Here’s a few interesting facts about credit cards from www.compareandsave.com, one of the UK’s leading credit card comparison sites:
1. The concept of a credit card for consumers came about when an American enjoying a meal out for dinner in 1949 realised he had left his cash at home and decided that an alternative to cash would be a good idea. Frank McNamara came up with the Diners Club Card and by 1951 there were 20,000 Diners Club cardholders.
2. The first credit card was made of cardboard and it was only in 1951 that it was changed to plastic so that it lasted longer.
3. Credit cards are normally the same shape and size because the follow the ISO 7810 – an international standard that outlines formats for certain types of cards.
4. The most common size for a credit card in 85.60 x 53.98mm.
5. Whenever you get a new credit card (or debit card for that matter), you must ‘activate it’ before using it by ringing up an activation number or by going online.
6. There are more credit cards in the UK than people – at the end of 2007 there were around 60 million people who between them carried 73.2 million credit and charge cards
7. A shocking 70% of consumers with cards did not take the time to compare credit cards before applying.
8. You have to be at least 18 years of age to get a credit card. In fact to get some credit cards you need to be as old as 25 and on a certain annual wage in order to be accepted.
9. Credit cards must be signed by the authorised cardholder in order to be valid.
10. Credit cards may be your ‘flexible friend’ but if you bend them too much, they will snap!

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This has been a week since my wife quit her job to stay home. While the decision happened overnight and we didn’t think much about how we would compensate for the lack of money, we just decided to pursue this route. Sometimes, you are better off trying things… destiny makes the rest for you

On day one, I had to do several changes:

Cutting down on my mortgage payment

As I said before, I had to put an end to my Smith Manoeuvre Strategy (at a really bad timing) in order to decrease my mortgage payment. My mortgage payment was divided into three parts:

1/3 for the interest

1/3 as a payment in capital

1/3 into my Smith Manoeuvre

For now, I have to drop my payment so I pay almost interest only. This is not sustainable over a long period of time but it should do it for now.

Cutting down into unnecessary expenses

We fired the cleaning lady which free-up $150 per month (but it is a pain to clean the house!) and the children will obviously stay at home with my wife. This will free up another $300 per month (yes, I am lucky to live in Québec as daycares don’t cost much!).

We will also drop our budget for gasoline while we recently increased our car payments (I just bought a SUV 2 weeks ago…). I asked for the penalty if I would give it back but it was way too much expensive (about 6K).

Looking for more money

This became my only responsibility! I am actually able to withdraw more money from our internet company than expected which is a really good news. I am also expecting an interesting raise at work since I am about to finish my MBA and I am one of the best performing financial planner downtown Montreal. I already ask for my raise and I should get my answer back in a few weeks. This should give us some rest.

The last part I can work on in order to increase my income is to boost my numbers at work so I can get a big fat bonus at the end of the year. So far, I am getting in the right direction to get a bonus that will pay for my RRSP contribution, pay for the capital I should have paid on my mortgage… and maybe go on vacation.

In the end, maybe that I only needed to get thrown away into this situation in order to make things ok financially with only one income!

image source: flickr

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About 2 years ago, there was a lot of writing done on community lending or social lending and companies such as Prosper. Funny enough, my MBA Strategy exam was on the impact of social lenders on banks (no wonder I got an awesome grade in this class ).

Social lending was meant to great success during the economic boom. However, we all wondered how it would go during an economic crisis while people default on their loan. Would they be able to find people that will still lend money to Sexygirl69 so she can start a new hair salon? The truth is that Prosper went pretty quiet for the past 6 months, trying to find a solution to this huge problem: the lack of liquidity in the credit business.

Instead of injecting money into the credit market, banks are taking the money from US and Canadian government to re capitalize them. Banks that survive the credit crunch of 2008, survived what they call an economic shock. While running their economic stress simulation, they all realized that while they were strong enough to get through the first shock, they are not capitalized enough to face another crisis. Therefore, they keep the money for themselves and do not pass it on to the population looking for credit.

So where is Prosper after the credit crisis?

Well it seems that Prosper is coming back from the dead stronger than ever They actually want to benefit from the credit shrink created by banks. While people don’t have any other places to get credit, chances are that they will turn around and create an online borrower profile and start requesting money through the social lending sites.

The Government of California authorized Prosper to resume its activities and add a whole new feature: Open Market. They will grant loan companies to participate in Prosper’s model and sell loans on the market. I guess they would probably do it the other way around and request money from investors to lend to more people as well. Social lending may come as a great help for banks too!

Through this initiative, Prosper hopes to increase their share of the credit market while providing access to credit to a lot of people in California with their social lending platform. Getting money from banks seem to be quite a challenge these days and Prosper saw the breech in the banks brick wall.

The evolution of this new business model will be quite interesting as the improvement of our economy (a part of it) could result from action of people lending money to others through social lending and restart the wheel of credit. I’m not saying that everybody should borrow money for the sake of the economy, far from it. However, if you need money from a project and banks don’t want to loosen up their wallet, you rather get it elsewhere!

I’ve made a recent search for social lender in Canada and I didn’t find any active one. There is Community Lend and IOU (I Owe You) but both of them are not open yet. I just can’t wait to be able to lend to people .

image: dreamagic.com

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hello everybody,

as you know, I am still in the March Madness contest over at Free Money Finance. Then again, if I win the best post of 2008, $500 will be given to a charity (I selected children’s wish).

so pleaes vote “banks” in the comment on the following url:

http://www.freemoneyfinance.com/2009/03/free-money-finance-march-madness-elite-8-posts-58.html

thx to all!!

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Here’s what caught my attention this week:

Frugal Dad explains the life cycle of a purchase. Things are always appealing when you don’t have them!

Intelligent Speculator goes with his 4 top stock picks for 2009 (I organized a contest among a few bloggers, here are my picks).

If you want to start year 2009 on the right foot, you better set financial planning goals. ABC of investing is giving you some tips on that.

Find out about the catch behind debt reduction and elimination program at The Simple Dollar.

Credit Tool Box explains in which situation you should choose a fixed mortgage rate. Personally, I would never do it

Get Rich Slowly is giving 9 methods to master your money in 2009. My favorite is to track every penny you spend. Trust me, you will be shocked at the end of the month!

Millionaires and their problems at The Digerati Life. Who would have thought that millionaires have problems… seriously!

There is a very interesting case study over at Million Dollar Journey. Read the comments, there are as good as the post itself

Looking to buy a house in 2009? Check this post from Four Pillars, he listed several interesting post he wrote about buying a house.

Go To Retirement convinced me to retire in Panama. I must say that beaches look more than just great there are 1 feet of snow in my driveway!

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If you liked this articles, you might want to sign for my FULL RSS FEEDS. Then, you will get my daily post to your email and can read it at any time. To subscribe CLICK HERE

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