Poor Man Survival
Self Reliance tools
for independent minded people…
ISSN 2161-5543
A Digest of Urban Survival Resources
Starting or Participating in a Lending Circle-An
Alternative to Traditional Credit
Helping
people receive cash advances when they are low on money and between paychecks
is one way to generate income.
For
those of you who spend a lot of time on social media, it’s an opportunity to
build a business. Fact is in a down economy there are a lot of people in need
of a pay day loan (a pay day loan can be a good thing for a person without a
support network in a financial crunch; use it once, maybe twice, and hopefully
by then you'll have control of your spending; a pay day loan becomes a
dangerous financial plague if a person becomes dependent on it).
Your
first effort though should be to avoid taking on new debt. No loans. No credit
lines.
So
a "cash advance" is a last resort option; use it only in a
time of real emergency; for example, you're about to lose your home or
apartment or sole vehicle.
Here
are viable alternatives to traditional credit…
Two years ago, Javiar Giron went bankrupt. The 46-year-old father of
three had been doing fine since he came to the U.S. in 1985: He learned English
on the street, bought a house and managed a carpet business. He began buying
and selling, or “flipping,” houses on the side, but that tanked with the
housing market and he lost two of his properties to banks.
Giron is emerging from the financial hole he spiraled into by
participating in a lending circle – a form of peer-to-peer finance – as a way
to save money with a no-interest, no-fee microloan and to
build up credit. Participants in this age-old technique can be found in states from
Massachusetts to California.
“Credit is gold in the U.S.,” Giron says. “You don’t have credit, you
don’t have anything.”
Mission Asset Fund
The Mission
Asset Fund facilitates Giron’s circle, in which a group of people lend money to
one another. The San Francisco-based nonprofit organization known as MAF
formalizes a traditionally informal practice partly to keep participants away
from payday
lenders and
other sources of short-term, high-cost credit.
The organization brings together about 10 low- and moderate- income
individuals to join a circle. The assembled group collectively decides on the
amount to be loaned, say, $1,000. Then the members contribute part of that
amount – $100 apiece in this case – to the pool of funds every month, and one
gets the full $1,000 each time. By the 10th month, all participants will have
received that amount and all the loans will have been totally paid off.
Lending circles help participants raise capital for various expenses:
car down payments, debts and small business investments, among other things.
But the microloans, which MAF insures, are less about the cash and more about
boosting credit scores to give participants access to mainstream financial
services.
Learning through lending circles
“Part of it is a process
of education, making sure they are budgeting and getting them at a place where
they can make good financial decisions,” says Jose Quinonez, MAF’s
chief executive officer.
There are no specific
requirements to participate in one of the circles, although the organization
discourages people whose debt payments consume more than half their income.
Those who do join sign contracts through MAF, which guarantees each member will
get their money back even if some don’t pay their share to the circle.
“We have sort of like a
mini-FDIC insurance to the lending circle,” Quinonez says, referring to the Federal Deposit Insurance Corp., which backs bank deposits. “That guarantee that we
provide brings more peace of mind — it gives people assurance that the
structure will hold.”
Default rates are less
than 1% in MAF circles, partly because of the social responsibility that being
in such a group entails. The organization reports all payment information to
credit bureaus TransUnion and Experian, so participants can benefit by
improving their credit scores.
How to Use a Lending Club
How does
an online credit
marketplace
work?
Lending Club uses technology to operate a credit marketplace at a lower cost than traditional bank loan programs, passing the savings on to borrowers in the form of lower rates and to investors in the form of solid returns. Borrowers who used a personal loan via Lending Club to consolidate debt or pay off high interest credit cards report in a survey that the interest rate on their loan was an average of 24% lower than they were paying on their outstanding debt or credit cards.
By providing borrowers with better rates, and investors with attractive, risk-adjusted returns, Lending Club has earned among the highest satisfaction ratings
in the financial services industry.
Innovation transforms lending
Lending Club is America’s largest
marketplace connecting borrowers and investors, where consumers and small
business owners lower the cost of their credit and enjoy a better experience
than traditional bank lending, and investors earn attractive risk-adjusted
returns. 4
Here's how
it works:
- Customers interested in a loan complete a simple application at LendingClub.com
- We leverage online data and technology to quickly assess risk, determine a credit rating and assign appropriate interest rates. Qualified applicants receive offers in just minutes and can evaluate loan options with no impact to their credit score
- Investors ranging from individuals to institutions select loans in which to invest and can earn monthly returns
The entire
process is online, using technology to lower the cost of credit and pass the
savings back in the form of lower rates for borrowers and solid returns for
investors.
https://www.lendingclub.com/public/how-peer-lending-works.action
LENDING CIRCLES
People
around the world lend and borrow with each other when bank loans aren’t an
option. With technology and credit reporting, MAF’s Lending Circles formalizes
this practice to help borrowers access zero-interest loans that help them build
credit. With more savings, less debt, and better credit, Lending Circles
participants can finally pursue their dreams: they go to college, buy homes, become citizens, and start businesses.
How It Works
Lending
Circles provides zero-interest loans that help people build credit. Every
participant starts by taking an online financial training class. Then, the six
to twelve members meet in person to form the Lending Circle and collectively
decide on the loan amount; for example, a group of 10 people might decide they
each want a loan of $1,000. Each participant in the Lending Circle can have
their own goal for the money, whether it’s paying off debt or paying for
tuition.
Everyone in
the Lending Circle makes the same monthly payment, ranging from $50 to $200,
which MAF reports to the credit bureaus. The loan rotates monthly to a
different participant: in the first month, one participant receives $1,000, and
each month another member receives the total sum until everyone has gotten a
chance. The program is proven to help participants establish credit histories
for the first time and increase low scores.
Lending
Circles are zero-interest credit building social loans…http://lendingcircles.org/
How to survive tough
economic times in the days ahead.
Read more at https://www.secretsofsurvival.com/survival/surviving-hard-economic-times.html#fe2vH3MhVzB7weps.99
Read more at https://www.secretsofsurvival.com/survival/surviving-hard-economic-times.html#fe2vH3MhVzB7weps.99
Note: The inspiration for this was a book I
recently read by Lisa Servon – The Unbanking of America: How the
New Middle Class Survives. Excellent
reading & available at: http://www.ebay.com/itm/182820711577?ssPageName=STRK:MESELX:IT&_trksid=p3984.m1555.l2649
Bruce, the Poor Man, free thinker,
social critic & cynic
Additional
Resources
Saving money doesn’t have to be hard. In fact, there are many ways
to save money that are easy and fun. Here are 95 painless ways to save money.
7 Easy Ways to Build an Emergency Fund From $0 (Wisebread): It is possible to quickly build an emergency fund from zero, even if you are living paycheck-to-paycheck. Here are several ways you can fill up your emergency fund fast so that you are prepared before the next disaster hits.
The
Best Checking and Savings Account Promotions and Deals
No bank wants your business as badly as the
bank that doesn’t have it. In fact, they are often willing to pay you to become
a customer. If you are looking for a new bank, check out these bank promotions.
Why half of Americans
can't come up with $400 in an emergency (USA Today) "As recently as 2016, the Federal
Reserve surveyed more than 5,000 Americans about their financial situation.
Among the findings was one startling statistic: Approximately 46% of Americans
stated they do not have enough money to cover a $400 emergency expense."
Frugal
Home Winterization
Reduce your winter heating bills.
Reduce your winter heating bills.
Contributors and subscribers
enable the Poor Man Survivor to post 150+ free essays annually. It is for this
reason they are Heroes and Heroines of New Media. Without your financial
support, the free content would disappear for the simple reason that I cannot
keep body and soul together on my meager book sales & ecommerce alone.
A portion of our profits are
donated to various charities each year.
This year we donate to: Red Cross [relief efforts due to all the
storms], USO for our troops, St. Judes, which helps children & their
families…
Helpful Brain Boost…
Keep
your brain sharp by taking an afternoon nap, it is proven to boost productivity
and make it easier to learn and store new information. A new study from the University of
Pennsylvania found that those who regularly enjoyed daytime naps of up to one
hour had better memory and thinking skills as they aged!
>>Napping
prevents bran shrinkage caused by stress and a shortfall of nighttime sleep. Keeping your neurons young and healthy.
>>Want to improve your brain even more? Learn how here:
You Have a 16-Cylinder Brain-Learn How to Use it &
Re-Awaken the Genius Inside You!
I know everyone is short on time in this hectic world so I’ve kept this
PDF short and to the point with links to expert how-to articles and guides
including:
·
How to Increase Your Intelligence
·
6 Step Brain Exercise Steve Jobs Used to
Boost Creativity
·
6 Simple Habits to Boost Your Intelligence
·
The Best Vitamins to Increase Brain
Function
·
How a Harvard Brain Specialist Keeps Her
Brain Healthy
·
A Review of the Top 10 Brain [Limitless]
Pills
·
How to Protect Your Cognitive Function
Support our efforts by shopping my storefront…
A Smoking Frog Feature, Shallow Planet Production
3 comments:
As more folks become "bankless" these kinds of resources become more useful to the little guy and this practice in one form or another has been common for centuries...good piece!
You ALWAYS provide a nice range of solid resources for the little guy and thought provoking ideas-thanks!
Loaned my brother $12,000 - never heard from him again and it left me in lurch. I've disinherited him. Ironically, I have no loans, paid cash for everything...car, home, etc.-no credit cards & as a result, I have 'bad' credit & pay higher premiums for various insurance products so I broke down & got a credit card to build up some credit. I feel that's kind of stupid especially in light of the Experian breach!
Post a Comment