopa.com.

Tough Financial Decisions

Life is full of tough decisions. Some of the toughest we face are financial decisions, because nothing is more aggravating than money and money management issues. Who among us can honestly claim they haven’t wracked their brains over how to save money and how to proceed into the future with fiscal responsibility? Sometimes, the best way to view money is imagine it stretched out over time. That way you can compare alongside the necessary expenditures that will come about and see how you can best optimize your finances in order to plug in those gaps. The following are three examples of financial decisions that are best made by thinking about their progression over time:

New car vs. old car repairs—This is an age-old question. Your old car needs some repairs, maybe a new transmission, that will end up costing you near and about the price of a new vehicle altogether. Many people think the responsible thing to do is to just buy a new car. But is that really the most responsible thing to do? Sure, the repairs on the new car may cost you a lot, but if your car is well insured and gets good gas mileage, why invest in a new vehicle with a brand new carbon footprint? View your new car over the span of ten years, when energy requirements may make it financially rewarding to get a hybrid or electric vehicle. Sometimes it’s better to stick with the old, until the new really is new.

New credit card with better interest vs. paying off old credit card—People are always feverishly looking for new credit cards with better interest rates, but in reality this plays right into the hands of the credit card companies, who are hungry for new customers and will offer anything in the short run in order to get your signature. Then, before you know it, they raise the rates right back up and now you’re stuck paying off two cards. Instead of looking for better rates, pay off your existing credit card debt and then pay for things with cash or debit!

Refinancing your home vs. investing in energy-efficient upgrades—With home prices at historic lows, many people are looking to cash in on the housing industry by refinancing their mortgages now. But perhaps that money would be better spend renovating your home and upgrading its features, including energy-efficient utilities, so that your home will grow in value.

These are examples of financial decisions that are like trick questions. You can think you’re making a shrewd choice until you consider how the finances of it will play out over the long-run. When planning your financial future, consider decisions like these as ways to balance short-term and long-term savings.

Avoiding Financial Ruin

If you’ve ever found yourself plunging into financial ruin, you will probably never forget that feeling of helplessness and despair. Financial uncertainty can be a terrifying ordeal that may take years to fully recover from. Some people never do recover and spend decades of their lives wallowing in bills and getting harassing phone calls from creditors. If you feel you are hedging close to the edge but want to avoid this is the kind of scenario, you may need to look at your options for steering clear of financial ruin:

Declare bankruptcy

Many people mistakenly view bankruptcy itself as financial ruin, the end of the road. But the reality is that bankruptcy is simply the name given to legally divesting yourself of overwhelming debt at the hands of a failed business, unpaid bills, or countless other circumstances. While the declaration of bankruptcy will affect your credit score and may affect your ability to take out loans or start businesses, it will protect many of your assets from court proceedings and lawsuits. A bankruptcy lawyer will certainly be needed to walk you through the legalese.

Consolidate your debt

One way to reduce the monthly nightmare that is paying bills and protecting yourself from default is to apply for a debt consolidation loan that will bundle your collective debts together into a single monthly bill. The advantage of this is that it simplifies your payments and gets creditors off your back. The disadvantage is the interest you will have to pay.

Pay your taxes

In the short run, not paying your taxes may seem like your only option for avoiding debt. But it will always catch up with you and tarnish your credit report. Some people end up having to pay hefty fines and even serve prison time for their inability to pay state and federal taxes. Remember, only two things in this life are certain: death and taxes.

Raise your credit score

Outstanding bills, defaults, unpaid loans, and foreclosed properties are just a few of the financial factors that can send your credit score plummeting. And once it falls it’s very difficult to pick back up. It can take years to repair your credit score, but it’s necessary in order to acquire any kind of business loan, mortgage, or scholarship. If your credit score is low attempt to raise it by making your payments on time and managing several lines of credit.

Whether it’s deserved or not, financial ruin can strike anyone. All it takes is the right (or wrong) confluence of factors mixed with bad luck and poor planning, and you can find yourself struggling to stay afloat. If and when this happens, you should be prepared for how you are going to deal with it.

Why You Should Teach Your Kids Personal Finance Now

Consumer debt, aside from obesity, is one of the biggest woes facing the average American today. Those suffering from thousands upon thousands of dollars of credit card debt, over the top mortgages, and high car payments generally have their lacking financial knowledge to blame. Credit seems to be easy money, and very few are able to determine how much such purchases will cost them in the end.

In today’s education system, finance or personal finance courses are not required in most schools. This leads to entire generations without the slightest idea of how to properly manage their money. To ensure their financial future and good spending, parents should be quick to teach their kids about good personal finance – even at a young age, just like they would good eating or personal hygiene habits. A few good ways every parent can teach their kids good personal finance include:

Practice Budget Creation

When you have to take the little ones with you to the store, don’t let them simply scour the aisles looking for their favorites cereals and snacks. Turn that time into a personal finance lesson. Before heading to the store, give each kid a set budget and a list with a few items from your list on it. Then tell them they must get what you need on the list within their budget. It’s a great way for them to learn to shop on a dime, and to not always reach for higher priced name brands.

Proper Allowance Management

For younger kids, teaching money management through allowance is a great way to mimic real life spending and savings. Their allowance is the real world equivalent to a paycheck, and they need to know how to properly earn and save their money. Make certain chores worth certain payouts, and teach your kids how to properly save parts of their allowance so they can make bigger more worthwhile purchases.

Open Checking and Savings Accounts

For older children, especially those interested in working outside of the home, you should encourage them to open both a checking and savings account with a local bank. Let them know about banking fees and interest rates, and encourage them to shop around for the bank that will be best suited for them.

There can be a strong difference between opening a savings account with a credit union and choosing a Discover savings account.  Kids need to learn at a young age how to make their bank accounts work for them, and having them shop around to find a great high interest savings account in a great way for them to learn.  Not only will they learn the importance of a higher interest rate, but they will learn about compound interest and how choosing that high interest savings account over a regular account will actually make their money work harder for them.

Prepaid Credit Cards

Whether you like it or not, there is a good chance that your kid is going to have to encounter credit cards if they wish to build and maintain good credit. So that they don’t sign up for the first credit card that offers a free pizza upon signing in college, teach them about credit cards and the interest rates and fees that are commonly associated with them.

A good way to do this is by giving them a prepaid or limited credit card while they are still under your roof. These cards essentially serve as practice cards and can enforce good spending habits without letting your kid get in over their head.

We all want the best for our kids, and although our focus is generally on getting them into a good school and insuring their health, parents also need to take the time to focus on proper financial education. Not only with teaching proper finance skills keep your kids from becoming a consumer debt statistic, but it will also allow them to achieve their future financial goals more easily.

How To Use Craigslist to Make a Quick Summer Buck

It’s amazing these days what one can sell online and how easy it is to do.  Heading into summer, it’s especially nice to have some extra cash in your pocket for those air-conditioning costs, family vacations, or general summer fun.  Whatever your reasoning, using Craigslist is an easy, sure-fired way to make some extra cash this summer with relative ease.  You’ll probably be pleasantly surprised by just how much stuff you can sell with the help of a camera and a computer if you follow some simple steps.

- What to Sell

The simple answer is: pretty much anything.  Unlike Ebay, Craigslist does not have any associated selling or listing fees so even if something doesn’t sell you won’t lose money.  Another added benefit to using the big C-list is that everything is done locally, or at least it should be, so no shipping fees are necessary, and bigger items can be sold easily and conveniently with little to no effort at all.  By simply going on the site, you can check out the types of categories and items people in your area are currently selling.

- Beginning

Once you’re ready to sell, hop on craigslist.org and select your state and city or the closest city to your home.  Next, click on the “post to classifieds” link on the top left side of the page.  A menu of options will come up from which you can choose “for sale.”  Continue to follow the prompts until you get to the page that asks you for a posting title, price, specific location, email address, and a posting description/pictures.  In order to figure out what to place in most of these categories, it helps to go through the existing classified section to which you’ll be posting your item, and see how some others have formatted their similar items for sale.

- Write a Good, Concise Description

Aside from your title and pictures, your text description is a hugely important tool to rope prospective buyers in.  You want to give a detailed description of the item, but be as concise as possible – nobody wants to read three pages describing a toaster oven.  Relay the essentials: the overall shape the item is in, how old it is, why you’re selling it, measurements, and if there are any flaws – people will be angry if you falsely advertise an item, and they likely won’t buy it.  Include your phone number if you’re comfortable with it, and give a brief description of the best means/time for people to get ahold of you.

- Pictures

Taking bright, well-framed pictures of your items is the best way to get people interested in your goods.  You can upload four, so you should use them all.  Show various angles, and include a frame of reference like a standard 12-inch ruler if necessary.  Merely having pictures will increase your chances of selling on Craigslist about ten-fold – if you have good pictures, that will make it that much easier.

- Prices

Don’t be ridiculous with your pricing.  Check online to see what similar items are going for, and be prepared to negotiate.  Putting “OBO” (or best offer) in your description will often attract more potential buyers who are looking to get a good deal, although it’s entirely up to you.

- Activate/Remove Listings

Once you’re satisfied with your listing, you must activate it.  After you submit it, craigslist will send you an email with directions to activate the posting.  It will show you the posting as it will appear and offer you the option to make any edits.  Once you publish, the posting will appear on craigslist for the public to see, though you can always make edits through that original email.  After 48 hours, you can republish your post to get it back to the top of the listings, although you’ll need to rewrite it out again, so saving your initial posting somewhere is always a smart idea.  Once something has sold, it’s a wise idea to remove your posting, so you’re not receiving continuous calls or emails about an item that has already been sold.

- Safe Selling Habits

While Craigslist is usually a safe way to sell your goods, it’s smart to follow some simple guidelines to ensure your safety.

1. Only accept cash, absolutely no checks
2. Arrange to meet in a public area if possible
3. If an item can only be picked up at your home, give your address to a buyer only when they’re ready to come pick it up
4. Wait outside your home with the item, and don’t let the buyer in unless it’s necessary or you feel comfortable doing so
5. If possible, have a friend or neighbor nearby

Now, all you’ve got to do is hit the basement, garage, or wherever you’re keeping those old items to collect dust, grab your camera and computer, and get selling.  The sheer ease of craigslist is bound to have you coming back to sell more in no time.