Saving with social networking
Social networking sites can help you save money and time while you have fun. They’re efficient matchmaking systems and can help you buy cars or even find a free baby sitter. The trick is that they cut out the middleman.
That’s why many people are jumping on the social media bandwagon to save money. “Social networking streamlines the money-saving process,” says Nick Mokey, a staff writer at Digital Trends in Portland, Ore. “Matches are better.” The key, he says, is using a site with a feedback system that rates other users.
Here are five great ways to save money using social networking.
Peer-to-peer lending websites such as Prosper and Lending Club match lenders with borrowers. The result: Borrowers save money on interest rates by cutting out the middleman — banks. These websites have created a booming sector that’s slated to climb by 800 percent this year to $5.8 billion in loans, according to research firm Celent. The loans are primarily personal, auto and home-improvement loans.
For example, Lending Club borrowers pay 7.93 percent to 25 percent in interest, depending on their credit history. “Our rates are 20 percent to 30 percent better than banks,” says Rob Garcia, senior director of product strategy at Lending Club. “And you can get funded in a few days.”
But you need good credit scores. Lending Club looks for FICO scores of 660 or better. At Prosper, it’s 640. Both sites tack on extra fees. At Lending Club, you’ll shell out 2.25 percent to 4.75 percent of the loan in origination fees. At Prosper, closing fees run from 0.25 percent to 3 percent.
Help with college savings
Social networking sites like GreenNote and SmartyPig give you valuable tools to save for college. Requests for donations can be funneled to the large social networks at Facebook, MySpace, Twitter and LinkedIn.
At GreenNote, more than 23,000 people are registered. And the fee is only $20. People generally donate $2,000 to $3,000 to the savings cause.
“The idea is not to pay for the entire tuition,” says Bill Hubert, CEO of Cology, which owns GreenNote. “It’s more to offset incidental costs such as books and fees.” Friends and family don’t send checks, he says. Instead, they pay with a credit card.
SmartyPig offers tools for setting goals and tracking donations to save for college. To further fine-tune fundraising, websites such as GradeFund have sprung up. It invites people to sponsor a student’s drive for good grades. Donors can choose sponsorship amounts as low as $5. Higher grades bring you higher donations, and donors can choose whether the money is disbursed to the school or the student.
“Cast as wide a net as possible,” Hubert says.
Websites like Tweet What You Spend and Bundle let you track your expenses to save money. Both are free.
At Tweet What You Spend, people use their Twitter accounts to send brief spending messages of recent purchases, such as groceries, to their Web-based cash journal. There, they drag and drop those expenses to spending categories that they create. They can also set spending limits for themselves and share shameful spending habits with others using the website.
Bundle is more voyeuristic. There are more than 250,000 users each month whose expenses and savings can be viewed anonymously. “You can spy on your neighbor and compare spending,” says Jaidev Shergill, CEO of Bundle. “You can also trade information.”
Data are filtered by age, location, income and household status, and the data are arranged in fun infographics from which you can get more specific information. “Bundle is aggregating information and breaking it down into charts,” says Mokey. “You don’t have to go up to people on the street. That anonymity is useful.”
Let peers help you choose a car
Car shoppers can now tap into group wisdom to help you save money on your car-buying decision. Sites such as Honk and CarGurus lean on a network of car-loving friends to dish out information. And it’s free to sign up.
Dashboards, which are pop-up control panels, are used on Honk to track favorite cars, while a search engine on the site matches you with cars most suited to your lifestyle.
“Honk captures social information,” Honk Chief Executive Tom Taira says. “It’s collaborative decision making.”
CarGurus has more than 600,000 users who post reviews, pictures and opinions about cars. Digital Trends’ Mokey believes that both sites are best suited to used-car searches. “People are inclined to justify their purchases,” he says.
Exchanging time for services
Swapping time for services is a booming niche. Several sites have sprung up to play matchmaker and save money on services, including FriendlyFavor and Time Banks.
With FriendlyFavor, you can begin by inviting your e-mail network to exchange services. Then, move on to social networking contacts. Simply register at the site and you’ll begin to receive requests for favors such as trading vacation cabins. The service is free.
At Time Banks, you’ll sign up at time-bank exchanges for your local area. Those local listings are by state and then are broken down by exchange services such as pet care, car repair or tutoring. One hour spent doing a service converts into a “time dollar” that you can spend on a service you need from another registered user.
More specialized Web-based services like BabysitterExchange, which operates like a baby-sitting co-op, can also help you schedule your errands or carpooling.
One caveat: Use the feedback system to vet people. “Do I trust someone to work on my car?” asks Mokey. “I have to wonder if people are stretching themselves too thinly.”
For more information about saving money, check out these stories at Bankrate.com: