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Now that P2P lending has gained a little bit of ground (the press has, for the most part, stopped referring to the space as "nascent" – though it's certainly still "toddling"), I thought it would be fun to revisit the early days when things were just getting started – when everyone and his brother had a great new revolutionary spin that the P2P lending platforms just had to work in somehow.

The early adopter community that grew up around the first P2P lending companies gathered together primarily in forums and message boards, where a collegial atmosphere of openness and transparency reigned. All was right with the world, and the world was going to be changing.

There were lots of interesting ideas born, strategies argued, plots hatched – which, I guess, is what happens when such a disparate group of people come together to discuss anything, through the twin lenses of community and technology – but this time it was all about finance.

We also used to hear several times a week from someone who thought it would be a great idea if the peer-to-peer lending model could be adapted to some slightly different purpose, and, from those conversations, a wealth of ideas sprang up. Here are some of the more popular:

P2P Venture Capital

This was by far the most common suggestion. Everyone wants a piece of a revolutionary startup, and the earlier you get a piece of it, the more it's worth. (Well, usually!) The general idea: Throw $50 each at 100 guys working out of their basements, hoping one of them goes on to be the next Google. Someone tried this during the late 90's boom (and went boom), but it's, legally, very complicated to implement due to SEC regulations and compliance issues. But it'd be fun! Especially if you could also trade those super-speculative startup shares. ("I'll give you 100 shares of LoLz0Rz.com for 500 shares of RoboKitty 2.0, deal?")

P2P Mortgages

Imagine combining a P2P lending platform with Zillow (the online real estate search portal), except that not only could you browse for a new house, you also could get a mortgage from hundreds (or thousands) of other users. This is one that I think will happen eventually (in fact, since I wrote this blog post about a week ago, Zillow has announced it's going to start integrating traditional mortgage offerings into its site. While not "P2P" quite yet, it may get there – spurred on by the housing meltdown and the recent problems with mortgage backed securities.) You can bet that no one will "forget" who owns a $500,000 mortgage if it's owned by 20,000 vocal lenders at $25/each.

P2P Auto Loans

Though the loan won't actually be tied to the vehicle, this can already be done through P2P lending for vehicles that cost less than $25,000 (or you can always finance, or refinance, the first $25k through peer-to-peer lending, for cars that cost more than that). Just take out a normal P2P loan and use the proceeds to fund your car, truck, bike or boat purchase. (If boat, happy mid-life crisis!)

P2P Micro/Mobile

You're in line at the movie theater and your dozy friend forgot his wallet again (the same way he always has to go to the bathroom at dinner when the check's about to come). What do you do? Buy his ticket and his $10 Coke, but not before he clicks "OK" on your cell phone and officially promises to repay you, plus interest, for your pretzel-buying trouble. There are a number of companies who have finally begun to pursue the Friend-to-Friend Micro-Lending market in the US in the last year, including: BillMonk, Buxfer, and OboPay.

P2P Media

This is the same idea as P2P Venture Capital, except to be used for funding artistic endeavors like films, movies, musical acts, etc.

Social lending platforms have yet to see many loans from small filmmakers or musical acts – and you'd probably want to be buying an ownership stake in these types of ventures, rather than just lending them cash – but, on the fun side, you might inevitably attract the 600,000 local bands on MySpace who each think they're going to be the next ones to "make it" (you know, the same ones who are downloading an MP3 or two from artists they like, while working on their "band page"). But, hey, Mr. Local Bar Jam Band, maybe your loyal fan-base would come together to make you an auto loan via a P2P lending platform, so that you could go play a show in their town – since mom won't let you take the station wagon to "gigs" (especially after what happened to it last time). I hear old VW Buses go for way under $25k. Zoom zoom!

P2P Insurance

A large group of people get together, pool their insurance premiums, and mutually agree to insure one another. This already occurs – though usually with loads of middlemen and many layers of re-insurance involved – in some mutualized insurance schemes. It would make for great collective bargaining after a certain point, assuming that no one, say, got sick or had their house burn down or car stolen until that efficiency point was reached. The government is the best positioned to pull this one off, but they're supposed to already.

P2P International

P2P lending and borrowing in international currencies. Think P2P Foreign Exchange, or "Earn in yen, lend in dollars." There are all kinds of very interesting hedging/trading possibilities here, the general idea being that one could take advantage of fluctuations in the international markets. If a housewife in Japan could make 8% more lending her yen out in dollars to Americans (who need to, say, prop up their flagging currency?) – well, why shouldn't she be able to? And vice versa. This will be here very soon, as governments and large financial institutions already engage in this activity, the opportunity will no doubt become available in a P2P environment.

I'm a huge fan of disintermediation and love these kinds of ideas. This is just a small sampling; there are so many others out there. If you've got a good one, a bad one, or just a funny one, feel free to leave comments. Who knows? It might even turn into a reality.

Despite the widely covered negatives of only paying the minimum on their credit cards, people still do it. There are only a few possibilities why this detrimental behavior continues. Either people still haven’t heard about the dangers, they are living beyond their means and can only afford the minimums, or they don’t care about the implications.

Those Who Still Haven’t Heard

The high cost of only paying the minimum on a credit card has been so widely covered I suspect that very few do so out of lack of knowledge of the problem. Just in case there are any readers who need a reminder, here’s an example:

A typical minimum payment might be 2% of the outstanding balance or $10, whichever is greater. Paying the minimum on a $2,500 balance at 18% interest will take 34 years to pay off and cost $8,781. Imagine if you were still paying off a purchase from 1974!

Those Who Can Only Afford the Minimum

Those who can only afford to pay the minimums are living beyond their means. Whether they bought more than they could actually afford, or have taken a hit from the mounting interest and fees, they are in an unsustainable position. Making a proactive change such as consolidating high-interest debt with a person-to-person loan can offer a second chance to get things right.

Those Who Don’t Care

People in this category are beyond the scope of this blog. We can try to teach the uninformed and offer suggestions to those who have identified problems in their finances. If you are aware of a problem and choose not to do anything about it, we really can’t help. All of the advice in the world will not help you if you are not open to the suggestion.

We hope that the majority of those who only pay the minimum on their credit cards are willing to reconsider. In time, perhaps even those who don’t care about the high costs will have a change of heart.

The number of Americans living paycheck to paycheck is difficult to quantify. A 2006 survey by the American Payroll Association found that about 65% of Americans are dependent on their next paycheck to meet current living expenses. Other surveys put the percentage much lower. Regardless of the actual number of people living paycheck to paycheck, many of those who do could save more using a simple technique.

Asked what they would do if they received a 100 percent pay raise, a combined 51 percent of American Payroll Association survey respondents said they would either deposit it into savings, contribute it to a 401(k), or invest it. I’d like to believe that people would save extra money, but I fear that many would not.

There are two different ways to live paycheck to paycheck: either earning so little that you can just cover your expenses or spending so much that you use up all of your income. While both groups are on the verge of living beyond their means, the first group tends to do so out of necessity, while the second chooses to do so. Those in the second group can make changes to their spending habits to improve their financial situation.

If you find yourself living paycheck to paycheck because you spend all that you earn, do this simple trick: give yourself a massive pay cut. By taking a large portion of your paycheck out of the equation before you even see it, you still allow yourself to spend your full income. You’ve just forced savings to happen ahead of time. For an in-depth discussion of implementing this method, see this related post discussing the benefits of a virtual drop safe as one way to protect your money from yourself.

If you spend all that you earn, hiding income from yourself is one way to finally start saving. While this method won’t help those who live paycheck to paycheck out of necessity, it will help the large number of people who inadvertently choose to live paycheck to paycheck as a result of their consumption habits.

One of the first strategies often touted in personal finance advice is to cut your spending by not buying a coffee each day. Showing how a small, repeated expense adds up over time is insightful and may inspire change or at least consideration of tracking your finances. If you've tried cutting back on a small expense like coffee without success, try this trick instead: pay double for it.

Depending on where you buy your coffee, paying double might not get you to a $10/cup, but that is certainly possible at Starbucks or an upscale coffee establishment. When I say pay double for your coffee, I don't mean that you should buy two or place the extra money in the tip jar. Rather, pay for your coffee and then stash an equal amount separate from the rest of your money.

The main benefit of paying double for coffee is that it forces people, who claim that saving coffee money is too small an amount to help them, to start saving. If you can justify spending a small amount each day, certainly you can justify saving the same amount. Often, when people try to save money by not buying coffee, they simply end up spending that money on other things. So not only do they deprive themselves of the daily pleasure of a coffee, they do it without actually saving any money. By paying double, if only temporarily, you may actually see some benefits.

With your routine being twice as expensive as it used to be, it may also be easier to break the habit. By not buying coffee on days when you don't have the cash to cover your added expense or by cutting back on the number of times per week you do buy it, you can actually start saving more money despite the higher costs. In time, you may be able to cut your habit entirely, in which case you'll be able to save twice as much.

A bunch of big, strong 22-year-olds are about to become very rich.

The NFL draft, the annual meat market that fits college football players with NFL squads, will take place at the end of April, and for the hundreds of prospects eligible for the draft, big changes are afoot. Not only will these young athletes (kids, really) be going from amateur sports to the big-time spotlight, but they will also be rolling in cash the likes of which they have only dreamed about.

Last year’s number one pick was Louisiana State quarterback Jamarcus Russell, who went to the Oakland Raiders. He signed a contract worth a maximum of $68 million over six years—$11.3 million per season. Russell’s deal was one of the richest contracts ever for a draft pick, and it was significantly better than the contract for the previous number one choice, defensive end Mario Williams. Russell repaid the Raiders for their generosity by throwing for two touchdowns and four interceptions in limited playing time.

The contracts for NFL draftees are expected to rise again for the 2008 draft. The Miami Dolphins hold the top pick, and they are considering a number of candidates to fill needs on their team. Whoever earns the right to be drafted first overall will be in for a serious payday, but even his colleagues who go below him will be multi-millionaires before the day is through.

Though these athletes will certainly be tested by the physicality of the NFL, their toughest task might just be managing their newfound riches. They will still be college kids at heart, but they will have to grow up fast once they put their name on the dotted line. Their spending habits, their lifestyles, and their savings behavior will all need to change once they go from earning minimum wage to banking tens of thousands.

Of course, change is not easy, especially for these big kids. The lure of money and youth is often a pitfall for NFL draft picks, which is why the league has set up counseling services and mentors to help these players transition from a life of wont to a life of wealth. College is a time of frivolity and freedom, and transitioning to the real world of hard knocks and financial responsibility can be a tough lesson.

Here are four changes that these college studs will need to make:

No more two-dollar pizza-by-the-slice

College students love their pizza, and having carte blanche on menu options would be a coed’s dream. However, NFL players can’t afford to load up on the greasy fare found in the local pizzeria, no matter how good it might taste. So while these future pros might be able to afford their own pizza oven and the professional services of Chef Boyardee himself, they would be wise to settle for healthier options.

All that money could buy an excellent personal chef—one who can create nourishing, wholesome meals. Eating the right things can mean the difference between a starting spot and a place on the bench, so a steady diet of healthy proteins, veggies, and carbs might be just what the coach ordered.

No more betting on milk-chugging contests

There are a variety of ways to invest money in college, but most of them involve dares and eating contests. This is no way for an NFL player to plan for his family, so while it might be tempting to wager five grand on a game of Halo, the portfolio options of peers should show there is a better way for these athletes to save.

Stocks, bonds and real estate are just a few of the wonderful solutions for young, forward-thinking richies. Saving money shouldn’t depend on who can fit the most marshmallows in their mouth...at least not for a college grad.

No more sharing a two bedroom apartment with five guys

One of the great parts of college is having roommates and friends nearby, but the life of a professional football player makes cozy living arrangements taboo. Star athletes need their space, and they need to be away from the bad influence of greedy, misbehaving friends.

Fortunately, having loads of money makes this transition rather easy. Almost all draft picks will get a signing bonus, which is a guaranteed sum of money just for joining the team. For first round picks, this money can be millions of dollars (six years ago the top pick in the draft received a $10 million bonus), and millions of dollars can buy a very nice home.

Some athletes choose to buy a condo with a teammate, especially if their new team is far away from their hometown. Either way, investing in real estate is a much better alternative to investing in toga parties with four frat brothers. The distraction from a college atmosphere shouldn’t have to carry over to the life of an NFL draft pick.

No more saying “Yes”

For many players, the hardest part of having money is feeling a need to share it with friends and family. In college, students live in squalor with their best friends, sharing everything that they have in the spirit of community and necessity. Millions of dollars later, athletes will have a hard time reconciling a change in viewpoint from sharing to shafting.

When an NFL draft pick signs for millions of dollars, he will find out that he had family members and long-lost friends that never existed before. So many people will want a piece of the silver spoon, and it can be hard to say “no.”
This is one reason why the posses of pro athletes are so large. Rather than saying “no” to friends, many athletes choose to give their buddies a job like a barber or bodyguard or personal shopper. Having a few close confidants is a good thing, but having a small community of hangers-on is a financial mess waiting to happen.