When trying to save money, both sides of the financial equation need to be examined. We often look at ways to increase our income as well as cut our expenses. Just as income sometimes increases on its own over time, some expenses also come to an end. Capitalizing on those opportunities may make all the difference in our savings plan.

Note that when I say saving, I don’t necessarily mean a savings account. Investments are a form of savings as well. As I mentioned in my short post about ignoring raises, it’s usually easy to live with the status quo. I argued that in the case of a pay raise, you should be able to save most, if not all, of any additional money received. The logic goes that if you were able to get by on your pre-raise income before, you should be just as able to get by on it afterwards. There are obviously some cases where a raise is truly needed and will allow your financial struggles to become a little easier. Allowing yourself to spend some of your raise to combat inflation is also reasonable. But aside from those exceptions, many of us could save a substantial portion of pay increases.

In much the same way, the end of expenses can be exploited to help us save more. Many expenses have no set end, but some do. In particular, I was thinking about expenses like car payments, college tuition, or repaying a P2P loan. When such expenses are finally finished being paid, you’ve probably become accustomed to making that payment each month for several years. Why not continue that expense in your budget but allocate it towards savings instead? If your lifestyle adjusted to deal with a monthly expense, there’s no reason to increase your spending once that expense ends. You can continue to “pay” that amount each month, but it will go into your own pocket rather than the bank, college, finance company, etc.

If nothing else, most people are creatures of habit. Once they have gotten used to something, it’s much easier to live with it than to change. You can take advantage of this characteristic by ignoring the end of expenses and simply diverting the payments to a more beneficial purpose.

We were delighted to open our doors to lenders again on Tuesday this week and see hundreds of lenders signing up for the new program in just a few days. In addition to the federal filing with the SEC, we have made a coordinated "blue sky" filing in all 50 states, and state clearances have been trickling in all week, with four new states already added: Hawaii, Nevada, Utah and Wyoming.

Other states already cleared include Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Louisiana, Minnesota, Mississippi, Montana, New York, Rhode Island, South Dakota, West Virginia, and Wisconsin. We are hoping to keep adding a few states each week for the next few weeks as we get clearance from state authorities, and will post regular updates and notify members directly as the list grows longer.

Keep in mind that state limitations do not apply to the Note Trading Platform operated by FOLIOfn, and all lenders can buy or sell Notes among themselves irrespective of their state of residence.

The Notes are offered by Prospectus.

Happy investing, happy trading and have a great weekend!

In a recent post, I wrote about the importance of goal setting if you want to change your financial situation. Without setting goals, how can you ever achieve them? Well, once you have your goals, you aren't finished – you still need to work towards them! In other words, you need a plan.

With your goals in hand, the next step is mapping out a plan to achieve those goals. With a plan and a goal, all you need to do is follow the plan until you succeed. Wash, rinse, repeat. So how do you turn your goals into reality? How do you make a plan?

What's your problem?

First, you need to look at your specific situation. What is the problem? Do you have too much debt, or do you simply spend too much money each month? If you have debt, is it credit card debt, or is it student loan debt? What, specifically, got you into financial trouble?

What is the biggest problem in front of you?

Now, take a look at the problems you listed in step one. What's the biggest problem? If you have a lot of credit card debt, what's the credit card with the highest balance or highest interest rate? Take note of your biggest problem, the one that you wish the most would disappear. This is what you want to focus on.

Often, the problem is simply a matter of overspending; if this is true, your first step must be to stop spending so much! Consider locking up some of your credit cards in a safe deposit box (if you cancel them, this will affect your credit score, so be careful here). Figure out how to make sure you stop overspending. If you continue down the same path, you will never solve your financial worries.

Map out a plan

So now you know what your problems are, and some steps you can take to solve them. You also have attainable, realistic goals with a time frame. Using that time frame, figure out exactly what you need to achieve to succeed in meeting your goals. If you want to pay off $50,000 in a year, this means paying off $25,000 in six months---so make that a sub-goal! Plot out what you need to do in small, manageable chunks to meet your final goal.

What's the first step you can take?

Now that you know what your big problems are, you can focus on solving them. What is the first step you can take? Can you stop using credit cards, stop spending, eat out less, or anything else? You need to do two things to meet your goal:

1. Pay off more each month
2. Spend less each month

(Doesn't that sound a lot like exercise? You need to eat fewer and burn more calories, just like you need to spend less and pay more.)

Find out the best first step for you to spend less. What can you cut out? Get rid of some magazine subscriptions, maybe your cable, or your home phone if you have a cell phone. What isn't absolutely critical?

Next, find out how you can pay more of your debt down. Is there a way you can make a little bit of extra money for a short time? Every extra dollar is extremely important for getting rid of your debt. Maybe you can sell some books or CDs on Amazon or Half.com.

With your plan and your sub-goals designed, take these first steps. Start paying off a little extra each month. Cut out your unnecessary spending. You will find, in no time, that you are doing better than you ever imagined.

Renaud presented at Finovate '08 in New York yesterday afternoon. The demo covered the new Lending Club, open to lenders and borrowers, and the Note Trading Platform operated by FOLIOfn, the first p2p secondary market. The demo was a blast – a big thank you to our friends at Banktastic.com for their reviews.

However, Renaud tells me there was a missing screen that he really, really wanted to show but did not have time. Here it is:

The new Loan Performance page contains information lenders might want to review to determine whether they want to buy or sell a Note.

Enjoy the new Lending Club, and feel free to send us your feedback, now that we're not so quiet any more.

We announced back in April that we were starting a registration process with the U.S. Securities and Exchange Commission (SEC) that required us to go into a quiet period. Thank you all for your feedback and support during that period.

Today, we’re delighted to announce that we have completed this process and are now available to both borrowers and lenders. We believe that this SEC registration is a major step forward for the Lending Club community and social lending in general, as it helps establish the space as a investment alternative to the traditional debt instruments and credit products offered by large financial institutions.

What does this registration mean for you, the lenders and borrowers?

• Under the registered offering, Lending Club lenders will now invest in notes that correspond to portions of loans made to borrower members. The notes have stated interest rates ranging from 6.69 percent to 18.63 percent, after a 1 percent service charge is applied.
• By partnering with FOLIOfn Investments, Inc., a registered broker dealer, Lending Club becomes the first social lending network where lenders have the option of a trading platform. On the trading platform, lenders who become customers of FOLIOfn will be able to put notes up for sale in the event they need liquidity before the completed term of a note.
• We believe this will accelerate the mainstream adoption of social lending, which will help more borrowers get funded faster.

The current financial crisis is creating mounting consumer distrust of large financial institutions and causing people to demand an alternative that gives them more control over their personal finances and investments. Lending Club is leading the charge to deliver that alternative by providing a network where lenders can fund loans posted by borrowers.

The Lending Club community has continued to show exceptionally responsible borrowing behavior over the last 18 months, demonstrated by the fact that since May 2007 the default rate has remained lower than 2 percent.

At a time when the financial landscape makes our community even more useful to both lenders and borrowers, we are thrilled to be able to accept new lenders again.

The prospectus filed with the SEC is available here.