Isn’t technology great! As the new “e-world” continues to grow, many revolutionary ideas are starting to take a solid form. In recent times, many industries have been turned on their heads thanks to the rapid advancement of the Internet.

Let’s have a look at the music industry. Big music is still fighting its way out of illegal distribution of its copyrighted material, largely due to the fact that the Internet makes data sharing so easy. You have to ask yourself, “But isn’t that the point of technology?” Is it that the Internet is evil for stealing from the music industry, or is it the music industry’s fault for not adapting to its new environment?

I tend to agree with the latter; in my mind it is Charles Darwin’s theory of evolution, i.e., survival of the fittest. In the end, I see the increase in a competitive environment to be a great way to force efficiency and innovation into any industry, creating better offerings to the consumers.

Let’s look at the results of the change to the music industry. Now, instead of having to buy a whole album, you can buy just the songs you want, not to mention you can do it from you own home in seconds. I still feel there’s a lot more changing yet to happen for music.

Now let’s go to the topic of dealing with your money. Shouldn’t the same thing happen for banking? Shouldn’t the way we use money improve as well, thanks to the Internet? Yes it should, and People-to-People Lending is helping to make that happen with such companies as Lending Club.

They call it “bank disintermediation.” I know, it sounds ugly, but basically it means that other entities (insurance companies, department stores, Internet companies, etc…) are providing products and services that were previously just supplied by banks, usually with the help of innovations in technology coupled with some regulation changes.

People-to-People Lending is an excellent example of bank disintermediation. Instead of the lending process being, more or less, a one choice operation (whatever traditional banking offers), we now have a People-to-People Lending alternative.

As a concept like People-to-People Lending grows, its new business model could in fact challenge that of traditional banking. You may have already seen how many People-to-People models embrace transparency by letting you see everything during the lending process, or market making via lender bidding, or by allowing the people-to-people community set the interest rates, or even the personal level of money lending by letting you see and experience the borrowers’ need.

All of these characteristics can arguably be considered as unique and solid advantages for People-to-People Lending, above that of lending via the traditional banking method. As Darwin argues in his theory of evolution, even the slightest advantage will have humongous consequences.

Why should you care? As a fairly new offering, People-to-People Lending is still in its gestation period. Who knows what interesting advantages this may spawn? All we know for sure is that an increase in competition can only make things better for us, the consumers. In the end we are going to see better rates, better service, faster transactions, more efficiency, etc…

In the near future, when you find yourself with a better money service experience, don’t forget to thank Charles!

A new tool in the fight to protect your identity is now available: the ability to freeze your credit report. The details were discussed in this Red Tape Chronicles Article and are highlighted below.

What it Is

A security freeze on your credit reports will prevent access to your report from new creditors. In this way, identity thieves will not be able to access your report or open new accounts in your name.

The Good

The freeze provides a new level of protection to your identity. It is one of the first proactive ways to prevent identity theft rather than a reactive one after theft has been attempted. Don’t underestimate the power of this protection. Even though there are numerous disadvantages of security freezes, this one advantage might make it worth it to you.

The Bad

• Freezing is time-consuming and may be expensive, depending on the state in which you live. The process generally involves sending certified letters and $10 to each of the three major credit bureaus

• You’re frozen out of your own reports, so you’ll need to undo the process before applying for credit, such as a P2P loan on Lending Club, and then refreeze the reports once your credit is established. This will incur more fees and time on your part

• A security freeze will not stop pre-screened credit card offers. See my post on that subject for information on how to opt out of such offers

• Existing creditors will still have access to your report and can send you offers for their products and services

• Having your credit reports frozen could lead to minor inaccuracies in your report if companies attempting to update account information have trouble getting access

Protecting your identity is a necessary and time-consuming process. I’ve discussed other methods, such as Credit Monitoring Services and accessing your free credit report, in the past. I also plan to do an upcoming post on Lifelock, which is a service making a lot of headlines lately. The bottom line is that security freezes aren’t the only way to protect yourself, but they are a unique element that you may want to consider for your overall identity theft protection strategy.

When you have a good idea, you want to tell your friends. When you have a great idea, you want to share it with the world. We regularly participate in conferences and panels to share our vision, approach and progress in helping to build the person-to-person lending world.

As previously reported here on this blog, Lending Club executives have presented at these conferences:

Joaquin Delgado, Ph.D., CTO
9/24/07 – Ajaxworld Conference

John Donovan, COO
Patrick Gannon, SVP
10/2/07 – Finovate 2007

Joaquin Delgado, Ph.D., CTO
10/19/07 – Recommender Systems

Going forward, you can find us at the following upcoming events:

Renaud Laplanche, CEO
11/16/07 – Business Remix: Amplifying the Power of Social Networks by socialpoweradvisors.com

John Donovan, COO
12/3/07 - 12/5/07 – Yes Summit by CUNA (Credit Union National Association)

Patrick Gannon, SVP
12/5/07 – C3 (Convergence, Community, Commerce) Entrepreneurship Series: Social Lending Panel Discussion by MIT Club of Northern California

Better Speeches. Together.

Sticking to your budget is hard enough when you are in control of your income and expenses. When costs beyond your control continue to rise, staying within budget is harder than ever. You may need a P2P loan from Lending Club just to avoid going deeper into credit card debt in these situations. One of those expenses outside of your control, gasoline, has regained an average price above $3 a gallon.

The latest price data, reported on November 5 by USA Today probably comes as no surprise to consumers. We’ve all been hearing about record crude prices in the news. Like so many aspects of the economy, there is a lag between the cause of the increase (crude prices) and the effect (higher gas prices). The most disconcerting news is that while crude is up significantly since August, gasoline prices have only been rising since mid-October. That suggests that even higher prices may be on their way.

While long-term trends towards alternative energy sources may be the ultimate solution to this problem, that does little to help the average consumer in dealing with rising gasoline prices. The short-term solution is to either plan for higher prices or reduce consumption. Barring an unexpected rise in your income, reduced consumption is the only realistic method to stay on track towards your current savings goals.

With gas prices so high, you’ll probably hear all kinds of tips on how to save gas. To help sort through the ones that actually work from those that just sound good, I found some insightful information on the Edmunds website. There they tested some of the most common tips and made recommendations about which are the most effective. Following their advice should help to keep your consumption down, which may help you to remain within your allocated gasoline budget and on track towards your savings goals.

What's the best personal finance advice you've ever gotten? Bankrate.com asked eight financial experts that same question. What did they say?

These experts provided good advice. For example, Gary Belsky wrote, "Be afraid when people are greedy, and greedy when people are afraid. It's basically, ‘Buy low and sell high.' In general, I've been doing better than market averages when I've been handling my investments." This is very good advice--a solid portfolio of index funds over a significant period of time will almost always be more successful than a portfolio of rapidly changing stocks. Especially after taxes.

Robert Kiyosaki also shared some great advice: "My rich dad gave me lots of advice. One of the better ones: There's good debt and bad debt. Bad debt is debt you have to pay for and makes you poor ... Good debt makes me rich and someone else pays for it." It's okay to sometimes have debt, as long as it is the right kind of debt. If you are borrowing money to buy sun glasses, then you are taking on bad debt. However, borrowing money to get a quality house or to pay for education can be a very good investment.

Check out all of the advice in this article, but make sure you read the advice of Peter Navarro: "Take every piece of advice you get from any investment adviser with a barrel of salt." People are individuals, and not every piece of advice is appropriate for every person. Whether you’re investing in P2P loans on Lending Club or buying stocks and bonds, make sure that your investment plan makes sense for you based on your own particular situation.