About a month ago, I was traveling back home for my father’s surprise birthday party (it went off perfectly, as he didn’t expect a thing…thank god for old age, as my mother definitely dropped more than a few accidental hints). Anyways, I was stuck on a layover and decided to wander through the various stores and kiosks like any self-respecting airport denizen who is bored with staring into space and people watching. So I made my way to a magazine rack and flipped through until I found an article on a little business called Prosper.com (www.prosper.com). Prosper is essentially a community micro-financing site utilizing an auction mechanism where an individual can effectively get a loan for anything under the sun from credit card refinancing to plastic surgery. A borrower states how much money they want and how equiped they are to repay this debt, and lenders compete over the interest rate. Presumably this is easier and cheaper than going to a bank. Not needing money myself, I decided to try it out and become a lender. The site seemed legit, and a lender selects a collection agency in the event that a borrower doesn’t pay. The same repercussions exist for defaulters as if they borrowed from a bank, so I feel like there is an incentive to pay up. So I threw in a little money ($200) and after getting annoyed with the auction process I just signed up for an automatic “portfolio” approach. This basically auto-bids according to some predetermined criterion. Now, a month later, I have $200 earning an average of 15% per year. As far as I’m concerned, this is AMAZING. Granted it feels fairly risky, but I am earning far more than the stock, bond or savings market. And I think its pretty cool that I’m helping some kid get out of credit card debt and a guy add on to his garage.
Check it out.
