Wesabe: Your Money. Your Community.

Dear Netflix,

We’ve shared a lot of laughs and even some tears. You’ve always been there for me, which makes breaking up even harder to do. I remember when we first met five years ago – I was pregnant with twins and confined to bedrest. I relied on your daily red envelope even more than I did my Ben & Jerry’s.

But Netflix, things have changed. With the foundering economy, it just doesn’t feel like the right time to be in this kind of a committed relationship. We’ve been drifting apart for a while, and yet there you are every month, taking a bite out of my checking account. Before you even ask, this has absolutely nothing to do with Blockbuster Online. I admit, I have checked out Hulu.com a couple times, but that’s not why I’m ending things with you.

It’s a crappy time to be a discretionary spend and I don’t mean to kick you while you’re down, but I need to start looking out for myself. And so 163 rentals and nearly a thousand dollars later, I’m calling it quits. This really is good-bye, so I hope you don’t cheapen what we had by sending me perky “one month free” emails or flyers.

Good luck, Netflix – I honestly do wish you the best.

Your friend,
Debbie

As community manager, I frequently get asked which topics cause the most controversy in Wesabe’s group discussions. Though no one subject is responsible for igniting debate, the most common clashes occur between the very frugal and the not so frugal.

The all-popular theme, “it’s not how much you make, it’s how much you save,” suggests that a hard dose of discipline coupled with a decent financial IQ leads to security and, what’s more important, peace of mind. Still, for many people, things like pets, multiple cars, and dearly loved hobbies can be worth debt, little to no savings, and less financial security.

Now crisis situations, like home foreclosures or loss of a job usually eliminate some of these “necessities.” However there is a chunk of people who aren’t in dire circumstances, and who are looking for a better relationship with their money, but are unwilling to change their behavior for it. Maybe they have some debt, don’t really budget, or have minimal savings, but nothing that pushes them into crisis mode. Granted, many of these people would consider their situations to be financially unstable. For them though, lifestyle and material comfort is worth financial insecurity.

Consider for example, the 32-year-old who is unwilling to forgo luxury expenses – cell phone, cable, car, restaurants – to max out his 401K.  Or the 27-year-old who chooses some debt and depletes her hard-earned savings to travel. While ideally we would pay off our credit cards each month, fully contribute to retirement and have an six-month emergency fund, there seems to be a decent number of people who are pretty responsible with their money but sacrifice some degree of financial security for more enjoyable day-to-day experiences.

As personal finance is, well, personal, and reflects what an individual wants out of their life, I am interested in where you draw the line between lifestyle and experience, and total financial security. Where does frugal become cheap? Or, on the flipside, where does carefree become careless?

Divine Caroline is a community-based website that describes itself as “a place where women come together to express themselves, find answers, and share life through storytelling.” With more than 100,000 members and an average of 2.3 million unique monthly page views, Divine Caroline is clearly an example of a thriving web-based community.

“Community” is a hot-ticket item in the wide world of Web 2.0. Left and right, websites, blogs and a growing flood of major corporations are making space for communities to grow and flourish.  Explaining what exactly comprises and fosters an online community, however, can be tricky. The online component seems to be the kicker; while geographic communities, ethnic communities and professional communities are more or less readily understood, a web-based community is a different type of animal.

Some of the most popular online communities, such as the ever-loud pack at Daily Kos or zealous followers of mommyblogger Dooce, are sustained by content. At Wesabe, community has flourished in the form of an online forum, a place where one can post a question and receive a hearty amount of free financial advice within a day.

Divine Caroline takes online community to the next level. The site sets itself apart not by its endless stream of comments or well populated forums (though it has those too), but its continual output of fresh, well-written articles on everything from parenting to politics and finance to relationships, the majority written by their own members.

By providing a publishing platform for women (the site caterers to women but welcomes men), Divine Caroline takes the ever important “engage your members” to a new high. By enabling women, for free, to easily submit and automatically publish their stories alongside professional content, Divine Caroline empowers women to share their wisdom. As a result, their site is thick with diverse content springing from a wide range of voices and backgrounds. While a quick browse through the Divine Caroline site would attest to this, I have highlighted a few articles that stood out to me:

“Never Satisfied? Try These Six Negativity Busters”

“Everything Is Better Wrapped in Bacon”

“Eight Easy (and Cheap) Ways to Improve Your House”

“Where Are Our Manners?”

In addition to hosting member content, the website encourages community reviews of products, has active forums, and provides rich member profiles.

Wesabe is now a Divine Caroline partner, meaning you’ll see some of Wesabe’s blog posts and other content highlighted in the site’s Money and Career section. Feel free to check out Wesabe’s profile and some of our stories or join Divine Caroline and build your own profile.

Ramit Sethi, blogger of personal finance and entrepreneurship blog, I Will Teach You To Be Rich, has made a challenge to his readers; save $1,000 in one month. Yes, that’s right folks, follow Ramit’s challenge and by December 1st, he’s betting most of you will have an extra thousand dollars in your pocket.

Ramit has never been a fan of promoting frugality tips like, “start a garden” or “just eat soup”, because he doesn’t believe most Americans are good at deferring their immediate wants. However, he was recently inspired by both a CNN article which cited that “As many as 80 percent of Americans are stressed about their personal finances and the economy”, and his readers many requests for advice on how to save money and decided to launch the Save $1,000 in 30 Days Challenge.

Here’s how it works: Each day in November, Ramit will post one suggestion to cut your spending. If you spend time each day working on the day’s post, Ramit is betting that the most of you will save over $1,000 each month.  And even if you don’t get all the way there, saving $700 is sure better than nothing. For the first 15 days he will post tips of his own. For the last 15 days, he’ll turn to his readers and those following the challenge who have submitted their best frugality tips.

We think the 30 Day Challenge is a great idea and fits quite well with another great idea from Wesabe member CymbidiumKelly, the “No Spend Month”. The tips on how to save from Ramit’s challenge and those that have been shared in the Group’s discussion about the No Spend Month, should help anyone who is looking for ways to save meaningful amounts of money.

Many Wesabe members are following Ramit’s challenge and the No Spend Month, and some are planning to write about their experience, which we’re planning on posting here. We’ll also have a new 30 Day Challenge Wesabe Group where members can post their thoughts, ideas and experiences. If you’d like to join the challenge or the No Spend Month and want to share your experience, we’d love to publish them on our blog! Shoot over a few paragraphs about how one or a few of Ramit’s tips are working out for you to allese@wesabe.com.

Join the “Save A Thousand Dollars in 30 Days” Challenge here.

At the beginning of this week’s episode of This American Life, host Ira Glass says, “One way you can tell that things are really bad is when you suddenly find yourself trying to understand things you never really cared about before.”

If you’re trying to figure out when and why the sub-prime mortgage crisis became a credit crisis, what “breaking the buck” means, and why Warren Buffett called credit default swaps “financial weapons of mass destruction,” you really should listen to this entertaining, enlightening and yes, frightening podcast that looks at the events of the past couple weeks and the bailout package. You can listen in or download the hour-long show for free this week (next week, it will cost $.95) here.

And if you’d like to learn more about the housing and lending crisis, an episode of This American Life that aired on May 9th does an amazing job of explaining exactly how and why those “toxic” mortgages came about. Called “The Great Pool of Money,” the show is $.95 to download. You can download a free transcript of the entire episode.

Another great resource is the Planet Money blog. The two main contributors to the above episodes, along with some other folks from NPR, explain what the ever-changing news of the day really means.

There have been some really interesting discussions on Wesabe looking at how the financial crisis is affecting people and changes they are making as a result.

Where do you turn for information about the current economic situation? Who are you talking to about what’s going on in the economy and your financial life?

This post was written by Allese, Wesabe’s Community Manager.

After yesterday’s failed bailout vote, the ominous headlines are everywhere:

“Stunning Defeat for Bailout Plan Torpedoes Stocks; Dow Sinks Over 750”

“America’s Money Crisis”

“Consumer Spending Loses Steam”

“End of the Superpower: Will US Lose it’s Status As A Result of Financial Mess?”

They’re big, bold-faced and downright scary. But what does it all mean?

After reading a few articles over at Yahoo! Finance and scanning Google News, I get that the situation is bad and it’s been bad. From the fall of Freddie Mac and Fannie Mae this past spring, to Washington Mutual’s failure last week and yesterday’s failed bailout, it’s clear that the American economy is in trouble. Outside however, these headlines seem far away — the stores are still crowded, the banks are still open, and restaurants and bars still overflow. Granted, I live in downtown San Francisco, an area where most people I encounter say that they are thus far unaffected by the economic crises.

Walking home last night, I wondered how long it took for the Black Tuesday of 1929 to affect the worker. If we’re headed into economic depression, how do we respond to it? How does one contextualize this crisis to make it hit home?

Trying to make sense of how this all happened for the non-financier (someone like me) is really difficult, as it is so complex. Lacking a degree in Economics, all this can seem like scary jargon. Attempting to answer my questions, I have read a lot and talked to several people about this crisis. Here’s my breakdown in layman’s terms.

It all started with mortgages. Banks were lending money to people who were qualified to get mortgages. These mortgages were very profitable for the banks. Investment firms and banks liked these mortgages, packaged a whole lot of them together, and sold them to larger financial institutions. In turn these financial institutions would repackage these into larger packages sell them higher up and so on. This was very profitable for the resellers, increasing the demand for mortgages, and causing banks and brokers to start lending money to less and less qualified people. At one stage, the bar got so low that you didn’t need to show any income or even have a job to get a mortgage (these were called NINAs – no income, no assets).

Now all this was being financed because home prices in the U.S. kept going up. The individuals who took out these mortgages began using their houses like piggy banks and borrowing against them. However nothing goes up forever. Eventually, the party came to an end, and house prices stopped going up and people needed to pay back their mortgages. But because loans were made to people who did not have the resources to pay them, they were unable to pay them back.

As people could not pay back their mortgages, these loans or pieces of paper, became worthless. Suddenly commercial banks that originated these loans and investment banks that repackaged these loans were left holding worthless (or toxic) pieces of paper. Worse still, investment banks leveraged these pieces of paper compounding the problem. As a result, investment banks such as Lehman Brothers, Bear Sterns, Merrill Lynch and commercial banks such as WaMu and Wachovia could not pay back these loans.

Back to my question, how does this all affect the average American citizen? These dramatic headlines are the beginning of a domino effect. The stock market is generally an indicator of market sentiment, or the way people feel about the future economy. When the market is down 8% in one day, as it was yesterday, there is clear concern and fear.

Banks are now less inclined to lend money to each other because they are concerned that the other bank will fail and not pay back their loan. Subsequently they have less money to lend to businesses and individuals, be it the American corporation looking to expand all the way down to the person trying to buy a car, the student trying to pay for college, or the Mom and Pop sandwich shop. As there is less money to be lent, corporations downsize and people lose their jobs, the Mom and Pop sandwich shop goes under as it is simultaneously unable receive loans to pay for its expenses and people begin to pack their lunches, the eighteen-year-old can’t go to college as he is unable get that student loan and so on.

Kiplinger has an interesting article titled “10 Things That Will Change,” spelling out what they think the economic and financial landscape will be in a few months. According to the article, “In reality, the change isn’t to a new environment. It’s a return to traditional norms of the past, before cheap money inflated asset values, undermined lending standards and encouraged excess risk. It’s bitter medicine, but it’s necessary.”

I was one of thousands of women to attend the annual Blogher Conference in San Francisco this past July. From mommy bloggers and passionate politicos to foodies and open source programmers, web-savvy women of every kind gathered to share their passion for writing, social media and the Internet. And boy, was it packed. After having to fight for a spot on the floor at the first two panels, I planned ahead and arrived five minutes early for my third session of the day, the Personal Finance, Business and Career Meet Up.  Ten minutes later, only eight more people had arrived

Where most of Blogher’s panels were literally overflowing, with people craning their necks around doors to learn how to improve their SEO skills or about issues that arise when blogging about sex, the personal finance, business and career panel was practically empty. Initially when reading over the various panels at Blogher, I was quite surprised that three such distinct, major topics were crammed into a “meet-up” (in contrast to a panel which featured well known speakers) and figured it would be brimming with bloggers of all sorts.  Many bloggers are, in essence, small business owners (their product being their blog) or hoping to be, thus making all of these issues of key concern. Not so much.

At the meet up, we spent the hour pondering these issues, focusing especially on the question, where were all the personal finance bloggers? Our answers covered a wide gamut of reasons, including the unsexy sound of “personal finance,” the feelings of inadequacy and fear that “managing your money” arouses, and the inaccessible nature of much financial information. Whatever the reason, it became clear that the term “personal finance” was in dire need of a facelift. Elena Centor, the moderator and Blogher’s contributing editor to the Personal Finance, Business and Career section, put it well when she said:

“I don’t like to talk about money. Truth be told, I avoid the topic at all costs. I hate money. Yes, I like to use money. But I hate what it does to people. It divides. It judges. It makes people who have great personal success feel like failures. Money causes insomnia, tears, heartbreak and humiliation… (however) given the economy, given that money is often at the root of marital stress, given that decisions to stay at a job, leave a job, or start a business all center around MONEY, it’s ironic that so few people want to talk about it.” Read the synopsis on Blogher here.

After Blogher, I started looking at major websites dealing with women’s issues and more specifically, finance. There wasn’t much to see. Though finance is a crucial subject, most thriving, web-based female communities tend to leave it out.  For example, iVillage, a dominantly female website that boasts more than 30 million unique views a month, lacks not only a personal finance section, but a business and career one as well. I did find a few gems: Divine Caroline has plenty of thoughtful, intelligent discussions occurring in their Career and Money Section; Wisebread has offers an entire list of female personal finance bloggers; and finally, the Sugar Network has a site, SavvySugar, solely focused on presenting financial/career information to women in their twenties and rousing up lively discussion surrounding these subjects.

Thus, I am very pleased to announce that there is now a SavvySugar Group on Wesabe. While Wesabe has a great community for money issues across all consumers, I and the Wesabe team believe that a group focused on women’s finance issues would be a great addition, and we wanted to draw from the wide range of experiences and awesome members SavvySugar has today. We think that the Wesabe community — especially the way everyone in Groups supports each other and provides fantastic suggestions for people facing financial issues — has a huge amount to offer SavvySugar. So, think of this like a dinner party introducing two groups of friends we know will get along brilliantly.  Welcome, SavvySugar, and thank you for giving a much-needed voice to young women and the money and career issues they face.