Seeking Guest Posts
I am looking for guest posts on numerous Orthonomic subjects. Have any of my readers used a People to People lending service (like Prosper), either as a lender or a borrower, who fill me in on halachic issues of using the site (are you direct lending or are you really investing in the Prosper company?) and how they worked with the issues. Assuming the halachic issues I'm seeing can be overcome, I'm most interested in the experiences of lenders. So I'm looking for both the Ortho and the nomic sides of this equation.
I am also hoping a reader who is trying to get out of debt would like to start a monthly diary to share their experiences in making a major life change. It would be great if the diary could include chizuk, feature practical advice, talk about challenges, and include some hard data (e.g. debt left to pay off so readers can track and cheer for the progress). I'd love a regular and empowering column from someone who is experiencing success.
Any subject you want to hear about as a reader, let the readership know by adding your comments. I've had requests for posts on Special Education and the Orthodox parent and Homeschooling and the Orthodox Family. The number of subjects are endless, so suggest anything you want and let's hope someone picks up the ball and runs with it.
Those who have emailed: Please forgive me for not getting back promptly. I will answer emails, but I'm under a pile of work and emails are on the back burner.
15 comments:
I don't know if she's available, but Crunchy Granola Mom has been homeschooling her frum family for years, and has the most wonderful attitude and creative ideas.
Maybe there are people who made chassunahs without going into debt and could share with us how they did it.
There could be folks who found an alternative to summer camp.
Did anyone swim against the tide and not overspend when your neighbors were doing it?
Is anyone out there trying to attract a minyon of families to a cheap but not Jewishly populated city?
I really don't have time for a guest post about children with special needs, plus I am looking for others' perspectives. However, I have found that having special needs children raises costs in so many subtle ways. None of my kids have attended a special needs yeshiva (their needs are better met in a public school setting -- but a competent Limudai Kodesh tutor can cost almost as much as yeshiva tuition, so I'm not necessarily saving there). I have always needed a lot of help in the house with my children. I have spent on out-of-network on specialists who could provide the diagnoses my kids needed to get proper public school services. I have spent on private therapy (many people have spent much more than me). I have spent money on day camp shadows. And don't tell me to eschew the camp-- my kids need it, and we need the break. The list goes on...
Other people's perspectives is that p'kuach nefesh takes precedence over all else. If a child's life would be very limited without special care and therapy, both the family's and community's resources should be utilized to help the child reach his or her full potential. If an expensive operation is needed to save a life, and the family will have to pay for some or all of it, who would allow the person to die in order to save money? This situation is not the same as choosing beans over steak in order to pay tuition.
Much research is needed to determine why one in 120 babies born today develop autism. Unfortunately, research comes from donations and unfortunately donations at this point are down.
Until a solution can be found, the future of many children is at stake and there is no cheap way to deal with it.
The only money saving thing that parents in that situation can do is to investigate thoroughly any therapies that they choose to pay for since there are many quacks who prey on parents who are willing to try anything.
We're a lender on Prosper. We have not (to our knowledge) loaned money to anyone Jewish through Prosper. However, here is my understanding of what the halachic situation may be:
Loans to individuals is legally through Prosper - which is a financial situation. When an individual lends money via Prosper, he is really loaning money to Prosper. Then, Prosper loans the money to the individual. Prosper simply promises the individual lender that the money will be repaid if and only if the borrower pays.
Prosper makes money on this system by taking a cut of the interest, charging the borrower a loan origination fee, etc.
In other words, basically, you are loaning a goy money so that he can loan it to a Jew. This is the same thing you do when you open a CD at a bank with the knowledge that the bank will be loaning money to Jews. So, my understanding is that Prosper lending may not be an issue.
The caveat, from a financial standpoint, is that its highly risky to lend to only a few individuals. You really need a portfolio of 50 to 100 loans to spread out default risk. So, to limit risk, $2500 - $3000 is needed since minimum loan amounts are $50.
Interest rates are higher depending on the credit of the borrow. For A+ credit borrowers, you'll net about 6% with default risks well less than 1/2% of loans. For people with C or D credit (low 600 fico scores), you'll net about 13%. But, 3% - 5% of loans may (historically) default.
anonymous 8:11. making a wedding or any simcha withoug going into debt is really easy (i don't think it even deserves a special post). The first and most important step is to stand in front of the mirror and say outloud "I don't care what the yentas think of me, i don't care what the neighbors think of me, my worth is not measured by any monetary stardards." Repeat as many times as necessary. Now go and make a wedding.
I spent less than 15K on my wedding over 4 years ago. No mandatory gifts. Neither family borrowed money. Recently I was talking to my husband about our wedding and I said to him that I thought we spend way too much on it. Probably we did.
I'm also a lender on prosper. Have been doing it for over a year. In the begining I made a few mistakes, but now I am more careful with who gets my money.
Many people use prosper to raise their credit score. For example, they borrow $1000 and repay within a couple of months. This looks great on them at the low cost. Other people don't have 3+ months until bank approves the loan, so they opt for a higher rate at prosper.
I have a policy to never give to people with payday loans. I consider those as an altimate in finacial stupidity. If one was stupid enough to go to paydays, then there is a good chance they won't be able to repay the loan.
From Halochic standpoint, you are covered. According to their small print, you are not the one making a loan, prosper is making it. You are actually giving money to prosper.
I would advise that you start with a minimum $1,000. That's enough to cover 20 $50 loans. Don't rush, evaluate these people. Of 32 loans that I made 7 are not paying back. (Hopefully I will get something out of them). Of these 7 only two were HR (high risk). I give a lot to HR as long as they don't have defaults and stuff. And all 7 were made in my initial loaning, I'm looking at them as learning loans.
I suggest you provide your readers with access to this fine presentation on a innovative personal money management. http://consumerist.com/consumer/clips/snl-skit-dont-buy-stuff-you-cant-afford-252491.php>http://consumerist.com/consumer/clips/snl-skit-dont-buy-stuff-you-cant-afford-252491.php
What the above people said about Prosper. (A couple of friends loan on it - one noted that he tried specifically to not lend to Jewish people, though IIRC he then found out he was not lending directly and it was probably fine.)
For those who use it, this site has incredible statistical analysis of Prosper: http://www.LendingStats.com My friend who uses Prosper found it to be very useful in analyzing what types of loans seemed to be the best bets.
There is an organization in Israel called Paamonim, which is a chessed organization that focuses on helping people get out of debt - and stay out of debt. They have volunteers who counsel families, and they educate the general public on how to budget. Their website is here (English)
http://www.paamonim.com/eng/html/
It is a shame that there isn't something like it in America.
It is a shame that there isn't something like it in America.
Check out Dave Ramsey podcast http://www.daveramsey.com or the flagship book "Total Money Makeover".
Dave Ramsey is an entrepreneur and his company certainly has a commercial aspect, but the goal is the same. They counsel people on finances. They have a very methodical plan for behavior modification and money management.
And you don't need to buy the products to take advantage of the service--just take the book out of the library.
I would be interested in a the diary/experiences of a widowed or divorced woman, preferably over 50. How to become financially independent, how to navigate the world of working, bills and living as an Orthodox Jewish woman alone.
Interesting timing - one of the other blogs I read regularly, Bloggin Away Debt, just posted that they are looking for someone to take over blogging about their debt reduction. (Since the current author expects to have paid off her debt in the next 6 months!) If anyone's interested, the blog is http://www.bloggingawaydebt.com. I have no relationship with this person, just enjoy getting ideas from the writer. (This is not a Jewish blog, by the way.)
Orthomom, what sort of information are you looking for about homeschooling? My daughter is 21 now and never attended any k - 12 school! We unschooled. I'd be happy to share resources or other things that we did when my daughter was younger. Two caveats - I am in California and I am not strictly frum. Please post your questions or comments and I'd happily respond.
B'vracha,
Helene
I'm a lender on Prosper. I decided to give it a try about a year ago as an interesting way to invest a small sum of money. I'm not a posek, but here's how it works. It is essentially a syndicated loan with individuals acting as the banks. The lenders lend to the borrower, but the borrower issues a note to Prosper. As such, the obligation of the borrower runs to Prosper, which in turn must pay the lender. Prosper is responsible for collections and management of the loan. It takes a fee to make money.
Interestingly, some lenders actually ask the borrower if they are Jewish. I'm not sure how appropriate that is under the law.
From an economic perspective, results are mixed. My early tendency was to chase big returns from risky borrowers. After mixed results (I stayed even), I started using one of Prosper's automatic loan allocation programs. No defaults in any of the loans selected by the automatic program.
Bottom line, it's interesting and - to me - worth risking very minimal capital for the entertainment value. But, from a lenders perspective, it makes better financial sense to invest if a good CD.
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