Many convenience stores use drop safes to prevent burglaries. A drop safe allows money to easily be deposited, but not easily withdrawn. A cashier might deposit a set amount of cash into the drop safe once the register hits a certain limit. Doing so keeps the unprotected amount (in the register) small while allowing the protected amount (in the drop safe) to grow. Applying the concept of a drop safe to your financial plan can help you to save.

The idea of a drop safe is useful, but as we rarely want our savings to be sitting in cash, a “virtual” drop safe is more appropriate. Just like it’s real world counterpart, we want it to be easy to put money into and hard to get it out of. As in the convenience store case, the reason to use a drop safe is to protect your money from being stolen. In the case of your personal finances, you are trying to protect your money from yourself

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There’s no doubt that social lending is gaining in popularity and growing in numbers every day. More and more you hear of P2P lending being described as an investment because of the sizable returns that are often possible. Opinions vary about whether or not it is a good investment, but I’d like to consider whether it’s a socially responsible investment.

For anyone who hasn’t heard of socially responsible investing, here’s an excerpt from a post I wrote on the subject:

“The practice involves trying to maximize financial return while investing in companies that are deemed socially good. Such companies tend to favor policies of environmental friendliness, workplace diversity, fair treatment of workers, etc. Many socially responsible investors also avoid companies involved with alcohol, tobacco, and gambling as well as big oil or military contractors.”

The difficulty in determining whether social lending is socially responsible is the fact

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All of the many benefits of debt consolidation may leave little doubt that it’s the way to go. One reader asked if there were any down sides to debt consolidation and here’s what I came up with.

The main down side comes in the form of an opportunity cost. If you take out a loan and use it to consolidate your debt, you’re passing up the opportunity to use the loan proceeds for another purpose. If you could invest that money in a way that was more profitable than the rate of your high interest rate debt, then you might be better off not consolidating. The problem with this idea is that credit card interest tends to be so high that it would be difficult to find a better alternative. Taxes on alternative investments make consolidating even more attractive.

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With the current crisis in the mortgage industry, the likelihood of getting a mortgage with little or no money down is considerably less. Usually coming up with 10% down is sufficient to get a loan. The major drawback of putting down less than 20% is that you almost always have to pay PMI.

The method I used to avoid paying PMI on my first house was something called an 80/10/10 mortgage. The idea is that once you put 10% down on your house, you automatically have 10% equity in your home. That most likely qualifies you for a Home Equity Line of Credit for at least 10% of the value of your home. Taking out that credit effectively allows you to double your downpayment and avoid PMI.

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As a regular contributor to the Lending Club blog, I’ve seen a lot of the reasons why it’s so successful. The bottom line is that borrowers and lenders can benefit by using Lending Club. Anyone with good credit can get a great rate on an unsecured P2P loan at Lending Club. Loan rates start as low as 7.62% for people with excellent credit.

As a lender, the great rates continue. You’d be hard pressed to find an alternative way to invest your money for similar returns despite the relatively low risk. The amount of risk you take on depends on how you set up your portfolio. The average portfolio return is currently 12.20%

If you’re interested in signing up for an account with Lending Club, you can use this referral link.

To understand how Lending Club can offer great rates to borrowers and lenders, see my post on the topic.

You can also see a list of my posts here.

As a regular contributor to the Lending Club blog, I cover a wide array of personal finance topics on that site as well.

Use this referral link to sign up for Lending Club.

Below are links to some of my individual posts:

Personal Financial Resposibility
Simplifying Your Budget with the 60% Solution
Phone Tax Refund
The Link Between Money and Happiness
Change in Mindset
The Value of The Dollar
Special Tax Audits on the Way
Learning From Compulsive Spenders

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