If you needed to somehow save up an extra $1,000 in a matter of weeks, how would you do it? You could walk into a bank and sit down with a financial advisor, but they’d probably start pitching you a line of credit.
So why not ask a bunch of strangers on the internet?
I noticed many of the questions cropping up in the Toronto-based Bunz Helping Zone on Facebook revolve around personal finance. The Helping Zone, like other zones in the Bunz community, developed out of the Bunz Trading Zone. Bunz established itself as a community of peers willing to trade, barter, or volunteer their time in exchange for goods. Since its creation, it has morphed into all sorts of things, with new zones popping up for just about everything one can think of.
But rather than be alarmed people are seeking advice from strangers, certified financial planner Rona Birenbaum says online communities like Bunz can be a really great place for people to up their finance game.
“There’s no sales pitch or business bias at work,” she says. “There’s a degree of honesty around the dialogue. What I think is refreshing for millennials is that it’s coming from real life experiences, which makes me think of how popular financial profiles have become in media.”
Another advantage is that these communities will be filled with people who have similar values and lifestyles as them — which can lead to more fine-tuned suggestions than asking a professional.
Birenbaum reminds millennials, however, to take any crowdsourced advice with a grain of salt.
“The only caveat is [that the advice] doesn’t come from a place of deep experience or professional knowledge,” she says.
In the helping zone, you will see all sorts of different questions, ranging from more straight-forward questions about banking, to more experiential requests such as a list of affordable grocers, or how not to get hoodwinked during a dental procedure.
I picked a few of the more memorable questions I’ve seen in the group recently and asked Birenbaum to give me her opinion on how good Bunz is at helping Toronto millennials with their finances.
Bunz members responded with:
Automate savings – pay yourself first
Pay with cash not credit
Spend less – cook your own meals
Track your spending using an online tool
Watch the documentary Minimalism – to get disciplined
Save your change at the end of every day
These are all fantastic tips and are good for a lifetime of sound cash management habits.
Given the limited time he has to accumulate the needed funds, the most important advice is to assess his cash flow. By that I mean complete a spreadsheet that outlines everything he spends money on versus his after tax income. This will tell him how much he can save each month (through automatic deductions) without making any lifestyle changes. If the number isn’t sufficient to meet his goal, he can identify which variable expenses he can reduce to meet the goal. Then he can use a tool like Mint to monitor his spending to ensure he stays on track.
I am a bit concerned if he is challenged to save up a thousand or so dollars in three months, how is he going to be able to afford the cost of home ownership and the inevitable unexpected expenses that crop up for home owners. So this budgeting exercise should be done to include his expected costs for mortgage, utilities, maintenance, property taxes etc. He may need to implement all of the recommendations from the community to make his dream a long term success.
Bunz members responded with:
Stay outside of Manhattan and commute in each day on the subway
Use Airbnb or YMCA
Look at affordable tours
Free/low cost theatre ticket options
Bus versus car
Watch out for bed bugs
More great advice. Accommodations are one of the most expensive parts of the trip, so savings here are crucial. Here’s what I would add: buy travel medical insurance. It is really inexpensive and could save your financial bacon if you get sick while in the U.S. American healthcare costs can bankrupt you.
If she has travel insurance through her employee group coverage, she should take the coverage information with her and make sure her travel companion or emergency contact also has it. The other point I would make is to avoid shopping for stuff she can get at home. Spend her money on transportation, accommodation and activities rather than stuff. Everything is at a 30% premium with the currency exchange.
Bunz members responded with:
Find out why you were turned down so you can focus on improving that aspect of your creditworthiness
Make sure the lender knew that the purpose of the loan was to pay off higher interest debt
Nothing you can do
Inquiring as to the reason for the decline is the first step. If the lender is misinformed in anyway, you have an opportunity to correct the record and possibly get the approval. Barring that, getting a second opinion always makes sense. Keep in mind that frequent credit applications can hurt your credit score, so be selective about frequency of applications.
It can take time to repair a damaged credit rating. If a lower interest loan isn’t possible, [this Bunz user] should take the advice given to [the first person in this post]. Go minimalist and accelerate repayment of the high interest debt as quickly as possible. [This person] wouldn’t be the first to ask parents for an interest free loan to get back on her feet. Many people don’t have parents able to help, and even those that do may be embarrassed to ask. But if you approach parents with an outline of the dilemma and a plan to fix it with their help, the response might be very positive.
*Names have been removed to protect the privacy of the group and its members.