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Three questions: CEO Renaud Laplanche

Hi Renaud – What’s the latest news at Lending Club?

After we opened Lending Club beyond its original Facebook environment last month, we started developing partnerships that will extend Lending Club to a variety of existing communities and networks, beginning with three great universities.

Lending Club is available today to Kansas State and Georgia Tech alumni. It will be available in about a month from now to the 420,000 alumni of the University of Michigan. We chose to make this announcement during the homecoming season, which traditionally has marked the return of millions of alumni looking to reconnect and give back to their alma maters across the country.

What is the significance of this announcement?

I believe this is the first time a financial service has combined the member benefits of alumni associations with the social interaction and viral nature of a social network (sorry, I mean a social utility) like Facebook.

Whether they become Lending Club members through Facebook or via their alumni association websites, our friends the K-State Wildcats, the Georgia Tech Yellow Jackets and the Michigan Wolverines will be able to lend and borrow money within their respective trusted alumni communities.

What makes alumni relationships relevant for lending and borrowing?

Person-to-person lending grows faster when a level of trust exists between borrowers and lenders. Adding in whole communities of alumni with that trust built in dramatically increases our ability to extend great opportunities to everyone on the platform.

Potential lenders feel closer to their fellow alumni than they do to the general public: they feel both a desire to help and a stronger sense of trust due to their shared connection. If you can make a 12% return (which is the current average of all lenders’ portfolios on Lending Club), and at the same time help fellow alumni, it becomes a no-brainer for lenders.

Borrowers also feel more compelled to make payments on time because they know that their lenders are fellow alumni who are counting on these payments. This keeps defaults minimal and, in turn, reinforces trust on the lenders’ side. You can expect more announcements on this blog shortly as new online communities join the Lending Club ecosystem every week.

In the past few years, blogging about money and finance issues has become quite popular. It seems that while discussing money is still somewhat taboo in casual conversation, blogs are pushing the envelope online, discussing and dispensing financial advice on a daily basis.

Our Top 30 list is the cream of the PF (personal finance) blog crop. We used the following metrics to determine the rankings:

1. Blog subscribers (do people read this blog often?)
2. Technorati rank (do people link to this blog?)
3. Compete.com traffic estimations (do people actually visit this blog?)
4. Page strength (determines the relative importance and visibility of a webpage)

** Note. if you think we missed a good personal finance blog, or would like your blog to be considered in the next update of this list, please leave a comment on this post and we'll consider it in the next update. Thanks! **

The Top 30 Most Popular Personal Finance Blogs

1. http://www.getrichslowly.org/blog

2. http://www.thesimpledollar.com

3. http://www.wisebread.com

4. http://www.savingadvice.com/blog

5. http://www.pfadvice.com

6. http://www.pfblog.com

7. http://www.mymoneyblog.com

8. http://www.fivecentnickel.com

9. http://www.bargaineering.com/articles

10. http://www.freemoneyfinance.com

11. http://www.consumerismcommentary.com

12. http://www.allfinancialmatters.com

13. http://www.thedigeratilife.com/blog

14. http://www.mdmproofing.com/iym/weblog

15. http://www.ncnblog.com

16. http://www.makelovenotdebt.com

17. http://www.cleverdude.com

18. http://www.bloggingawaydebt.com

19. http://www.lazymanandmoney.com

20. http://www.myopenwallet.net

21. http://www.bostongalsopenwallet.blogspot.com

22. http://www.thesunsfinancialdiary.com

23. http://www.mightybargainhunter.com

24. http://www.queercents.com

25. http://www.stopbuyingcrap.com

26. http://www.frugalforlife.blogspot.com

27. http://www.mytwodollars.com

28. http://www.wereindebt.com

29. http://www.singlemomandmoney.blogspot.com

30. http://www.firefinance.blogspot.com

Honorable Mention

These guys didn’t quite make the top 30, but they are worth taking a look at as well:

• http://www.1stmillionat33.com

• http://www.mapgirl.net/mfc

• http://www.everybodylovesyourmoney.com

• http://www.budgetingbabe.blogspot.com

• http://youngandbroke.typepad.com/young_and_broke

• http://www.finance-weblog.com

• http://www.doughroller.net

• http://www.paidtwice.com

• http://www.plonkee.com

• http://www.nevblog.com

• http://www.gatherlittlebylittle.com

• http://poorerthanyou.com

• http://www.christianpf.com

• http://www.2millionblog.com

• http://www.dinksfinance.com

• http://www.beingfrugal.net

• http://blog.lendingclub.com

The Lending Club blog didn’t quite make the top 30, but it did make the honorable mention list! Make sure and subscribe to the Lending Club blog here in addition to checking out our Top 30 list.

Everyone has certain items that they love to spend money on. For me, I can't resist a good book on Amazon, even when I already have too many books in my backlog.

When I look at my monthly expenses, I see that a lot of my money is going to Amazon to get these books even though I don't necessarily need them. However, I budget and plan for these book purchases. I know exactly how much I am spending on books, and if the number gets out of hand, I can easily limit the number of purchases I make.

However, some money leaks can be much more insidious. Money, Matter, and More Musings wrote a great post on capping money leaks. What are some of the biggest leaks? Paying for cable when you don’t watch much TV, being addicted to specific foods, and not paying off credit card debt are at the top of the list.

Also, small things can lead to big problems. Forgetting to turn your library books in on time, for example, might only be a one or two dollar charge. But continuously being late can lead to much bigger fines.

What is the solution? As we’ve mentioned before on the Lending Club blog, there are several ways to see where your money is going. As a reminder, for one month, watch every dollar you spend. Make sure that you note every payment you make. You'll start to see where your money is going, and for what purposes. You might catch yourself spending a lot more on eating out than you thought, for example. To correct your spending habits, you must know them first. Once you plug up all of these leaks, you will have extra money to put toward your IRA and invest in mutual funds and P2P loans.

What are your money leaks?

I recently saw a clip on The Today Show with tips for women leaving their jobs, or thinking about leaving their jobs, to become stay-at-home moms. That got me thinking about the prospect of trying to live on one income and seeing how the tips could apply to the general population.

Some of the tips that were provided are listed below along with my take on how they apply to a two income family trying to live on one income. If you were to try living on one income for a while, it’s important to remember where to cut back and where not to.

Use a Budget – This is already a critical item for everyone’s financial well-being, but it becomes even more important when trying to live on one income. Without careful management and oversight of where your money goes, you may find yourself getting behind. For a really simple budgeting method, see my recent 60% Solution post.

Keep Separate Accounts – For two-income families, there’s really no need to have separate checking accounts. Just make sure that you and your spouse find some common ground on the amount of money you’re each allowed to spend on non-essential items.

Continue Retirement Savings – Just like having a budget, saving for retirement is something you should be doing in nearly every circumstance. Don’t allow changes in income to short-change your retirement. This is one area where you can really benefit by trying to live off of one income. Your retirement savings is a great place to apply the extra money that you’re not spending.

Stay Connected – Continue your involvement in professional affiliations, social groups, and volunteer opportunities. These activities keep you well balanced and build your social network.

Even if your family doesn’t quite make it to living on one income, living on one and a half incomes will free up a lot of money. That extra money can be used to boost your savings, investments, retirements account, or your Lending Club P2P loan portfolio. When you stop to consider that there are millions of families living on one income, you begin to realize that your family might be able to do it as well.

When you look at your current situation, do you think that you're doing better or worse than the average person your age? While the Lake Wobegon Effect predicts that you probably think you're doing much better than anyone else, we actually have statistics to show how you are doing.

MSN released a report about the debt, income, and wealth of people in their 20s, with some very interesting results. As we often ask on the Lending Club blog, how do you measure up?

According to the study, 47% of people in their 20s carry credit card debt. Do you have debt? Only 32% have a 401(k) or a Roth IRA. Not having a retirement account when they are young might really hurt them when they are about to retire.

When looking at the numbers, the financial lives of 20-29 year-olds don't seem all that rosy. 25% of them have a negative net worth and their median income is less than $30,000, even with a large percentage having a spouse and children. If you don't follow good financial practices when you are young, the bad results can carry through into your 30s, 40s, and later.

The MSN study also offers some great advice about how to act financially in your 20s. For example, the study recommends that you live cheaply for as long as possible. Before marriage and having a family, it is much easier to live frugally. Your best shot at saving money is in your 20s.

Don't waste the best years of your life by setting yourself up to be broke. Live frugally, invest your money, and have some fun. For investing, try stocks, bonds, mutual funds and P2P lending. Your 50-year-old self will thank you for it.