Archive for April, 2012

Lending – the stepping stone to “Giving”

Apr. 27th 2012

We all know the amazing feeling that comes from ‘giving’ but, I will always be the first to admit I do not have the most impressive philanthropy record. Only one occasion sticks out in my mind where I willingly gave my time, energy, and money and expected nothing in return:

In high school, I gave private basketball lessons to local elementary school children for an hourly fee. One day, I received an inquiry about providing lessons for a church youth group made up of underprivileged children . They offered my going rate but I jumped on the opportunity to give back to the community and do it for free. I became submersed in a community of 15 eager boys and girls that did not know the basic rules of basketball. I was introduced to their rusty basketball hoop with a crooked rim and 4 old basketballs that were in every shape but a sphere. Throughout the 5 week endeavor, I witnessed an eager but clueless bunch transform into young basketball players who were able to conduct structured drills and play in organized games. It was humbling to see the reactions of the children when I bought new basketballs for them; most of them played with extremely lopsided balls all their life.

“Whoa, it bounces super straight,” I remember one of the kids saying after dribbling one of the new basketballs.

Walking away from each lesson gave me an insatiable “high” for life that is truly hard to describe. To put simply, it felt really good.

Years have passed since then and my schedule has become cluttered. I have resorted to what the bulk of my peers have been doing as charitable action: donating to food drives, donating old clothes, adding a dollar to whatever cause the local grocery store is supporting (partially because it is hard to refuse donating a dollar when the cashier asks you in front of a line of people).

All these actions were numb and unfulfilling compared to my past experience with the kids. I realized that the majority of these charitable deeds required a sense of optimism and imagination. We have to paint our own sanguine picture that our donated clothes are ending up on the backs of cold, needy children and our dollar is one of millions that are funding new homes. Regarding our clothing donations, the truth is quite deflating. ABC news wrote an article a couple year ago revealing that the clothing donations of the best quality (about 10% of all donations) end up at your local thrift shops where many of the customers end up being people like me and you: upper to middle class citizens scrounging for some good deals. The remaining 90 percent of what we give away is actually sold to textile recycling firms. Sad.

I have come to the understanding that in order to reignite the indescribable “high” from giving, I must see something through from beginning to end. I felt good about giving lessons because I witnessed it first hand and watched the children blossom over 5 weeks from start to finish. Unfortunately, busy schedules and a rocky economy make it difficult to dedicate time to a hands-on project or fund a project from start to finish but, I have been able to distinguish a form of compassionate action that is realistic for many individuals to do that can change lives: lending.

Lending opens the doors for individuals to pay for education, transportation, housing, the list goes on…

Financial blogger Craig Ford wrote

“I have one outstanding debt – a house loan. But, I didn’t get my loan through a regular financial institution.  Living overseas, I would have been looking at a 10+% loan to buy a home. Seven families I know banded together and offered my family a loan to buy a home.  I viewed and still view that loan as an act of kindness…That loan is a blessing to my family.”

The beautiful thing is the lender(s) can witness all the positives of their loan first hand.

Lending can be the vehicle we use to transition into ‘giving’ when we are financially ready.

People should not be intimidated by the loan experience. Sites like LendingKarma make it easy for lenders and borrowers to set up a loan agreement and help execute the loan step by step. LendingKarma provides the online, legally binding paperwork and tracks payments from beginning to end.

Best of Luck!

“I have found that among its other benefits, giving liberates the soul of the giver.” Maya Angelou

 

Jay is a marketing intern for LendingKarma. He is passionate about writing to share knowledge, inspire, and entertain

 

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5 Things Students Do In College To Kill Their Momentum When They Graduate

Apr. 20th 2012

Too many recent college graduates find themselves in a standstill dealing with financial troubles, confused by career direction, and intimidated by their empty résumé.

Here are the 5 most common ‘No No’s’ that lead recent college graduates into the dreadful stalemate. Avoid the following and you will have a great chance of ‘hitting the ground running’ the moment you throw your graduation cap in the air.

1. Choosing convenience over being thrifty 

College students are guilty of being lazy and have all the excuses in the world not to go the extra mile in order to save a couple dollars. But the money you can save really adds up and can set you up with a more favorable financial outlook once you graduate.

The campus bookstore is SO convenient but avoid it at all costs (no pun intended). The average student is spending $1000 on textbooks every year mainly because a large percentage of the student population is shopping at their campus bookstores. Save money buying/renting used books online (I used eCampus.com). You can easily save up to 50% on your textbook expenses. Just about everything in the campus bookstore can be found cheaper online or at an off-campus store. You can even find college apparel. You would be surprised how many outside vendors sell your university’s shirts, shorts, hoodies, etc.

Secondly, do not buy a meal plan. Go grocery shopping, cook at home, and treat yourself to a good restaurant meal every now and then. Colleges are guilty of over-charging on bulk-made/ordered foods and only provide the option to purchase expensive meal plans. Take for example the University of San Francisco. USF has thousands of students purchasing their $2,005 standard meal plan per semester. That works out to $401/month in their 5 month semester. In college, I got away with spending $150/month towards groceries and another $50 towards restaurants.  I was spending half the money as the USF cafeteria patron, and arguably eating healthier and tastier food (my girlfriend could cook).

2. Taking out student loans from the government and bank without searching for an alternative

Two third of all students come out of college with outstanding debt. On average, the U.S college graduate walks across the stage with about $25,000 in debt.

Today,  the student loan option is looking even more grim. Student loan rates are expected to double from 3.4% to 6.8% (more info in this Fox Business News Article)

The best alternative may only be a phone call/email away. More and more students have found the value of asking friends and family for student loans at incredibly affordable interest rates. Working with a close friend/family member to customize a loan is simple using a peer-to-peer lending site like LendingKarma. LendingKarma helps lenders and borrowers set up loan agreements, makes the loan legally binding, and sends out reminders of payments every step of the way.

3. Picking a ‘dead’ major

Choose your major wisely. Look for a major that is in high demand by employers today. Avoid picking dead majors like Latin, horticulture, or religion because the job market is not too promising in those fields (20 most useless college degrees).

Take a look a today’s trendiest degrees that are in high demand in today’s job market: Best Degrees For Growing Careers

4. Focusing on only getting good grades

There is nothing wrong with racking up straight A’s on the report card but too many college graduates get caught up with the letter grade rather than learning, exploring, and focusing on a subject that they could build a career upon. It is important to be proactive and learns skills that you feel will help you in future. So, take classes you are actually interested and don’t just study for the sake of the grade. Let your dream job serve as your motivation.

5. Ignoring your résumé till after graduation

Many college students do not start drafting their résumé until they graduate. Many times, it is not until college students begin writing their résumé do they find out how blank their résumé looks. Start NOW, if you haven’t already. Of course, job experience is a key component of a résumé so make an effort to find a part time position. Search for internships in industries you are interested in and gain hands on experience (internships.com is a great site to begin your search). Even if you end up serving food at a restaurant or folding clothes in a department store, you are learning about time management, teamwork, responsibility, independence, and the list goes on. No matter what job you land, employers can see the traits you possess to facilitate a job while being a full-time student.

Lastly, attend the free college résumé writing workshops offered at your college to hone your résumé writing craft. My college offered numerous résumé workshops that covered all the basics and revealed countless tips; some were even headed by top industry employers.

Best of Luck!

“Success occurs when preparation meets opportunity” – Henry Hartman

 

Jay is a marketing intern for LendingKarma. He is passionate about writing to share knowledge, inspire, and entertain. 

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LendingKarma Loan Agreements and Taxes

Apr. 9th 2012

Tax time is right around the corner which means that for lenders it’s time to tally up the amount of interest received throughout last year’s loan repayment because Uncle Sam wants his share of the profits. The interest you’re charging on your loan is considered investment income by the IRS. If you’re not charging interest on your loan agreement you should be careful as the IRS may calculate the interest amount for you and consider it taxable income. This is called imputed interest. Gift tax also enters into the equation with larger interest-free loans. There’s a good overview of imputed interest here. LendingKarma can help you to document your loan payments and interest to help you to avoid this situation.

He needs his cut of your profits

Assuming you’ve properly documented your loan, either on your own or with our “karma builder” custom loan agreement creator or our blank loan forms, the next step is to gather all of your check stubs or receipts for all the payment received throughout the last tax year. Once you’ve done that you add up all of the interest portion of each payment until you get a final amount for the year. That amount ends up being reported on a Schedule B form. If you’ve been tracking repayment using LendingKarma Premium you can simply sign in to your LendingKarma account and download your tax report that contains your interest totals for the year.

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