Errors in Judgement

So I took a job for the last month which was a lot of hard work. I put in 30 hours more than I should and subsequently managed to knock my hourly rate (I was getting a flat fee), down to below minimum wage. No fun. I managed to get out of the second half of my contract and am working on something else that is a little more money, a little less driving, and a lot more fulfilling.
My issue here is that in hindsight, I should have gotten more details about the job before I took it. Part of it is that I didn't know the right questions to ask, but part of it also was just my desire to work work work.

I spent 6 weeks without a day off. I might have gone a wee bit crazy around the end there.

So now it's back to working what a normal person works. The only problem is that with that, comes less income and a little more financial stress. I have a $250 vet bill to pay this month, and as it stands, with what I have booked, it's going to have to get pulled out of what has become a miniscule savings account balance.

I'm starting to freak out again because I'm back to making painfully slow progress on my debt. My student loan is costing me a minimum of $608 a month which is about half my expenses. I want to get these payments down but it's so darn hard to find any extra money to throw there. I'm using every penny I have to cover bills and living expenses. So here we go again. It's spending freeze time. Last night I bought enough groceries to last a good long while. I have a couple of things to buy for the garden and a birthday present to get and after that, no more going out, no more nothing. We're going to see if I can get through the month and charge absolutely nothing to my card other than gas.

I feel like I might not be able to pull this one off, but I'm sure going to try!

A Guide to Using Prosper - Borrowing

Prosper.com is a person to person lending site that is growing in popularity by leaps and bounds.

With the credit crisis in full swing, average people are being refused loans by banks, especially people with less than perfect credit. Some of these people turn to credit cards as their only option to straighten out their finances, but some turn to sites like Prosper.

How to Get a Loan

Prosper is a Person to Person lending site, meaning real people lend other real people money.

If you are a Borrower, you sign up for an account and Prosper verifies your identity and checks your credit history. It pulls your revolving balance, how many lines of credit you have, how long you have had credit for, any delinquencies or bankruptcies, how many credit inquiries you have had in the last six months, and your debt to income ratio. After pulling all of this information it assigns you a credit grade from AA to E. There is also an HR or High Risk credit grade.

Next, you set up a loan listing. This is similar to setting up an auction listing. You write about what you need the loan for and why you are good candidate. You also include information about your monthly earnings and expenses. This enables people to make sure that you can afford to repay the loan. You then select your loan amount, between $1,000 and $25,000, and the interest rate you wish to start the listing with. It is often a good idea to start a listing with a higher interest rate than you would like in order to attract bidders. Also, ask friends and family for endorsements. There is a system where people can endorse you on Prosper and having other people vouch for you can increase lenders confidence in your loan. It's even better if they are Prosper members, and even better than that if they can also bid on your loan.

When you post your listing, lenders are then able to bid on it. The minimum bid is $50 and they can bid on your loan at an interest rate of their choosing, so long as it is at or below the rate you started your listing at.
After your loan has enough bids to cover the cost of the loan, it is considered "Funded". This is where the fun part starts. People can now bid your loan down, meaning if they want a piece of your loan, they will bid a lower interest rate and the overall interest rate of your loan will start to drop. It's similar to eBay where high bidders push out lower bidders, but the high bidders are the ones submitting the lowest interest rates.

At the end of your listing if your loan is not funded, it disappears and you can start over. There are no penalties for this. If your loan is funded, you are given the opportunity to accept it, then Prosper reviews your information and deposits the money in your back account (minus their fee).

5 Tips for a Better Loan Listing

1. Include a picture. If your loan looks more interesting when scrolling through a list of loans, you are more likely to get bids.

2. Use a grown up title. "Consolidating Credit Card Debt" is better than "++OMG Pleese Look I Need Money Now!!!1!!!1!*". Trust me.

3. Include a list of your income and expenses, and if you are consolidating debt include the balances of your credit cards and what the interest rates are. It is likely people will ask you this anyway.

4. If you have delinquencies, explain them in the listing and note whether the loan will be used to pay them off.

5. Spell and grammar check your listing. Treat it like a job application and make sure it is detailed and well presented. Make sure everything is coherent and explained.

Paying Back Your Loan

Prosper requires you to make 36 monthly payments, the first of which is due a month after your loan is dispersed. Your payments can be set to automatic withdrawal, but you can make payments manually or early very easily through the Prosper system.
One of the interesting components of the Prosper system is that it displays the due date of your final payment, and what they estimate that payment will be. Any time you make an early payment or a payment for an amount greater than your minimum, it recalculates that final payment so you can instantly see the good that you have done.
If you miss a payment, you are charged a late fee.
When you make a payment on your loan, that payment is broken down and deposited into the accounts of the people that bid on your loan.
So the money you pay and the interest that you pay will go into the pockets of real people.
You can have a maximum of two loans with Prosper for a maximum of $25,000 borrowed. Depending on your credit grade, you must have made on time payments for 6-12 months before you can apply for a second loan.

I ran a $3,000 Prosper loan for ten days, and it closed at an interest rate of 11.8%. I used this loan to pay off my scooter loan which was at a higher interest rate, and to pay off a portion of a credit card which also had a high interest rate. After I am eligible for a second loan, I plan to consolidate all of my credit cards into a Prosper loan and probably refinance the first loan. I hope to get an even lower interest rate the second time around.

A Handy Tip

If you get a Prosper loan, when the money is dispersed into your account go ahead and make the first payment on your loan. That will give you a safety net on your loan payments. Continue to make each payment a month early and that way if anything ever goes wrong with your finances, you have a month of breathing room to make your loan payment.

I will be writing a guide to Lending on Prosper soon. Feel free to ask any questions!


To get a sign up bonus for joining Prosper, go here.