Uncrunch America Contest for $5,000 0% APR Loan

Uncrunch America is a consortium of peer to peer lending companies including Lending Club for personal loans, Virgin Money for mortgage loans and On Deck Capital for small business loans. Credit Karma and Geezeo are also part of the “Uncrunch” team because of their money management tools.

Uncrunch America formed in January 2009 because of the tightening credit market to educate people about social lending opportunity and available alternative capital sources. This month’s prize is a $5,000 interest-free loan. Participants submit an essay about how they would like to “Uncrunch America” through access to credit.

Participants can enter by submitting a story online and encouraging others to vote for it. Uncrunch America’s stated goal is to “help resolve the credit crunch and rebuild the economy by delivering consumers secure, trustworthy tolls and infrastructure to finance necessary expenses and make critical investments.

About the organization:

Lending Club is a social lending network where members borrow and invest money. Qualifying borrowers can obtain a personal loan of up to $25,000 at fixed interest rates for 3 years with no penalty for early payment. Read more here.

Virgin Money is a financial services pioneer dedicated to improving your overall mortgage experience. Read more here.

On Deck Capital is a direct lender for small businesses unable to obtain traditional funding or that need faster access to capital for unexpected business opportunities.

Credit Karma is a provider of free credit scores and credit improvement resources and tools.

Geezeo is a suite of online personal finance tools with tasks like budgeting.

You can read Tom's earlier post about the launch of the Uncrunch America campaign online here.

Jessica Ward is a freelance writer and blogger from Seattle. She also blogs at http://www.pennywisefamily.blogspot.com/.

At Finovate 2009 Budget Solutions Abound

Holy budgets Batman! Finovate 2009 is showcasing no less than ten (count them 10!) budget solutions for personal finances. I explored some of these on my blog this past week as I wrote all about budgeting for a week, but there’s a lot out there and I couldn't do them justice there.

For the sake of the reader, I’m going to make some categories here to differentiate what might be right for your style as a prospective user or curious reader. Some of these will overlap due to the nature of the features. All are free to use unless otherwise noted. The denotation ($) means fee-based and (*$) means free during Beta trials, or some features are subscriber-based.

I included a “social media” category here—because two of these are very similar to common social applications. Wesabe is a lot like Facebook in that people can recommend or comment and share information. Geezeo has a lot of Twitter-like features and their “confession booth” even integrates with Twitter (not to mention, it's outrageously addictive).

Rudder is in a bit of a class of its own. It appears to include bill-pay features (note to self to play with this one a bit more).

There are essentially two "classes" of personal finance application in my view. Those that require data-entry of transactions, and those that don't. Otherwise, the items below appear in no particular order and none of these are paid placements.

Aggregator
Green Sherpa ($)
Mint
Wesabe
Geezeo

Quicken (*$)
Rudder

Data-Entry

iBearSoft (mobile only) ($)

LooniesDesk (*$)

BudgetPulse

CalendarBudget (*$)

Social Media Features

Wesabe

Geezeo

Mobile Apps
Mint
Green Sherpa ($)

Wesabe
Ibearsoft (*$)
LooniesDesk(*$)

Uncrunch America: Solve the credit crisis from the bottom up through social lending

Twenty-five year old entrepreneur Scott Krager has earned over 6,000 votes for his idea on change.org to solve the credit crisis from the bottom up through social lending. In the first round of voting it placed 2nd in the social entrepreneur category.

On Friday, Change.org will co-host an event at the National Press Club in Washington, DC to announce the top 10 rated ideas and plans for supporting the formation of a national advocacy campaign behind each idea. Krager's social lending idea is currently in 18th Place and needs 3,779 more votes to be among the final 10 ideas.

We interviewed Krager to find out more about uncrunch.org and his ideas to promote social lending.


What is your background and what inspired Uncrunch America?

I'm a small business owner myself. I know how valuable credit is to many small businesses. I've been following this space for the last few years. Kiva is what originally attracted me to the whole social lending niche, and then Prosper and Lending Club.

What is Uncrunch America and what do you hope to accomplish?

Uncrunch America is an organization that came out of a simple idea from Tobin Smith (leading equity and economic researcher, author and commentator) to 'uncrunch' the consumer credit markets for deserving, credit worthy Americans by promoting "social lending" networks and other web 2.0 financial education and management tools.

I fell in love with the idea and their website, and approached approached them with the proposal of promoting them by signing them up on change.org's voting contest: Top 10 ideas for Change in America.

My goal was to build awareness around social lending, gain the support of the Obama administration, and convince the government to match funds. Uncrunch.org supporters believe this is the most efficient way to put government funds to work for the people, not financial institution profits.

Who is behind Uncrunch America?

Tobin Smith and his organization ChangeWave, along with Lending Club, Credit Karma, Geezeo and OnDeck Capital.

How did you bring all the supporters together behind Uncrunch America?

I didn't personally. I signed up for change.org and submitted and promoted the idea. The founding companies have since reached out to their customers and followers to build support for the idea as well.

What has the reception been like so far for Uncrunch America?

So far, it has gotten amazing traction and I think it's because of how timely this idea is to the current credit crisis. First it made it to the second spot in the first round of voting with a few hundred votes. Now, it is in the 21st position (out of 90) in the second round of voting with 4 days left. I really thing it has a great chance of making it to the top 10.

What are Uncrunch America's biggest challenges?

The immediate challenge is to make it to the top 10 on change.org. Whether they accomplish this or not, I think their next challenge is to gain traction and get the message out there. Uncrunch will be promoted by all its partners, similar to the (RED) campaign, so it is critical that they get more supporters, and the message does not get lost in the noise.

What future plans does Uncrunch America have?

Unrcunch America will be launching a campaign to get their idea out there. In the process, they will be recruiting more members to help in this endeavor. I think it is a great initiative and hope they succeed.

Is there anything else you would like to add?

Vote, vote, vote. With only 3 days left to vote, I hope your readers click here and submit their vote for this idea. Making to the top 10 will be a great push for social lending in the US, and a great way to get attention from the incoming administration.

How to use the 'wisdom of the crowds' on Prosper

In The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations, James Surowiecki argues that groups make decisions that are often better than could have been made by any single member of the group.

I've been wanting to write a post about this for awhile and an article in the Boston Globe yesterday further encouraged me. In Sharing the Wealth, the Boston Globe discusses how financial social networks may help people make better financial decisions. Here's an excerpt:

Social-investment sites take the sheen off "expert," allowing people to compare their investments or trade advice and opinions. Social-lending companies let people appeal to other people, rather than their banks, when they need a loan. And financial-advice sites that employ social-networking tools act like Weight Watchers for money: People choose goals, such as buying an iPhone or paying off a credit card, then move toward them while others with the same goals trade encouragement and strategies.

"I know a lot about the mistakes people make at a young age, and I think it's a great concept," said Cary Carbonaro, president of Family Financial, a traditional financial planning firm based in New York and Florida. "If I'm in debt, I can go talk to other people in debt or ask someone who is my peer and not embarrass myself."

But there are obvious questions, ranging from privacy and security risks to the dubious benefits of leveraging the financial "expertise" of the masses. The wisdom of the crowd may be a fine way to discover the most amusing YouTube video, but Wikipedia has been vilified for inaccuracies, and the online world hardly has a reputation as a trustworthy source. Start-ups need to gain the trust of users, assuring them that the software is hacker-proof and that their detailed financial information won't end up in the hands of marketers.

...Social finance should have 2 million users by the end of next year, and 16 million within 10 years, according to Online Banking Report, an industry newsletter.

In addition to Prosper, Zopa and Lending Club, some of the social finance sites that the Boston Glove features include:

• Geezeo/Wesabe - similar to an online version of Quicken where expense information and advice is shared among users
• Covestor - launched this summer, tracks its members' investment records, allowing people to judge their portfolio's performance against the crowd
• Zecco - web brokerage with blog and social-sharing features that allow people to share tips and trades
• Wikinvest - bills itself as a Wikipedia for investments, promising to be a constantly updated resource that reflects more than just a single expert's opinion of a certain company

Is the wisdom of the crowds really wise? Sometimes crowds can make very poor decisions because people tend to emulate others and conform. I've seen posts on the Prosper forums where people said they bid on loans simply because they were mostly funded using this reasoning, "how can 30-40 other investors be wrong?" Of course, maybe they just followed the same reasoning you did. Surowiecki argues the best groups have the following attributes:

• Diversity of opinion - Each person should have private information even if it's just an eccentric interpretation of the known facts.
• Independence - People's opinions aren't determined by the opinions of those around them.
• Decentralization - People are able to specialize and draw on local knowledge.
• Aggregation - Some mechanism exists for turning private judgments into a collective decision.

While group behavior may cause some poor decisions to be made on Prosper, I think there are plenty of examples in the forums where the collective intelligence of the group contributes to better decision making. What do you think? Would any changes in the website structure or technology help facilitate better decision making?