Peer-to-Peer Lending, commonly referred to as P2PL, is exactly what it is: a person-to-person lending. It is an alternative to traditional credit lending for small loans.

Peer-to-Peer has become a great option for people who need a personal loan and people who want to lend it to them. Peer-to-Peer Lending is a type of micro lending.

P2PL companies, such as Lending Club and Prosper, manage peer-to-peer lending online in these major three steps:

Check the borrower’s credit to make sure they are eligible for a loan

Assist investors to lend money to the borrowers

Help borrowers to pay their loans back to the investors

The reason for the growth of the peer-to-peer lending’s popularity for both consumers and the lenders are these major reasons:

The interest rates are generally low for consumers who want to get a small loan

The loans are term-based, generally 2-5 years versus traditional bank loans

The Investors get a better return on their investments.

Even though the interest rates are low, they might be higher depending on the risk involved and that has to do with the borrower’s credit score.

The better your credit score is the better are your chances of getting lower interest rates, because of the lower risk for the lenders.

Who is P2PL for?

It is for anyone who needs to get a small personal loan. Generally people who want to consolidate their debt, like credit card bills or for a person who might have an unexpected expense.

What are the advantages of getting P2P loan?

Lowest interest rates

Fixed rates that would not go up

Fast and simple applications process

Low late fees

No prepayment penalty.

For example, Prosper offers unsecured loans from $2000 to 35,000. Their interest rates are from 6.6% to 35%. The loan average is about 13000 with 13.9%. The investors earn in average between 5%-9.5% depending on the risk involved.

Lending Club: Their personal loans are from $1000 to $35,000 with interest rates from 6.6% to 29.9%. Average loan is about 15,000 with a 13.4% APR.

Do these companies have any fees for their services?

Yes, both Prosper and Lending Club have a fee for new loans. Lending Club has a 1.11% – 5% fee of the total loan amount. And Prosper has 1-5% fee. It varies based on the size of the loan. The origination fee is included in your APR and then subtracted from your total loan balance before you receive your loan.

On late payment fees both Prosper and Lending Club have a low fee of $15.00 charge for the bound check or 5%, depending on whichever is greater for over 15 days late payments.

Why can these Peer-to-Peer Lending companies offer low interest rates and fees?

All the process is done online, unlike other finance institutions that have lots of overhead expenses; the P2PL companies have fewer expenses so they can pass on their savings to the consumers.

What are some of the drawbacks of Peer-to-Peer Lending?

You must have a good credit score

Fees to pay

If you default on your loan, it will have an adverse effect on your credit score rating

Higher Payments

Higher interest rate based on your credit score

Note: Always research to understand the risks, conditions and terms of each company’s loan terms.

How does it work?

Each P2PL has a quick online step-by-step process for you to follow. First step is to fill out the online application. You also need to have a good credit score to be eligible. The process usually can be as fast as seven days.

Are there other P2PL Companies that offer different types of loans? Here is the list of some P2PL companies, which offer different types of loans:

Funding Circle offers business loans

Lending Club also offers small business loans beside personal loans

SoFi for refinancing student loans

Kiva is a non-profit that helps alleviate poverty in other countries by lending them money

Other Peer-to-Peer Lending companies for personal loans beside, Lending Club and Prosper:

Upstart offers personal loans

Zopa offers personal loan (a UK-based company)

You also want to be aware of scams – Read this article for what to look for here.

Finally, before you get any loan, make sure that you do your own thorough research and find the best alternative that works for you and your situation.

The post What You Need to Know to Invest in Peer-to-Peer Lending first appeared on Whole Hearted Way.

I have been helping my brother refinance his mortgage. He, like others, have this outdated idea of the evil Adjustable Rate Mortgage. After explaining to him the differences of a fixed rate mortgage and an adjustable, he chose the adjustable.

I wrote an article for GuideVine about those differences and you can check it out here:

How to Calculate Which Mortgage is Best

The post The Basics of a Mortgage Explained first appeared on Whole Hearted Way.

Many people think I know of a “great investment” or that I have a favorite that I use over and over again. I have been in the financial services industry now for over 30 years. (Yes, I am old.) I do have certain favorites that I prefer -for myself. My risk tolerance, my tax bracket and my goals are different from yours. That said I keep an open mind when I am working with clients. I I want to find the best investment for them, and I will use anything that I think is appropriate.

Because my clientele is not in the 1%, I am very conscious of fees in each investment. This is one of the reasons why I rarely recommend a variable annuity. I find it hard to get past the high internal fees that are in annuities.

In a casual conversation with a young woman, we chatted about Vanguard funds, and having a good estate plan, and then she popped the question- What do you think of Variable Annuities? I went off in a litany of reasons why I think they are a bad idea. She listened intently and then told me that she was married to a much older man and that he had an annuity and it was giving them both growth possibilities and income, and they liked the tax deferral feature.

I regretted saying what I had said. Knowing now of her personal situation, I could see that the annuity was not only suitable for her family but a correct choice for them.  I know now to hold my tongue when asked about investments since I don’t know the questioner’s situation. Like a doctor prescribing pills without a thorough history and examination of the patient, my comment about variable annuities did more harm by making her question whether they had an appropriate investment. She listened to me and starting questioning her choice and wondering if they could have done better.

Awkwardly,  I had to reverse course and tell her how even though I disliked variable annuities, from what she told me, she had made a proper and wise choice. I went into a break down of all the good features of a variable annuity that was suitable for her husband and for her. She felt a lot better.

Just because you dislike a particular investment now, does not mean that it will forever be inappropriate for you. As you age and your personal situation shifts, more investments you thought you would never invest in become more attractive to you.

Keep an open mind and never say never to an investment.

The post Never Say Never To An Investment first appeared on Whole Hearted Way.

I wanted to invest some money I had saved up but knew nothing about investments. A friend of mine hooked me up with her sister who was an insurance agent. She sold me a life insurance policy with a cash value that was a good “investment”. The cash value was guaranteed by the insurance company. It sounded good to me and I signed up. I was a young single woman at the time with no kids. Years later when my rent went up unexpectedly, I went to draw on this cash value and couldn’t. I studied up on what I invested in and was furious that I was sold a policy that wasn’t suitable for me and wasn’t really an investment. Lesson learned.

As my knowledge about personal finance grew, I ran into all sorts of people that had made investments and lost money in things that they didn’t really understand or were not appropriate for them. I remember meeting a guy who told me he would never invest in mutual funds again. He had bought a fund and in six months, it went it down in value so he sold it. He didn’t understand that he could have held on it. His loss was a paper loss, and it had the opportunity to go up again- if only he held on to it. Markets go up and they go down. If you understand how something works, and you know it is right for you, then you need to be invested in it for the long term. What’s long term? At least 5 years minimum.

Just like in life, there are no quick ways to get rich. The slow and steady growth of your money is a lot like that. There are lots of bumps in the road but you are still alive and working and investing more each year. The big difference is that when you experience a loss, you do not let it wash you away. You keep investing more and you learn from your past experiences. Those people who invested and lost money will invest again and over time their gains will outweigh their losses. Many will not even remember their losses because they understand the basics of compound interest and they learn to limit their risks through strategies like diversification. Many people say they will never again invest after a loss. They will continually earn and and spend with no possibilities of growth over time. They work, they earn, they save, and their savings doesn’t even keep up with taxes and inflation so they are actually getting behind every year- now that’s a guaranteed loss every single year of your life.

Learn from your losses but keep investing for growth. You can’t afford not to.

The post You Need To Lose Money To Make Profits first appeared on Whole Hearted Way.

I will work until I die.

I can always find a job.

I will probably get a disease and die before I retire.

My kids will help me out financially.

These are all fear based comments that don’t really address the issue. There is a collective consciousness that work equals income. Work does equal income but we can also get income from other sources and this is undervalued when we review all of our potential sources of income as wage replacement. Take a look at these income producing income sources that aren’t earned income:

Rental Income

Annuity income

Dividend and capital gain income

401K lifetime distribution income

IRA distribution income

Social security income

Income from a reverse mortgage

Income from treasury or other bond income

We need to look more at these unearned sources of income for our future. The reality is no matter how much we like to work, we may not be able to in the future or our job skills will no longer be needed or the jobs that we enjoy won’t exist anymore.

A plan of looking at a balance of earned and unearned income sources is more realistic that hoping that our job will be around till we die. Review and concentrate on what sources of unearned income you can increase to supplement job or social security income in the future. Then you won’t have to depend on a job for your sole source of income and that can be a very liberating feeling.

The July issue of Mindful Money Magazine is out and we discuss how to accumulate unearned income in a portfolio. You can subscribe and get a trial issue and you can cancel at any time.

The post Get Income for Life Without a Job first appeared on Whole Hearted Way.

The post When Good Habitual Patterns Keep Your Poor first appeared on Whole Hearted Way.

Like most people, I have refinanced my mortgage to get a lower rate. My previous lender was Schwab Bank and my new mortgage is with Quicken Loans. Since then, I have been flooded with information enticing me to refinance again and at an even lower rate. It is obvious to me when I read this material that even with the slightly lower rate, the fees involved would not make up the difference in interest rate so I ignore them.

Last week when my husband picked up the mail, he was excited to see an offer from Quicken Loans at a rate that I quickly figured in my head would save us another couple of hundred dollars a month, and they advertised no fees.  I was excited at the prospect of saving even more money by our current lender even though we had just refinanced the year before.

Of course, no loan has zero fees so I took the postcard ad from him to examine the offer more or look for a website to read the details. To my surprise the ad wasn’t from Quicken at all, but from a securities firm that was acting as a mortgage broker servicing Quicken loans. In other words, it was a scam. It was a damn good one, too. It made me look twice and I wondered how many people would have taken the time like I did to get my magnifying glasses on to read the fine print to prevent me from making that call.

In August 2012 a Financial Literacy study by the SEC discussed the existing level of financial literacy in the U.S. They found- “Studies reviewed by the Library of Congress indicated that U.S. retail investors lack basic financial literacy. The studies demonstrate that investors have a weak grasp of elementary financial concepts and lack critical knowledge of ways to avoid investment fraud.” 

This Issue of Mindful Money Magazine  for the iPad is dedicated to Financial Literacy Month, and you can get an annual subscription for only $19.99 -that’s a 60% savings, and you get the first issue FREE and you can cancel at any time at no cost. Get it here – Mindful Money Magazine

I am a professional Financial Advisor and I almost got taken. If it can happen to me, it can happen to you, too. The most common fraud is not in securities industry, but in the real estate industry- loan brokers, appraisers, contractors, bankers, title insurance, etc. Buyers beware and read the fine print always and if you don’t understand, ask me.

The post Refi Hell- I almost got taken! first appeared on Whole Hearted Way.

I want to change the way you think about money! It’s hard to find the real truth in financial
information today and even harder to know whom to trust. That is about to change.

Among the key findings in the CFP Board (Consumer Federation of America Household
Financial Planning) survey are that people today are facing tough choices about how to allocate
more limited financial resources. “Saving enough money for future goals…while also
maintaining an adequate emergency fund and staying out of serious debt has always been a
challenge…Advances in technology have made accessing and analyzing financial information
much easier, however a lack of understanding about savings and investments options as well as
how to best manage household finances remains a serious obstacle to Americans financial
preparedness.”

55% of Americans say, “It’s hard for me to know who to trust for financial advice.”
Our financial planning articles are written by fee-only Financial Advisors and Certified Financial Planner licensees.

52% say, “Investing seems complicated.”
After every article, we have action tips in each financial planning category to make it easy for you.

55% say, “I’m worried about losing my money if I invest it.”
In each issue, there are proven tools and resources to help you make money, not lose it.

My meditation teacher told me that the mind is a powerful ally that helps us focus on what we
need to do: study, play sports, cook, save and invest, etc. Look for insightful articles from spiritual teachers on how to connect to and attract abundance in your life.

There are no ‘“Get Rick Quick!” schemes. This is about making the best of each dollar to support you and your family in what you want to do now and in the future. You will hear from financial psychologists who will offer advice on how to build healthy financial behaviors.

Let’s not forget the inspiring stories from people successful at getting out of debt, saving and investing.

Subscribe today by downloading the trial issue here Mindful Money

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enter 3free to get a 3 month free subscription.

I appreciate a review, and don’t forget to spread the wealth and share.

The post Putting Your Money Where It Matters- Mindfully first appeared on Whole Hearted Way.

I received this reader question recently and wanted to respond publicly:

“I would like to no more about this programs and does it really works? I have made a few investments on the stock exchange through information that i got from Penny Stocks newsletters but was unsuccessful. I want  more wealth but dont no how to start or what to begin with.”

This program is not something I made up or just discovered on my own. It is a well researched and verified process that Certified Financial Planner Licensees use if they practice comprehensive financial planning (which many do not). I have used it personally and in my financial planning practice and found that it works ALL the time if followed correctly. The problem is that many of you will not follow it. Why? Because it isn’t fast, it isn’t sexy, there are NO get rich quick schemes and NO, your life is going to change forever moments.  What it does is give you a road map to arrange your finances to support your current lifestyle and your projected lifestyle (and that means different things to different people). It means taking into consideration how you live, play, what your risk tolerance is, what your tax bracket is and a host of other details.

Where do you start? You start with a strong money foundation and that is following Step 1. to Step 3.

Step 1. Cash and Credit. Cash flow and credit is the life blood of your financial plan. Understanding how much you take in and how much you spend shouldn’t be a painful exercise but a motivator to work with what you got in the best way possible.

Step 2. Risk Management. Everything you acquire can be taken away in one full sweep (and I know you have seen it happen) without the proper insurance.  Getting the right insurance that fits your needs and your budget is a strong step in preserving what you are building on.

Step 3. Estate Planning. You are not building wealth just for you but for your family. A few easy legal documents can insure that they get what you have worked so hard to build and get it easily and without taxation. I have seen so much grief and family burden due to lack of a few simple estate planning documents.

Step 4 is Identify Goals. There is a saying that if you reach for nothing, that is what you will get. What does the future hold for you? Do you see yourself working part-time at age 50? Or would you like to not work at all at age 60? Or maybe you want to change careers or open up a small business? Maybe you would like to send your kids to a private college? Maybe you want to go back to school to learn a new trade? Perhaps you just want to get out of debt and start an investment plan? Whatever you want, that will cost money and you can figure out how to afford those things by goal setting. Unfortunately, it isn’t going to just happen one day. You are going to make it happen by planning for it. Now that you have a solid wealth foundation, you can begin to invest.

Step 5 Investment Planning.  There is nothing complex here.  You pick out (a process called asset allocation)  no-load mutual funds with a variety of asset classes and asset styles based on the return you want, the risk you are willing to take, and the taxes you are willing to pay. Once you have your allocation, it is set it and forget it time. Sorry, I just haven’t seen the research that market timing (darting in and out of investments) works but asset allocation does. You revisit this asset allocation once a year.

Step 6 Retirement Planning. Retirement planning is all about using  these wonderful tax deferred retirement plans (401K,403b,457,etc.) to help us build wealth to meet our goals. Let’s face reality folks. Even if you loved your job and will work everyday until you drop, there will be days,  months, or years during your lifetime that you cannot work. Then you should have your investments replace your earned income.

Step 7 Tax Planning.  I am all for getting the most bang for your buck and tax planning provides that in your wealth building program. For every dollar that you invest, if you can get ten cents to fifty cents back from the government, well why not do that?  That is why so many deferred compensation plans, IRAs, SEPS , etc.  are so popular. They provide a lot of bang for the buck. Don’t get greedy by wanting tax free everything but do take tax implications into every investment decision you do. The difference between 5% taxable and 5% tax free is huge if you are in a high tax bracket.

Those are the 7 steps to build wealth and I go into detail for each one. I have also given you  resources that I value to help you even more. There are links to get a free credit report, and links to fee-only Financial Advisors, and links to financial calculators.  If you aren’t the do-it-yourself type, I am always available to help mentor you through the steps. What is different about me, Wealth Coach Fern, is that I empower you with the information and the tools to build your own wealth program.

Why is that so important? Because studies have shown that most of you will follow through on a comprehensive financial plan if you “own” it. That is what attracted me so much to the coaching model. I want you to be successful and I can coach you through a complete personal financial plan. I have 30 years (gulp! I am old) experience in this field and very passionate about it. If there is any way I can make it easy or if you need more info on a topic, let me know. I want you to build wealth and wealth beyond money!

The post Does this Wealth Program Really Work? first appeared on Whole Hearted Way.

The post Brokers versus Fiduciary-What’s the Dif? first appeared on Whole Hearted Way.