So essentially she is paying for high school. I sure hope it is financially beneficial. This is the kind of investment in the economic development of a country that I wish governments could make. If not, I sure wish the super rich would give money to fund this kind of education instead of giving trust fund babies millions for conspicuous consumption.

It is disgusting how spoiled brats are such vapid people that they do what they do, while so many hundred of millions of kids lives could be changed with the most wasteful spending these trust fund babies that our politicians keep giving massive tax breaks to. Our politicians should be ashamed of themselves. And so should the spoiled brats.

I sure hope the vocational education is much better than much of what is available in the USA – which seeks just to exploit people. Vocational education can be extremely useful and valuable and worth taking out a loan for. But it is just so dangerous if someone is pushed into taking out a loan without the real prospect of a good income after the education is completed.

If anyone knows of charities providing grants or doing the vocational education directly please let me know. I would much rather donate than provide a loan in a case like this. I actually have no problem at all with it being a loan if the results of graduates shows the loan will reward hard work with a much better economic future. I just am very worried about people being taken advantage of in this situation. And I am perfectly happy to donate to a good vocational education program.

Maybe I am getting to be too soft. The luxury that those in the USA have taken for granted has not been available to billions that are living at the same time. We (in the USA) often have unrealistic ideas of how easy everyone else can expect to have it. Many very poor people around the world have to pay for even primary education.

I made new Kiva loans, today, to entrepreneurs in Indonesia, Cambodia, Senegal, El Salvador, Philippines and Togo.

Related: Investing in the Poorest of the Poor – Kiva Entrepreneur Loans: Kenya, Lebanon, Nicaragua, Kenya, Honduras and Armenia – You Can Help Reduce Extreme Poverty

Manuel De Jesus, miller and farmer in El Salvador, will use his loan to buy parts for this milling euipment.

There is a great deal focus recently on the “99%” (via occupy wall street and the like). The truth is these are mainly about the 5% or 10% (those rich, but not quite as rich as the richest 1% – and much further from the richest than they were a few decades ago). As I have written before, most of those in the USA (also Europe, Japan…) are rich (though this is changing, a greater percentage of the USA is not rich, looking globally, than maybe any point since the 1930s).

We get confused because many near us are even richer and think that means the rest of us are very poor. But those in the USA are often in the 5% or 10% – not the 30% or 60% or 90% they seem to think they are. $50,000 in annual income puts you in the top 1% globally. $25,000 puts you in the top 10%.

I agree with the desire to reduce the political and market corruption, as I have written for years.

For the 99% (or the 90% anyway), I really think the best things are government policies that reduce corruption and increase market forces. Letting actually capitalism work instead of political and corporate cronyism failing to let markets work as they should. Also giving education and the chance to build a better life for yourself are important. Thankfully many countries have been doing very well on this front: Singapore, Korea, Brazil, Ghana, China… That doesn’t mean there are not huge issues to still address for most of the 90%, there are.

Microfinance in general, and Kiva in particular, are one great way to help. Again it isn’t perfect. And those getting the loans are not given an easy life. They are given a chance to try and build there business to improve there economic condition. This isn’t a certain success. And I do worry that taking on too high an interest rate, or loan amount, can leave people worse off than before. But when looking at the system of microfinance I really like the opportunity it gives people, who haven’t been given many.

Those getting loans have to make smart personal finance and business decisions. If they do well they can greatly improve their financial situation. I made several more loans today, using money repaid by previous borrowers. I try to find loans where I am able to help fund a investment that will improve capacity (but that isn’t always possible) – a new machine that makes them more efficient for example. I also try to avoid loans where the interest rate is over 30% (which might seem very high, but rates below 20% are very rare given the economics of these loans – they are very costly to service). What Kiva does is provide the funds people like me lend as interest free loans to the partner banks. The idea is that this allows partner banks to provide more capital for loans (obviously) and at a lower rate because the bank isn’t having to pay interest on the funds.

My loans today went to: Mali, Honduras, Senegal, Ecuador, Togo, Philippines and in the photo above El Salvador. The Curious Cat Kivans group has now lent $12,925 in 320 loans. We now have 11 members, join up and help give people an opportunity to improve their economic condition.

Related: More Kiva Entrepreneur Loans: Kenya, Honduras, Armenia… – Using Capitalism in Mali to Create Better Lives – Funding Entrepreneurs in Nicaragua, Ghana, Viet Nam, Togo and Tanzania

Douglas Osusu, Kisii, Kenya, in front of his posho mill (used for grinding maize into flour).

A nice example of this is the loan to Douglas Osusu (pictured). He has requested this loan of 80,000 KES to purchase a dairy cow and a posho mill. This loan also has a portfolio yield (Kiva’s equivalent of an annual percentage rate) of 19%. 19% is very loan for loans on Kiva (remember there are significant costs to servicing micro-loans) – I like the rate to be under 30% but sometimes accept rates up to 40% (or even higher occasionally). I also give great preference to low rates, as the lower the rate the better for the entrepreneur. The 3rd factor I consider is the history of the field partner bank (default rate, delinquency rate and currency exchange loss rate). In this case the field partner is new and carries risk because of that. Still in this case I really like the loan and I like that this lender is charging low rates so I want to take the risk and see how they can do. The amount I lend is based on the combination of these factors – I lend more when I have several reasons to really like the loan.

Join other readers by making loans and joining the Curious Cats Lending Team: 8 members, 213 loans totaling $8,775. Comment with the link to your Kiva page and I will add a link on Curious Cat Kivans.

My current default rate is 1.39% and the delinquency rate is 8.49% (see chart of USA general delinquency rates). The delinquency rate is exaggerated due to technical details (some difficulties in reporting in various countries and such things). Agricultural loans often become delinquent on Kiva but still are paid in full (in my experience). While the defaulted loan rate is 1.39% if you look at the percent of dollars lost I have a rate of 1.2% (this is nearly all due to a bank that failed over a year ago to which I had 2 loans where I lost $87.50 of $100 – there are also 2 other losses for under $5). I add to my total loan amount a couple times a year but also I get to keep relending as money is paid back.

Some of my favorite ways to help reduce extreme poverty are Trickle Up, Kiva and using Global Giving to find small organizations.

Related: 100th Entrepreneur Loan – More Kiva Entrepreneur Loans: Kenya, El Salvador (June 2010) – Kiva Opens to USA Entrepreneur Loans – MicroFinance Currency Risk – Kiva Fellows Blog: Nepalese Entrepreneur Success

• 58 months old
• $153,090,650 raised
• 99% repayment rate
• 395,427 entrepreneurs funded
• 742,717 Kiva lenders
• 201 countries
• Curious Cats Lending Team: – 8 members, 193 loans totaling $7,950

Add to those numbers by joining Kiva today or lending more money today. Let me know and we will add you to the Curious Cat Kivan page.

Related: Provide a Helping Hand Using Kiva – Funding Entrepreneurs in Nicaragua, Ghana, Viet Nam, Togo and Tanzania – Creating a World Without Poverty

Christopher Kibubi Wahinya (in photo), Nairobi, Kenya, buys old computers, which he repairs and sells to the local people. He has been in this kind of business for the last four years and he says that the business is profitable. He is using his loan of Kes 50,000 to purchase old computers, repair them and sell to the local people. He plans to grow his business by moving to the ground floor of a busy building where he will stock all computer accessories and later own a computer showroom.

Carlos Alberto Pereira Granados is 43 years old and resides in the town of Cojutepeque, El Salvador. He has a workshop where he repairs sewing machines and sells all types of related parts. His business is located at the municipal market. Carlos Alberto works Monday through Sunday repairing the machines of his customers. He is requesting a loan so that he can buy sewing machines wholesale as well as parts such as bobbins, belts, hooks, and other items so that he has everything required to perform his work and attract more customers.

Kiva is a great way to support entrepreneurs. I try to focus on loans I think will benefit the borrower and grow the economy (not always easy). One of the things I try to watch is the “portfolio yield” (which is similar to Annual Percentage Rate) – the lower the better. Some banking Kiva partners are charities or partially funded by charities and therefore can 1) fund some of the administrative expenses of the bank and 2) are focused on helping the customers not making a profit. I would rather have my money used where it most helps entrapranuers so the lower the rate the better.

I encourage you to join me: let me know if you contribute to Kiva and I will add your Kiva page to our list of Curious Cat Kivans. Also join the Curious Cats Kiva Lending Team (the team has now lent over $7,500).

Related: Micro-credit Research – 100th Entrepreneur Loan – MicroFinance Currency Risk

Since I am making loans on Kiva to help others out one of the big factors for me is the cost to the entrepreneur. I just would much rather provide funding for loans where the entrepreneurs gets a reasonably low rate. I understand there are costs the lenders have to cover. I have no problem with that, but if my choice is helping an entrepreneurs get a loan at 20% or 40% I am going to take 40%. I figure the odds that the entrepreneurs benefits will be much greater with lower costs. I also prefer loans where I see how the loan will let them be more productive, for example by purchasing a machine to help improve productivity.

I wish Kiva would let me selected lenders I like and then have the results shown only for those lenders (as one option).

I encourage you to join me: let me know if you contribute to Kiva and I will add your Kiva page to our list of Curious Cat Kivans. Also join the Curious Cats Kiva Lending Team.

Related: 100th Entrepreneur Loan – Creating a World Without Poverty – Financial Thanksgiving – MicroFinance Currency Risk

Now I think their questionnaire is far too simplistic but it is hard to get people to spend even 15 minutes looking at a saving plan for retirement. So I know they are trying to keep it very simple so people will complete it. That said, read our posts on retirement planning to lean more about planning for retirement. It is critical that you spend the time in your 20′s, 30′s and 40′s doing this or you are really going to have trouble making decent retirement plans.

Related: Add to Your 401(k) and IRA – Spending Guidelines in Retirement – Retirement Savings Survey Results – Personal Finance: Saving for Retirement

Kiva is one of my favorite charities, as I have mentioned several times. They provide a platform that connects those with funds to lend to entrepreneurs. This week they added the ability to lend money to entrepreneurs in the USA. And they also added short webcasts to some of the entrepreneur profiles.

One of my goals for this blog is to increase the number of readers participating in Kiva – see current Curious Cat Kivans. I have also created a curious cat lending team on Kiva. If you lend through Kiva, add a comment with a link to your Kiva page and I will add you to our list of Curious Cat Kivans.

Related: My 100th Entrepreneur Loan Through Kiva – Using Capitalism to Make a Better World

I made my 100th contribution to a micro-loan through Kiva last week. Participating with Kiva is a great antidote to reading about the unethical “leaders” taking huge sums to run their companies into the ground (or even just taking obscene sums to maintain their company). The opportunity to give real capitalists an chance at a better life is wonderful.

Kiva allows you to lend money to entrepreneur (in increments of $25). The most you get back is the amount you loaned, and if the entrepreneur, does not pay back the loan then you take a loss. This is something you do if you believe if giving people an opportunity to make a better life for themselves through hard work and intelligent economic choices.

I encourage you to join me: let me know if you contribute to Kiva and I will add your Kiva page to our list of Curious Cat Kivans. Also join the Curious Cats Kiva Lending Team.

My loans have been made to in 32 countries including: Ghana, Cambodia, Uganda, Viet Nam, Peru, Ukraine, Mongolia, Ecuador and Tajikistan. Kiva provides sector (but I think this data is a not that accurate – it depends on the Kiva partners that are not that accurate on identifying the sectors (it seems to me). A large number of the loans are in retail, clothing and food. I like making loans that will improve productivity (manufacturing, providing productivity enhancing services…) but can’t find as many of those as I would like (8% of my loans are in manufacturing, 11% agriculture, retail 18%, 23% food, 25% services (very questionable – these are normally really retail or food, it seems to me).

Some examples of the entrepreneurs I have lent to: welding workshop (Nicaragua), expanding generator services business with computer services (Cambodia), food production (Ghana), manufacturing nylon (Nigeria), internet cafe (Lebanon), electronics repair (Benin), new engine for mill (Togo), weaving (Indonesia) and a food market (Mexico).

Related: Financial Thanksgiving – MicroFinance Currency Risk – Creating a World Without Poverty – Provide a Helping Hand

21 of my loans have been paid back in full. 3 have defaulted. Those figure give a distorted picture though (I believe). There was a problem with a Kiva partner (they partner with micro-finance banks around the world) MIFEX, in Ecuador. Kiva discovered that MIFEX (i) improperly inflated the loan amounts it posted for entrepreneurs on the Kiva website and (ii) kept the excess amount of the posted loan to fund its own operational expenses. Kiva does not expect any further payments on these loans. I had 2, so I think those 2 give a fair impression. The 3rd default is from Kenya. That loan was to a business selling bicycle parts. In 2008, in Kenya, the prevailing political crisis deteriorated and businesses have either been destroyed or closed in fear of looters. Technically the loan did default, however, I was paid $71.50 out of $75 loan (so the defaulted amount was very small.

In addition, of the 72 active loans only 1 is delinquent. Granted some are new, and have not had a chance to go delinquent but many have been paid successfully for a year or more and over 10 are within 2 months of being paid off. For Kiva overall the default rate is a bit over 2%. I think a more interesting figure would be the % of capital that had defaulted. So if $10,000,000 had been loaned, then how much was paid back. So with the Kenya loan above 95.3% of the loan was repaid.

Rather than that loan being counted as a binary defaulted yes or no, counting it as a 4.7% default provides a more accurate picture to me. If I had 100 identical loans and everyone defaulted I would have 95.3% of my original capital. Or I could have a 10% default rate at that same (95.3%) payback level in which case I would have 99.5% of my original capital. Or I could have a 5% default rate with a 5% payback level (they paid back $5 of a $100 loan) and I would have 95.3% of my original capital. It seems to me when you have the same percentage of original capital remaining with default percentages of 100% and 5% that means the default figure is not providing as valuable an insight as it could. I believe the % of original capital returned for the whole portfolio would provide a better measure of default performance.

I fully expect more situations similar to MIFEX, in Ecuador, where defaults happen. Historically micro-credit default rates have been very low. But as they become increasing popular and especially as they grown incredibly fast (due to organizations like Kiva) it is natural to expect some unwise decisions will be made and problems will follow. I am perfectly happy to have a few problems that result in some of my loan capital being lost, while helping a great number of people.

The thing I really worry about is not losing the money I put into Kiva, but the loans not creating value to the entrepreneurs. Being successful with a small business is hard. As the micro-lenders grow it is natural that getting loans will be easier. For those that make good choice that is wonderful. But there will also be loans made to people that will make bad choice or suffer from macro-economic conditions that result in the loans becoming a hardship rather than a boon. To some extent that is fine, with opportunity for success comes a certain amount of risk.

What I am concerned about most is maximizing the success and minimizing the failure. I believe in a model where the borrowers have to deal with real economic consequences and are rewarded for making good choices and hard work. But I want them to have good chances for success which will rely on not just their hard work but good decisions by the micro-lending banks and the economic conditions in their country. It does no good to make loans to entrepreneurs that are not likely to have success. As I wrote in 2007, getting unethical investment banks involved would be a very bad idea.

For me, giving back to others is part of my personal financial plan. As I have said most people that are actually able to read this are financially much better off than billions of other people today. At least they have the potential to be if they don’t chose to live beyond their means. Here are some of the ways I give back to others.

Kiva is a wonderful organization and particularly well suited to discuss because they do a great job of using the internet to make the experience rewarding for people looking to help – as I have mentioned before: Using Capitalism to Make a Better World. One of my goals for this blog is to increase the number of readers participating in Kiva – see current Curious Cat Kivans. I have also created a lending team on Kiva. Kiva added a feature that allows people to connect online. When you make a loan you may link you loan to a group.

I actually give more to Trickle Up (even though I write about Kiva much more). I have been giving to them for a long time. They appeal to my same desire to help people help themselves. I believe in the power of capitalism and people to provide long term increases in standards of living. I love the idea of providing support that grows over time. I like investing and reaping the rewards myself later (with investment I make for myself). But I also like to do that with my gifts. I would like to be able to provide opportunities to many people and have many of them take advantage of that to build a better life for themselves, their families and their children.

The photo shows Frew Wube, Haimanot and Melkan (brother and two sisters), an entrepreneur that received a grant from Trickle up. Trickle Up provides grants to entrepreneur, similar to micro loans, except the entrepreneur does not have to pay back the grant. They are able to use the full funds to invest in their business and use all the income they are able to generate to increase their standard of living and re-invest in the business.

The ability to think of the opportunity my donation or loan is providing someone else is one way to put up with the silly annoyances of working. It is easier to shrug off pointy haired boss behavior: my job allows me to provide help to a significant number of people.

Some other charities I donate to and support: Habitat for Humanity, World Wildlife Fund, Concord Coalition, Public Library of Science and the Environmental Defense Fund.

Please consider donating to a charity instead of buying more stuff this holiday season. If you lend through Kiva, add a comment with a link to your Kiva page and I will add you to the page. Kiva offers gift certificates.

Related: Micro-financing Entrepreneurs – Nepalese Entrepreneur Success – 2006 Nobel Peace Prize to Father of Micro-lending – Buying Stuff to Feel Powerful – Buy Less Stuff