Lending Club

Double the Good Using Goodwill

Mike Smith — Tue, 07 Oct 2008 16:25:02 +0000

Making clothing donations to a worthy charity like Goodwill has always yielded multiple benefits. In addition to the charitable work done by these organizations, donors have been able to take small tax deductions as well. Another advantage getting a lot of attention lately is that shopping at charity thrift stores can lead to some unbelievable deals for name brand clothing.

Some people may feel guilty shopping at such a store because they feel they are taking away opportunities for less fortunate shoppers. When you realize that there is an abundance of merchandise and that store proceeds also go towards the charitable mission, this excuse can quickly be dismissed. There may also be historical stigmas attached with second-hand clothing and thrift store shopping, but there really shouldn’t be. A recent Goodwill fundraiser turned quite a few heads and hopefully many opinions of thrift store shopping as well.

As part of its fundraising event at the French Embassy in Washington D.C., Goodwill held a fashion show featuring items from Goodwill donations. Many of the high-society attendees, who previously stated that they would never shop at a charity thrift store, were clamoring for items to buy from the racks after the show was complete.

Paying incredibly reduced prices for high quality, name brand clothing isn’t tacky, it’s financial genius. Many of the items for sale are barely worn and some are even brand new. I know that we’ve donated clothing that our children outgrew before they were able to wear and I’m sure others do the same. Following the logic that those with more also give more, a high percentage of clothing donations likely come from wealthy individuals who themselves wear high quality, expensive clothing. Reusing items is also environmentally friendly because it cuts down on the amount of resources that must be used to produce new items.

So continue donating clothing to charity and taking the appropriate tax deductions. But also remember to check there before buying new clothes. You can probably find superior items for significantly lower prices, and your purchase will further support a charitable cause.

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Small Business Bailouts Are Do-It-Yourself

Mike Smith — Mon, 06 Oct 2008 18:22:16 +0000

It seems that 2008 will likely be remembered as the year of the bailouts. Such a generalization loses sight of the fact that only big businesses are getting government help. Not only are small businesses not getting bailed out, but their options are also shrinking as credit tightens.

The National Small Business Association recently released its 2008 Small-Business Mid-Year Economic Report, which included the results of an August 2008 survey of small business owners. A full 67% of small business owners surveyed responded that their businesses had been impacted by the credit crunch. As credit tightens, banks generally favor their largest account holders. So while large corporate customers are still able to borrow money to a certain extent, small business funding is drying up.

The survey also discussed the difficulties faced by small business owners as a result of FDIC insurance limits. 68% of small business owners found the $100,000 FDIC insurance limits inadequate to cover their business accounts. By providing inadequate protection of small business deposits and expensive (or unavailable) funding for financing needs, banks continue to hurt small businesses in a number of ways.

Small businesses can’t count on government bailouts to help them when they run into trouble. Small business bailouts are do-it-yourself. Traditional banks are unlikely to help. Fortunately, social lending continues to grow and serve the needs of the small business community at this most critical time. With low operating costs and lenders more than willing to fund exciting small business projects, P2P loans may prove to be a major catalyst in stimulating the economy in a meaningful way.

Is your small business hurting? Have P2P loans come to your rescue? Please share your experiences with the community perfectly suited to serve your small business funding needs.

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Should You Pay to Save?

Mike Smith — Sat, 04 Oct 2008 17:01:03 +0000

They say that it takes money to make money, and often times that holds true. But can spending money save you money? In many cases, it can. Monitoring the costs and the savings are a great way to continually ensure that paying to save makes good financial sense.

Paying to save comes in many different forms. One example would be to join a Wholesale Club like Sam’s Club or Costco. For a yearly fee, you are able to purchase products at discounted prices. Another example would be joining Amazon Prime. For a yearly fee, most purchases from Amazon get free 2-day shipping, or reduced price overnight shipping. A final example is joining a movie rental service like Netflix. For a monthly fee, unlimited movie rentals are available.

In all cases, you’re better off paying to save if you pay less than you save. That may sound obvious, but the calculation still needs to be done. When performing your analysis, make sure you compare the costs you would have incurred had you not paid to save instead of comparing how much you actually saved. This may seem counter-intuitive, but once you pay to save you may end up making many more purchases.

As an example, when deciding whether a Netflix subscription is worth it, compare the cost of the subscription to the current amount you spend on movie rentals to see if you’ll save money. If you were to instead compare the subscription cost to what all the movies you borrow from Netflix would have cost to rent, you’ll skew the results. The fact is that you wouldn’t rent as many movies if you had to pay regular rental prices. In a similar way, you may find that once you join a wholesale club, you do get great prices but you start to buy so much more that you end up spending more as well.

If the goal of paying to save is to end up spending less, you’ll need to keep track of your costs and your savings. You can certainly save money through many pay to save programs, but unless you’re careful they can easily end up costing you more.

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