Vouch – A Nifty Idea for Lending

Technology has enabled a number of innovative financial technologies that provide advantages to the consumer – Bitcoin with its anonymity and ability to transfer funds without exchange fees, mobile check deposits supported by most major banks, peer-to-peer lending such as Prosper and The Lending Club offer, and the list goes on.

The official Vouch logo.
The official Vouch logo.

Recently I received an email from Credit Sesame advertising Vouch – a lender that gives one loans based on one’s network. In the past if you wanted to secure a loan but didn’t have a good credit history (or a history at all) you needed to find someone to co-sign on the loan (or pay exorbitantly high interest rates).

The biblical book of Proverbs warns against giving oneself to unwise pledges (or co-signs):

“My son, if you have put up security for your neighbor,
if you have shaken hands in pledge for a stranger,
you have been trapped by what you said,
ensnared by the words of your mouth.
So do this, my son, to free yourself,
since you have fallen into your neighbor’s hands:
Go–to the point of exhaustion–
and give your neighbor no rest!
Allow no sleep to your eyes,
no slumber to your eyelids.
Free yourself, like a gazelle from the hand of the hunter,
like a bird from the snare of the fowler.”
(Proverbs 6:1-5, NIV; see also 11:15, 17:18, and 22:26)

The danger in co-signing is that one essentially places one’s own well-being in the hands of another. If that other person defaults on the loan for any reason – you become responsible to pay it.

In this life there are few things we are truly in control of – part of the wisdom of life is recognizing what we can and cannot control. Vouching unwisely is something we can choose not to do.

Now vouch is a similar concept to co-signing, it just distributes the risk. Whereas previously if someone borrowed $5000 and you co-signed you would be liable for the entire $5000, with vouch you choose a level of liability – $25, $100, $500, etc.

Assuming you vouch only what is within your means to easily repay, the risk becomes fairly low. Most people can afford $25 out-of-pocket as a one-time expense, if necessary.

The idea behind vouch is to offer lower rates by essentially having numerous co-signers on a loan. I know they like the term vouch – its less scary than co-sign, but imho, it is co-signing, just distributed.

This idea is pretty spiffy, if you ask me (ohh, you didn’t? well, I guess I’ll just tell you anyways!), because it could open loans to a demographic (those with poor/no credit history) at affordable rates where there has traditionally been reasonable option available.

P2P is great if you have a good credit score – but it isn’t worth a hoot if you recently went through bankruptcy, a recession, etc.

Let me give a few examples of scenarios where I see Vouch being a valuable option:

  1. John lost his job in 2008 in the recession, over the next several years he built up $25,000 in credit card debt and his credit score declined as he had to sometimes delay paying a credit card bill to ensure his electric wasn’t turned off. At the moment he is paying 20% interest on this debt. He has recently secured a new job which pays well, has good benefits, and historically John has always been a faithful, hard worker – but his credit history is still horrible. John gets a number of friends and relatives to vouch (co-sign) $25-$100 for him and is able to refinance a significant amount of his debt through Vouch at 10% interest.
  2. Mary is heading off to college but needs an additional $2,000 to pay for her first semester. She has already taken available of all the grants and scholarships available and also the reasonably priced student loans. She now has a choice between taking out a loan from a lender who will charge her high interest due to her lack of a credit history, or she could use Vouch to allow a number of family members (parents, grandparents, aunts and uncles) to co-sign with her. Since her family knows she is responsible, they don’t mind “promising” to pay up $100 each if Mary should fail to meet her obligations. They know that Mary will not fail excluding some extraordinary circumstances.

This also makes sense for the lender. The lender is spreading their risk out. With a traditional co-sign loan one can pursue those who have signed the loan (say two to four people) to get back one’s money, but if these individuals are unable to pay, the lender is out of luck. Whereas with a system like Vouch one can spread the risk across dozens or hundreds of people – and statistically it is less likely that all will be unable/unwilling to pay (especially since it is a smaller amount) which means there is less risk for the lender of losing their investment.

This is a screenshot of the dashboard one is presented with after registering on the site.
This is a screenshot of the dashboard one is presented with after registering on the site.

I have not used  Vouch, I just think it is a neat idea. I’ve setup an account, it was fairly easy, and am waiting for them to reply to me with info. about what I would qualify for…and whether Vouch ends up being a great business or not, the solution is fairly ingenious and I hope it will take off.

Toshiba, Kingston, and the Case of Useless RAM.

I’m an IT geek. IT flows through my veins – I couldn’t get rid of it if I wanted. I’m too old to be a digital native, but I’d like to think I’m pretty close.

I’m used to replacing my laptop every two years or so but I’ve been using the same laptop now since 2010. A Toshiba Tecra A11-S3540. It is a good machine boasting a powerful Intel Core i7 CPU, a dedicated 512 MB NVIDIA graphics adapter, 4 GB DDR3 RAM, gigabit ethernet, and 802.11n wireless. A while back I replaced the standard 7200 SATA hard drive with a 128 GB SSD – which made an incredible difference in system speed…but now, things are starting to drag again.

I’ve looked at purchasing a new system, but to get something just equivalent with what I currently have is fairly pricey, so I’m holding off as long as I can. There is really only one other upgrade I can make to stretch the life of this laptop – adding more RAM.

I’ve held off on buying the RAM for over a year – but finally decided that the decrease in productivity was costing me more than upgrading the RAM would cost.

I went on Toshiba’s site and looked up their memory recommendations. For this specific laptop model they recommended Kingston’s 4 GB DDR3 1333Mhz memory modules at $50 each.

Screenshot of Toshiba Direct Search Result Page

I shopped around a bit – seeing if I could find anyone else who was selling the memory for cheaper and double and triple checking whether it would work with this system. I supposed since it was the recommendation on Toshiba’s site it would, but I wanted to be sure.

I stumbled across a Kingston page which indicated what I was looking for was actually the KTT1066D3/4G but that it had been “replaced by” the KTT-S3B/4G.

Screenshot of Kingston Memory Page

To their credit, if I went through the System-Specific Memory portion of Kingston’s site and attempted to find my system, it wouldn’t appear as an option.

You can probably guess where this is going. I ordered the RAM from a seller off eBay. Damage was a little less than $110.

I (im)patiently waited for the memory to arrive and when it did I eagerly pulled the old 2 GB RAM chips and replaced them with the new 4 GB RAM chips. I powered it on, BIOS post went fine, but then Windows started to load. A message about a fatal error flashed on the screen and the system shut off…a few seconds later it powered itself back on and repeated the same steps…and so on.

I did some troubleshooting to make sure it wasn’t a bad RAM chip and eventually called Kingston, who informed me that the RAM wouldn’t work with my system. I’m not sure what “replaced by” means, but apparently it doesn’t mean “can be used instead of.”

The eBay seller offers a thirty day return policy, so I could return the chips, but over $10 was for S&H, I’d have to pay $10 for S&H, and then take a 15% hit for the restocking fee. In the end I’d get back around $75 out of the almost $110 I’d shelled out.

Moral of the story? I suppose there are two: (1) don’t rely too heavily on what Toshiba suggests are replacement parts for your system and (2) “replaced by” don’t mean what you think it mean, at least when it comes to Kingston…I’m not entirely sure what it does mean.

Dear Spotify

I’ve been using Spotify for 2+ years now, it deserves a longevity award. It also deserves some sort of honor for being one of the few subscription services I dole out for on a monthly basis – placing it alongside Netflix – and everybody has Netflix.Spotify Client Apps

In spite of a number of other options, including from mega companies like Google and Amazon, I still prefer Spotify. It is entirely free if you don’t mind the ads and the premium account is $5/mo.

That said, I do have a few things I’d love for Spotify to incorporate:

  1. Tagging – Playlists are cool, they are like categories, but everyone knows that you need categories and tags (ala WordPress). I like creating playlists – but what if I want to listen to a song on a specific subject? Or what if the song is on multiple subjects? Yes, I can create multiple playlists – but this quickly becomes cumbersome.
  2. Listens – It would be great if Spotify displayed how many times one has listened to a song. I am an explorer – always trying out new bands, new albums – and oftentimes forgetting who I’ve listened to previously and which songs. If I could see how many times I’ve listened to the song it would allow me to more efficiently explore.
  3. Searching Artists, Songs, Albums - I’ve listened to a lot of artists and this list of artists (or songs or albums) can become overwhelming. Sometimes I know I want to listen to an artist that begins with some letter or word, but I can’t remember its name in its entirety, it would be great if I could search only what is in “Your Music.”
  4. Language / Topic Filters – I know that Spotify includes “explicit content” warnings on songs, but I’ve listened to far too many songs that had “explicit content” and weren’t marked as such. This becomes important when (a) one is playing the music in the presence of others who might find the content offensive, (b) one finds it offensive, or (c) one is allowing Spotify to post to one’s Facebook timeline and has an audience that includes individuals of young(er) age for whom such content might be inappropriate.
  5. Shazam Functionality - If I am listening to the radio in the car I still have to use Shazam to find out and save what song I’m listening to. Adding this functionality into Spotify’s mobile app would be huge…especially since Shazam now makes me integrate with Rdio.

Which of these features? Or what other features would you like to see in Spotify?