If you also have a home business and would like to form an LLC or corporation, MyCorporation is sponsoring a free LLC or corporation service worth $149. This is a one day internet special running today, from the hours of 6am-6pm PST.

Here is the promotion announcement:

On Tuesday, November 11, 2008 from 6am to 6pm (pacific time), MyCorporation is offering a special promotion titled FREE FOR A DAY. For one day only, MyCorporation will process a new Corporation or Limited Liability Company for FREE. That’s a savings of $149 off regular service fees (note: document shipping, state fees, publication fees, and additional product fees are additional).  This is the first time this promotion has ever been offered!

Free for a day promotion link

If you want to take advantage of this offer, use this link (remember it is only active from 6am-6pm PST):

.

Keep in mind that this promotion covers free corporation service, which includes document preparation, but does not cover the state filing fees. You will be responsible for those fees.

Can you file your own LLC or corporation documents? Yes, you can. Each state has different requirements, some of which are more complicated than others. I recommend downloading the documents first and if you can do it without difficulty, then go for it. But if you aren’t sure how to proceed, assistance from MyCorporation or another knowledgeable source may be beneficial. I compare it to filling out your tax forms. Anyone can do it, but there may be a few small details you miss. Why take a chance? Especially when you can get the assistance free.

I’ve been a user of Quicken and TurboTax for a few years and have always been happy with their service. Intuit has a strong reputation for ensuring legal documents are up to date and meet standard requirements, and I would not hesitate to use them for setting up my business paperwork.

About MyCorporation

MyCorporation is owned by Intuit, the company that owns Quicken, Quicken Online, and TurboTax. MyCorporation provides assistance filling out legal documents such as an LLC, corporation, etc. MyCorporation will also provide assistance with searching and applying for trademarks, proof of copyright for your work, and other business documents to help manage your business. They provide a similar service to LegalZoom, which offers many of these same business forms, as well as wills, trusts, and estate planning documents.

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As I’ve grown older, the desire to create things and earn more than my allowance (now a salary) never left. In fact, it has grown stronger. Most people in today’s workforce cannot rely on receiving a pension at age 55. If I am going to be able to retire at a young age I will need to contribute a lot of money to my retirement accounts and I believe that the more I contribute now, the less I need to contribute later.

One strategy I am using to contribute more money toward my retirement accounts is to create alternative income streams. My current goal is to become a millionaire, followed by my ultimate goal, which is to be able to retire with enough money to last the remaining years of my life.

Defining alternative income streams

When I talk about alternative income, I am talking about anything that I don’t earn through my day job. This could be money I earn from my home business, earned interest and dividends, monetary gifts, or money I get from bank bonuses, credit card bonuses, or other sources of free money. Other examples could include working a part time job, receiving rent from a property, royalties, etc. These are all forms of income I don’t rely on for my day to day living expenses, which gives me additional money every month to reach my financial goals.

Why alternative income streams are important

In many ways, alternative income is just as important as your regular paycheck, and potentially even more important if it is passive and requires no additional work to continue creating income. Here are a few more reasons why alternative income is important:

Don’t put all your eggs in one basket. I am a firm believer that your ability to generate income is your greatest asset. You career is probably the largest contributor to your basket, should only be part of that equation. The economy is bad right now and we are in the middle of a financial crisis. Unemployment is increasing and many people are having to deal with sudden decreases in income. Alternative income streams help ease the loss of a job or your main source of income.

Options. Like investing a lot of money early in life, alternative streams of income give you options. Last year, my wife left a higher paying job so we could enjoy a better quality of life. At the time she was working long and irregular hours and it was difficult for us to spend time with each other. So we decided to cut back on our budget and begin saving money while working toward a transition when we would become a one household income. As part of that transition, I began a home business to increase our income. The additional income is irregular and may not replace 100% of her income when she stops working, but it will certainly make the transition easier.

Non-existent pensions. Pensions have all but disappeared in the US. Gone are the days you could join a company after high school or college, work there for 30 years and get a gold watch, a pat on the back, and a paycheck for the rest of your life when you retire. Social Security is also in a perilous situation. Most people don’t have the comfort of knowing someone else will take care of them in retirement age. Alternative income streams help me contribute more money to my retirement accounts now so my retirement years will be easier.

Help reach your financial goals. Using alternative income is a great way to reach your financial goals - whether your goal is debt reduction, retirement, saving for a big ticket item, putting your children through college, or something else. An additional income stream means you can put your financial goal(s) into hyperdrive.

Alternative income equals freedom

I think everyone should strive for some form of alternative income stream - even if it is just earning interest from a CD Ladder or a high yield savings account. The key is to have your money working for you until you can reach the point when you are less reliant on a single source of income.

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Lending Club SEC Filing Approved

Lending Club is the first P2P lending company to offer a secondary lending market. They filed their SEC papers in April and immediately entered into a quiet period in which current lenders were not able to make loans. The approval process with the SEC took 6 months. Here is a snippet of Lending Club’s secondary market announcement:

By partnering with Foliofn Investments, Inc., a registered broker dealer, Lending Club becomes the first social lending network where you have the option of a Trading Platform to put your notes up for sale in the event you need liquidity before the 36-month term of a note. Any new note (issued after October 12, 2008) can be traded on the Trading Platform. You can also buy notes from other lenders.

This is a great development for Lending Club and its members as it adds another dimension - added liquidity for investors.

Prosper Enters Quiet Period

Following several months behind Lending Club, Prosper filed paperwork with the SEC this week to offer a secondary market. While it took Lending Club 6 months to get their paperwork approved, there is no way to determine how long it will take for Prosper’s paperwork to be approved - if it gets approved.

Here is their message to Prosper members:

Prosper has started a process to register, with the appropriate securities authorities, promissory notes that may be offered and sold to lenders through our site in the future.

The registration filing is a necessary step toward making the secondary lending market available to the community. This is something many of you have been asking for, and we believe the liquidity of a secondary market will make Prosper even more vibrant.

Until we complete the registration process, we will not accept new lender registrations or allow new commitments from existing lenders. If you’re an existing lender, your current lender agreements will be unaffected; your existing loans will continue to be serviced; you’ll be able to track and monitor your loans; and you’ll be able to withdraw funds from your Prosper account.

If you’re a borrower with an existing loan, you will continue with your current borrower agreement and be unaffected by the registration process. If you’re a borrower seeking a loan, you will still be able to create a new loan listing, which we will endeavor to fulfill through alternative sources.

A successful registration can take several months, but we assure you we will do our best to move forward as quickly as possible. Until this process is complete, we’re required to be in a quiet period and will be unable to respond to press, blogger or other inquiries about Prosper or the registration filing until it becomes effective.

We apologize for any inconvenience this may cause, and want to thank you in advance for your understanding and support.

Sincerely,
Prosper

What does this mean for Prosper? This means current lenders will not be able to make loans through Prosper until the end of the quiet period, which could take a few months. All current loans are unaffected, and borrowers can still get new loans through Prosper. Prosper will fund loans while the quiet period is in effect. This is the same process that Lending Club went through over the previous 6 months.

What’s next for the P2P industry?

Creating a secondary market will allow investors to more easily get in and out of P2P loans, which should be good for the industry as a whole. Hopefully the SEC will approve Prosper’s bid soon - I think competition is a good thing.

And speaking of competition, this week also saw the entrance of a nother competitor to the Peer to Peer Lending Market - Loanio. I plan to do a full writeup on Loanio soon. Be sure to check back!

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Kiva is another P2P lending organization, but the idea behind Kiva is not for lenders to make money. Kiva’s goal is to help eliminate poverty by giving small non-profit loans to entrepreneurs in developing countries. These entrepreneurs usually can’t go to a bank for a loan because they don’t have enough money to make a deposit or have any collateral for the loan.

How does Kiva work?

Kiva collects microloans from individuals and organizations and distributes them via field partners to entrepreneurs in developing countries. Some field partners offer training or other support to the entrepreneurs. Loan repayment and other updates are posted on Kiva and emailed to lenders who wish to receive them.

It is important to note that while neither lenders or Kiva receive interest payments on the loans, Kiva’s field partners are middlemen who often charge interest to the loan recipients, sometimes at high rates, but usually better than the prevailing rates entrepreneurs would be able to get elsewhere. (Kiva loans are generally a safer loan option, as the entrepreneurs other options are local loan sharks who sometimes use violence or other methods of retrieving their loan).

To make a loan with Kiva

Kiva has a list of entrepreneur’s on their website who are searching for loans to improve their operations. Lenders can scroll through the list of entrepreneurs and make a selection based on the person they wish to lend money. Loans are made via credit card or PayPal. When loans are repaid, lenders have the option or lending money to another entrepreneur, or withdrawing their money. You can make a loan with as little as $25.

Pros and Cons of lending with Kiva

Even though you are lending money for a good cause, when you make a loan with Kiva you are not giving a donation, so your loans are not tax deductible. These loans are also not guaranteed, so there is the chance that you can lose money if the loan is not repaid. If this happens, you should be able to claim the loss against your taxes.

So why lend with Kiva if you can’t claim it on your taxes, and you may not even get repaid? Because you have the chance to help someone improve their life and community, which is a noble action on your end. At a minimum loan of $25, the risk is small.

My thoughts on Kiva and microlending

I look at making a loan through Kiva as an opportunity to help improve someone’s life at very little risk on my end. Though the money is technically a loan, I look at is as a donation and would not lend out any more money than I could afford to give to any other charitable organization I believed in.

The difference between Kiva and a charity is the money for the Kiva loan is not tax deductible as it is for a charitable donation. But then again, with charity wouldn’t return the money to you and give you the opportunity to give it again. So a Kiva loan has the potential to be a gift given many times over. And that is pretty cool.

Here are some other articles about microlending and Kiva:

• About microlending.
• Banker to the Poor: Micro-Lending and the Battle Against World Poverty.
• doing good from the comfort of your own home: kiva edition.
• Kiva.org - Lending to Third World Entrepreneurs.
• Combining Kiva Lending and Birthday Presents.
• MicroPlace - MicroFinance.

Have you used Kiva? If so, what are your thoughts?

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After getting my initial P2P investments in place, I haven’t had much to write about other than the current situation with Lending Club. I also haven’t given readers any updates on my P2P loans. So far, no news has been good news, but I decided it was time for an update.

My experiences with Person to Person lending

Prosper. My initial investment with P2P lending was with Prosper. Late last year, Prosper was doing a large advertising campaign and contacted me about advertising on my site. Before agreeing to run their advertisement, I wanted to check out their business. I liked what I saw and invested in a few small P2P loans.

I equated Prosper to the Ebay of P2P lending because lenders bid on the loans they give to borrowers. Since then, I have made several more loans via Prosper and I am happy to say each of them is current and has never been late. Granted, most of these loans are only about 6 months old at this point, but it is promising, nonetheless. I am currently earning almost 12% on my initial loans.

Lending Club. After trying out Prosper, I decided to investigate purchasing loans through Lending Club. At the time, Lending Club was giving out $25 referral bonuses to sign up for a new account, and the minimum loan was $25. This made it the perfect “no risk” situation. I signed up, got my $25, and immediately invested it in a P2P loan. The lending process at Lending Club is more like shopping, and I equated Lending Club to the Amazon of P2P lending.

Again, I am happy to report that all of my loans are current with Lending Club. Most of these loans are about 4-5 months old, and I am currently earning approximately 10% return.

Lending Club’s Current Situation

In early April, Lending Club abruptly announced they were ceasing new lender registrations and loans while they entered a “quiet period.” Based on information from their website, talking to other people involved with P2P lending, and a conversing with a Lending Club customer service representative, I speculated about Lending Club’s future.

About two weeks ago, Lending Club filed with the SEC. There still is not a time table for resuming normal activities, but it looks like things are going well for Lending Club at this point, and I wish them the best. Their success can only be good for the P2P lending community in the US.

How I feel about P2P lending with the current developments

I still believe P2P lending can be a viable investment option for some people and is worth trying if you have the time and money to invest. I currently have a relatively small amount invested in peer to peer loans (less than $1,000), and I plan on monitoring the loans for the time being.

At this point, I believe P2P lending is still in the developmental stage in the US and has room for improvements in several areas. I still think it is a good option as long as one is willing to put in the time needed to study the market and understand how it works. Like most investments, P2P loans are not guaranteed, so there is a risk of loss associated with your investments. I also don’t think P2P loans should be the main form of investment in your portfolio. But used wisely, they can be an additional source of income for you.

Here are what some others say about P2P lending:

• Making Extra Money With P2P Lending
• The Future of P2P Lending - Dusting Off My Crystal Ball
• Is Peer to-Peer Lending Ready for Prime Time?
• Why I think P2P lending is a bad idea (for an alternate viewpoint of my own).

Disclosure: I currently write freelance articles for the Prosper blog. The views expressed in this article are mine alone and do not reflect the views of Prosper or any other company.

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What follows are my thoughts about Lending Club which are based on reading other blogs, industry news, and a phone call I had with a Lending Club customer service representative last week. Many of the answers I received from Lending Club were read directly from a script, and several questions received the standard “no comment” response. However, the customer service rep answered a few other questions which I received interesting responses to - if you read between the lines.

As a note, I am a paid freelance writer for the Prosper blog, and these views do not represent those of Prosper, Lending Club, or any other person or business. I am an active lender in the P2P loan market, and I have a vested interest in the P2P lending industry. As such, these are my own views regarding Lending Club, what is going on over there, and their future within the P2P industry.

What is going on at Lending Club?

Last week Lending Cub halted new lender registrations and their referral program to “register with the proper authorities.” Most people speculate that Lending Club did this to obtain a broker/dealer license from the SEC that would allow them to permit members to buy and sell loans between themselves. Currently, Lending Club borrows money from “lenders” and lends it out to “borrowers” in the form of a promissory note. If the filing is approved, it will allow Lending Club to register these promissory notes as securities, which will allow lenders to buy, sell, and trade portions of their portfolio.

According to Lending Club officials, this was a voluntary decision and they were operating within the full limits of the laws. However, there were certain things they were not legally allowed to do, such as allow Lending Club borrowers to transfer loans among themselves. Borrowers are currently locked into 3 year loans which is a deterrent to investors who desire liquidity in their investments. Filing with the SEC will legitimatize the buying/selling process between users and allow Lending Club and its users more freedom with their investments.

Is Lending Club broke / dead?

Several bloggers have asked the question, is Lending Club broke or is Lending Club Dead? Based on the information I have, the answer is no.

Lending Club is not broke. They are continuing to fund new loans during the quiet period. They also have millions of dollars in private equity backing. (They are a privately held company, so their books are closed; this information is based on discussions with LC representatives and reading on the web). Based on the fact that they have so much backing and so much money in current loans, there is too much potential for profit for Lending Club not to be backed by someone.

However, Lending Club is at a turning point for their company. They have stopped bringing in new lenders for the time being and I believe they need to get this situation resolved quickly to increase their foothold within the P2P lending industry and become profitable. Lending Club is still at a young enough state of business that they may be able to afford to slow operations to add functionality and legality to certain operations. Had they waited much longer, this could have been nearly impossible.

As it stands, I think they are taking a very calculated risk, and one that was not made lightly. A small sacrifice now has the potential to reap large dividends later.

Lending Club is continuing current operations - although at a slower pace

Prior to this announcement, Lending Club was making huge strides in the P2P industry. Lending Club had originated over $15 million in loans and they were recently growing at the rate of $1 million in loan originations per week for the several weeks leading up to the quiet period. (See Lending Club Stats for more information regarding originated loans).

Lending Club has announced they will continue funding new loans, albeit at a slower pace. They have heavy backing, but I don’t think they have enough funding to burn through over $1 million in loans per week for several months.

They will continue funding new loans and my guess is that if/when the securities application is approved, they will likely put these loans on the market to their lenders. I believe Lending Club’s business model supports them being in the P2P lending industry as a loan facilitator, not as a direct lender. So this would make sense. (this is speculation on my part).

Why did Lending Club halt new lender applications if they are continuing operations?

Lending Club reported they were required by the “registration regulations” to halt new lender registrations and their referral program until their registration application is resolved. I think this is primarily for two reasons - to simplify accounting and to ensure that everything is within the limits of the law.

How long will this take?

At this point, the answer is unknown. But it will likely take several months before any answer is given by the SEC (or whichever governing body LC is registering with; this was a point they could not confirm or deny). This type of registration often takes 2-4 months to complete, but as no company has successfully attempted to register a P2P lending company this way before, this is really unchartered territory. It will be interesting to see how the regulatory committee handles the application. (One of the key points to this being unchartered territory is that only a portion of the loan is being sold to an individual, and not the entire loan).

How will the securities registration affect Lending Club?

Right now Lending Club is taking a hit on their image. There have been many questions regarding their stability (see the articles mentioned above, and a few below), and many people have withdrawn their money and vowed not to return. I think much of this is due to the lack of available information and the fact that many people just don’t know what is going on. The quiet period is not helping matters. However, I think this has the potential to be a short term image problem if Lending Club is successful with their registration bid.

Lending Club needs to maintain the image that everything is, and will be, good for their company. Their actions to this point are reassuring. To me, it speaks volumes that they are continuing to fund loans with their own operating funds. I think their actions also send a positive message to the P2P industry, markets, and analysts.

There are several ways the securities application can affect Lending Club:

Lending Club’s application is approved. If Lending Club’s application is approved, I think they will be fine. Upon approval, LC is going to do everything they can to engender positive media and bring new lenders and borrowers to their site. They will likely bring back their referral program (though I have been told it will be in a different form; no details at this point). The increased functionality and liquidity of their loans will be a nice selling point, as the other major P2P lender in the US, Prosper, does not yet have this option.

In addition to filing for a securities license, it is believed Lending Club is requesting approval to allow its account holders to place their unused funds in a Money Market Account, similar to what PayPal does. This allows unused funds to earn the borrowers/lenders interest, which is currently unavailable for account holders at either Prosper or Lending Club.

Lending Club’s application is not approved. If Lending Club’s application is not approved, there a couple possibilities. The first is they revert to the old business model. Lending Club reports they were operating within legal limits, so there should be no reason why they would not be able to revert to the old process. However, there is the possibility that the application process initiates changes to the laws under which Lending Club operates. If this happens, Lending Club will be forced to adapt to whatever changes occur within the industry. It is important to note that if this is not approved, Lending Club may or may not operate as before.

What should I do with my Lending Club account?

If you made loans at Lending Club they will continue to be serviced, and you will continue earning your payments as if nothing happened. However, you will not be able to reinvest your funds at this time. I recommend withdrawing your funds as they become available, because they will not earn interest and you cannot reinvest them.

If you borrowed money from Lending Club continue to make payments. You entered into a legally binding agreement and are legally bound to repay your debts just as if you borrowed money from a bank or made a purchase with a credit card.

If you have unused funds at Lending Club withdraw them. They cannot earn you interest under the current business model, so there is no sense leaving them there for several months until this situation is resolved.

What I am doing with my account: I withdrew my funds the day of the announcement and have 2 active loans at Lending Club. My loans are current and continue to earn me money. As the money becomes available, I will withdraw it.

I will make a decision regarding my accounts after Lending Club’s situation is resolved. If the business model improves, I will definitely consider adding more funds. However, it is much too early to make that decision.

What does this mean for the P2P lending industry?

Right now I think this is scaring a lot of people away from the industry. The P2P lending industry is very new in the US and is still unproven in its current form. As with any new kind of investment or business there will be growing pains, and this is a perfect example of that.

I think the P2P industry has a lot of potential, which is why I write about it and support it. More importantly, it is why I have invested some of my own money there. However, I do not yet think the P2P lending industry is a viable mainstream investment for everyone, and it is definitely something you need to investigate and research before making any investment. But you so that with all your investments, don’t you?

My verdict: Take a wait and see approach with Lending Club. I won’t write them of as dead, but I will wait for more information before calling their new situation a success.

More reading about Lending Club from other blogs:

• Debt Kid - My Take on Lending Club’s SEC Registration
• Tech Crunch - Lending Club Puts Hold on Lending Activity While It Sorts Out Some Legal Issues
• Personal Loan Portfolio - Lending Club Quiet Period Announcement: A Blog RoundUp
• Thicken My Wallet - What the P2P lending industry doesn’t want you to know: of Lending Club and Prosper

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This is a major announcement in the P2P lending industry. I read the e-mail announcement several times to make sure I understood it completely, and I think it may actually be a positive change for the industry.

However, the company is undergoing a quiet period and will not be able to respond to press and other inquiries about Lending Club or the registration process during that time. So I can’t confirm my thoughts about what they are doing.

This is a full text of the e-mail announcement:

Dear Patrick,

Lending Club has started a process to register, with the appropriate securities authorities, promissory notes that may be offered and sold to lenders through our site in the future. Until we complete the registration process, we will not accept new lender registrations or allow new commitments from existing lenders. We will continue to service all previously funded loans during this period, and lenders will be able to access their accounts, monitor their portfolios, and withdraw available funds without changes.

The borrowing side of our site will remain generally unaffected by this registration process; borrowers can continue to apply for loans and new loans posted after April 7, 2008, will be funded and held only by Lending Club.

Until the registration process is completed, the company will undergo a quiet period and will not be able to respond to press and other inquiries about Lending Club or the registration process during that time.

Q&A:

Q1. What about money I have begun moving, but is still in transit to Lending Club?
A1.1. If you are in the process of verifying your bank account, you will be able to complete that verification but will not be able to add new funds
A1.2 If you have initiated a transfer, the funds will be displayed in your Lending Club account balance as soon as those funds are available.
A1.3 If you have uncommitted funds, you may request that Lending Club return those funds via the same method used to load the funds. For example,

• If you have initiated an ACH to add funds, these funds will be transferred into your Lending Club account but you will not be able to lend these funds out. You can go into your Lending Club account once the ACH transfer has been completed and withdraw funds back into your linked bank account..
• If you’ve wired funds into your Lending Club account and have not yet committed these funds into loans, you can send a request to support@lendingclub.com for us to wire these funds back to you at no charge.
• If you’ve sent funds by check, and have not yet committed these funds into loans, you can send a request to support@lendingclub.com for us to send you a check by mail for the same amount at no charge.

Q2. What about referrals?
A2.1 The current referral program is terminated. If you have referred someone who has already signed up as a lender or a borrower, or if you have been referred by someone and have already signed up as a lender or a borrower, you will be receiving your referral payment within the next few days.

Sincerely,

Patrick Gannon
Senior Vice President
Lending Club
440 N Wolfe Road
Sunnyvale CA 94085
www.lendingclub.com

This is definitely big news in the P2P lending industry, and I will write more on this in the following days.

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Anyone with as little as $25 has the chance to play the role of the banker and make assume the same risks and rewards banks assume when they make unsecured loans to individuals. The potential reward is greater than investing your money in a CD or savings account, but the risk is having the loan default and getting no return. If you aren’t familiar with P2P lending, here is a great primer - What is Peer to Peer Lending? Feel free to read it and come on back. Don’t worry, I’ll wait…

OK, now that you know what P2P lending is all about, here is a collection of great articles to give you some more insight into the P2P lending process, the industry, the pros and cons of P2P investing, and more! Fasten your seatbelt, and get ready for the ride!

11 Perspectives on Peer 2 Peer Lending

Tom, from the Prosper Lending Review, received a reader question concerning P2P loans as investments and whether it was a good option for a large portion of the reader’s portfolio. Eleven perspectives on P2P lending is a collection of responses from different bloggers, and this is a highly recommended read if you are thinking about investing in P2P lending. (it would have been 12 perspecives if I wasn’t too busy last week to chime in!)

Pros and Cons of P2P Lending

Is P2P lending good or bad? Is it just another financial tool, or a scourge to our financial system? Two personal finance bloggers tackle this topic with well thought out articles.

Is P2P lending bad? Glblguy from Gather Little By Little thinks so, and he tells why in his article, Why I think P2P lending is a bad idea. Mostly he believes it enables debt and is risky.

Is P2P lending good? Pinyo, from Moolanomy, responds to the previous article in a point by point article titled, Peer-to-Peer Lending and Bloggers Ethic. His main observation is that Peer to Peer lending is a tool and is neither good nor bad, but as effective as the person using the tool.

Peer to Peer Lending

Can you use Peer to Peer Lending to hedge your investments? Rocketc balances his credit card arbitrage with some P2P lending in order to hedge his investments and hopefully achieve higher returns. Read about it in Hedging with Lending Club II, part of his series on person to person lending.

Is the economy affecting who borrows from P2P lending companies? Rate Ladder writes that Prime Borrowing on Prosper Hits Record Levels — Febuary Marketplace Survey. Prosper reported that the number of prime borrowers (720+ credit scores) creating listings and obtaining loans continued to hit record levels.This could be a direct result of the economy, as people are faced with difficult decisions.

Peer to Peer Borrowing

How do you get your Prosper loan 100% funded? Mike from Prosperous Land shares a Simple Receipe For 100% Funded Prosper Loan. This is also great info to keep in mind if you participate in portfolio loans - you have less control than if you hand select each loan.

Prosper Blog

I would also like to let everyone know I have taken on a paid writing position for the Prosper Blog. My articles will be featured about twice per month, but as an introduction, 3 of my articles were published this week:

Three Chords and the Truth - and Some Operating Funds…. Rock & Roll is all about the music and the attitude. But it also takes a little cash (or credit) to record that killer album! Bonus: There’s a little trivia in there about some great Rock bands!

Why YOU Need Credit. Everyone needs credit - to borrow money, get good interest rates, pass an employer’s screening… or even to purchase a cell phone.

Why You Need a Credit Card. Establish credit, purchase things on-line, rent a car, itemize purchases… the list goes on. Just be sure to pay your bill in full monthly, and there won’t be any problems!

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Try Peer to Peer Lending for little to no risk on your part: If P2P lending intrigues you, now is a great time to try it out with little to no risk on your end.

Lending Club $25 sign up bonus. Referral program temporarily suspended. Gotta move quickly on these!

Prosper $25 to sign up bonus (after funding a loan).

For more details, read Free Bonus Money with P2P Lending.

Photo credit: penywise.

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• $50-100 - Credit Card Bonuses (credit card sign up bonus money)
• $50 - TradeKing Bonus (details)
• $25 - ING Referral Bonus ($25 ING Referral)
• $10 - Ebates On-line savings! (Save money with Ebates)
• Blockbuster Total Access free trial
• Netflix free trial

The interest and dividend payments were the only 1099s that were applicable to my wife and I. When I tallied up the total of how much money my wife and I earned in 2007 from interest and dividends, it surprised me - the total was just over $4,100! I couldn’t believe we earned over $4,100 without working - that is well over $300 per month!

How we earned $4,100 without working

Well, I won’t break down the specific numbers, but I will tell you the types of income. I will also make a note that interest rates last year were very good for increasing your earned interest income!

Last year our $4,100 came from:

• Earned interest from bank accounts and Money Market Accounts
• Dividend income
• Bank account and referral bonuses
• Credit card rebates

Earned interest. Earned interest from bank accounts and money market accounts is self explanatory, so I won’t go into any details there. Just note that the rates this year are 30-40% lower than this time last year, so I don’t expect those numbers to be the same.

Dividend income. As for dividend income, my wife and I do not hold any stocks in individual companies, although I have thought about investing in dividend paying stocks in the future. For now, we are investing solely in index funds, which is where our dividends came from.

Bank account and referral bonuses. First, it is important to note that these count as earned interest for tax purposes. Last year, I took advantage of several bank bonuses which I received for joining a new bank or opening a certain account. The highest of these was $150, but I opened several other accounts with varying bonuses.

Perhaps the most well-known bank bonus is the $25 ING bank bonus. New members who sign up with a minimum of $250 get a $25 bonus. If you refer someone who signs up, they get $25, and you also get $10. Do you see where I’m going with this? Repeat this process a few times, and you can make some very nice money.

Credit card bonuses. I also took advantage of a couple credit card offers for free money. This includes signing up for new cards for the bonuses and receiving cash back bonuses and rebates. The good news is that most bonus money you earn by signing up for credit cards is considered a rebate, which is not taxable! Be sure to check with a tax professional for the exact situation though!

How much can you earn by doing this?

A lot! My $4,100 was a mixture of interest income from cash on hand, dividend payments, and bank and credit card referrals and bonuses. While that seems like a lot, and it is, it is by no means the upper limit. There are a lot of regular folks who are able to take advantage of similar deals and situations to get a lot of free money. Here are two examples:

$5,000 - Rocketc, the blogger at Rocket Finance, just wrote a three part series about doing referral bonuses to earn income to make up for a budgeting shortfall. He was able to earn over $5,000 without working over the course of a year!

$11,500 - Madison, from My Dollar Plan, has over $200,000 in credit card debt that she uses to fund high interest savings accounts and make other strategic financial moves. The money is from 0% balance transfers, so she pays no interest as long as she makes the minimum payments on time, and pays the bill in full when it is due. She estimates doing this combined for earnings and savings of over $11,500 last year!

I am trying to increase my passive income next year

It might be tough to repeat these same numbers this year because the fed has drastically lowered the interest rates. However, I am doing a few other things to try and increase my passive income for next year. Hopefully a few of them will work well!

Anyone can get these types of bonuses. Here are a few ways to earn some free money with bank bonuses and referrals. It is easy for just about anyone to get over $100-200 in free referral money from that page. So go earn a few hundred dollars!

Note: I may be a little loose with my definition of passive income - many people consider earned interest and dividends as portfolio income. Still, $4,100 without working is exciting to me and I want to do this every year!

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• $50-100 - Credit Card Bonuses (credit card sign up bonus money)
• $50 - TradeKing Bonus (details)
• $25 - ING Referral Bonus ($25 ING Referral)
• $10 - Ebates On-line savings! (Save money with Ebates)
• Blockbuster Total Access free trial
• Netflix free trial

Loanio $25 Bonus for new lenders

Loanio is a new P2P company with a business model similar to Prosper. To get your $25 for becoming a new lender, use this $25 Loanio referral link. You can also refer new lenders and each of you will receive $25.

Prosper $25 Sign-up Bonus deal expired

Prosper is also giving new lenders $25 to sign up, and either $25 or $50 for referring new customers. The Prosper bonus requires new lenders to make a loan before they will receive their $25 bonus. The minimum loan is $50, so it will actually cost you money to take advantage of this offer. However, you stand to earn interest from your loan, and if you can refer a few people, you can make even more money.

Prosper’s referral program. Prosper currently gives a referral bonus of either $25 or $50 for referring new lenders and borrowers, respectively. The bonus is larger for referring new borrowers because Prosper is in the business of facilitating loans. Prosper bonus money is not paid unless the person you refer either makes a loan or borrows money within 90 days of signing up through your referral link.

Lending Club $25 Sign-up Bonus

The Lending Club Referral program has been temporarily suspended. You gotta move quickly on these deals!

I love free money!

Signing up for Lending Club was a great deal (it only required you to sign up to receive the bonus)! The Prosper referral offer is still a good deal, but does require a small initial investment on your end.

Please note, this information is correct at the time of publication, and you should always do your research before investing!

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• $50-100 - Credit Card Bonuses (credit card sign up bonus money)
• $50 - TradeKing Bonus (details)
• $25 - ING Referral Bonus ($25 ING Referral)
• $10 - Ebates On-line savings! (Save money with Ebates)
• Blockbuster Total Access free trial
• Netflix free trial