Our rings

No, not me!!!

Would you lend money to help someone get into debt?

As I’ve mentioned before, I find exploring Prosper fascinating. I like to see what sorts of things people are using it for. Often, it’s stuff I could get behind–like debt consolidation at a lower rate. Mr. Micah’s credit card was at 29.9% APR, so I can even understand why people would be ok with 25%. So, awesome. You’re helping a fellow human being get out of debt at a rate which eases their pain and simplifies their repayment! (And making a little money.)

Or it’s things like starting/expanding a small business. The person is, theoretically, putting the money into a business which will then grow and produce. Worth a shot.

I ran across a posting a couple days back for a guy who wanted to borrow $5000 at 27% APR to buy an engagement ring. *bug eyes* He’d tried to get the loan funded twice before, but people didn’t bite.

Best case scenario, he’ll have the money paid back in a few months and just doesn’t have the credit to get anything better because…well, maybe he just has no credit history. And he wants to buy the ring now because there’s a special day coming up and he wants to propose then.

Worse (but not worst) case, he spends at least a year paying it back and it costs him another $1000+ in interest. Worst, of course, would be a default.

Maybe he thinks that it’s worth going into debt for the woman he loves. It’s probably not—at least not that much. If she requires that expensive a ring and he can’t afford it, there’s a problem already. He may want to spend it out of his great love for her and desire to make her feel special, that’s sweet but I don’t know if I’d want to enable it.

As a grown man, he has the right to do what he wants with his debt (though I hope the girlfriend is aware of his financial situation–and he of hers–before they get married). He could obviously use a credit card (I guess he has higher interest) or perhaps get a loan from the jewelry store.

As it is, he’s appealing to the goodwill people on Prosper to support his love with their loan. Would you do it?

(Let’s assume a decent case scenario, where he pays it back on or a bit before schedule and there’s no collections agencies involved)

Or do you dislike debt so much that you don’t want to enable someone?

Or do you think it’d be better if he got 27% from Prosper than 30% from somewhere else?

What would be your reasoning?

On a sweet note, my MIL just got an engagement and wedding from from my FIL for Christmas. He hadn’t had the money to buy her one 30 years ago, but he used his jewelry-making set to put something really sweet together for her. It was so cute!

photo is of me and the boy!

{ 21 comments… read them below or add one }

fathersez December 30, 2007 at 8:52 am

I think the best thing anyone can do to him is not to lend him the money.

If he is so in love, shouldn’t the lady be aware of his financial state by now? Unless he is in love with a girl well above his financial standing, and she is not aware of his. And no ring will settle this.

No true love should need someone to take a 27% APR loan to prove it.

FourPillars December 30, 2007 at 9:05 am

Sounds like a scam to me. If he really doesn’t have any money then why would he want to spend $5k? That’s a lot of dough for a ring.


mrsmicah December 30, 2007 at 10:09 am

Mike, I expect he’s bought into the diamond commercials. He says he’s got income to pay it back, but apparently doesn’t have anything saved.

vh December 30, 2007 at 10:38 am

If it’s not a scam, it sure looks like Son of Subprime Loan! I wouldn’t lend the money, not because of a judgmental impulse about the intrinsic silliness of the purchase but because the guy sounds like he’s not thinking very clearly, suggesting that he won’t have the self-discipline or earning power to repay the money.

Now if I were feeling very priggish (which wouldn’t have to be much more priggish than I feel about our would-be borrower’s proposition right now), I’d say I wouldn’t lend money to enable anyone to buy a diamond, period, given the exploitive and immoral nature of the diamond industry.

Amanda @ Me vs Debt December 30, 2007 at 12:38 pm

Although I originally signed up as a borrower on Prosper, I have since become a lender. The only people I lend to are those that sound like they are ready to make sound financial decisions. This guy doesn’t qualify in my book. First of all I don’t think expensive jewelry is a good reason to go into debt and second of all I see no reason to rush into marriage. If you want to spend the rest of your life with someone, why not wait a year or two (or three as in the lifetime of the loan) to make it a legal deal. Just my opinion.

Kacie December 30, 2007 at 2:22 pm

Oh for pete’s sake. $5k for a ring? Uh, that’s absurd. It’s not as absurd if you can walk into a jewelry store and pay cash for it. If you’re one of those people, I’d say go for it!

But taking a $5k loan on a luxury you can’t afford? Bonkers. That guy has no business doing that, and hopefully his girlfriend wouldn’t want him to.

He’d be much better off saving the money and buying it outright. If they want to get engaged now, they can do so without a ring. Thanks to DeBeers and pop culture, we just assume that you need a ring to get engaged, ya know?

Turns out, you just need two consenting adults. Much cheaper!

mrsmicah December 30, 2007 at 2:58 pm

I’m rather fascinated by the evolution of wedding traditions. My grandfather gave my grandmother a brooch and bracelet set when they got engaged. 200 years ago, brides probably didn’t even consider wearing white (I think Victoria was the one who really popularized it). 100 years ago, white wasn’t yet de rigeur (as far as I know).

Of course, there were different traditions and social norms then.

And now you need the diamond, the white dress, preferably a limo…lots of flowers… My wedding conformed to a lot of those norms, but it stayed under the price of this engagement ring.

(Yes, that’s a diamond on my finger–a recycled/reset stone. I love sparkly things.)

plonkee December 30, 2007 at 3:46 pm

I have to be honest, I like pretty jewellery and I would love to have expensive jewellery – it’s that feeling that I’m special enough to have someone spend a fortune on me. And it’s a one off.

But then, the sensible side of me kicks in, and says that is a lot of money, really a lot of money. And it’s a fortune to borrow at 27%.

Unfortunately not everyone thinks of money in the same way as sane pfbloggers and their readers. I’m sure that more than one couple are paying off the engagement ring into their first year of marriage, and paying off the wedding for the first three or more. Sometimes you have to live it to realise why it’s such a bad idea.

RacerX December 30, 2007 at 3:50 pm


I was feeling bad about calling the person a potential scam, but it seems to be the thought of everyone here.

Reason I think it is a scam is two-fold:
1. Jewelry stores have stupid-liberal policies on credit. They can afford it since the margin is so high on jewelry. Nearly anyone can get a loan.
2. We tried before and failed and is back…is you were desperate, would you keep coming to the same place, or try another avenue?

IF not: I hope he finds out that if she IS the one ring size doesn’t matter, and if she does care…she isn’t the one!

Eden December 30, 2007 at 5:04 pm

Saving my Prosper rant for another time…I will just say that loaning someone money at above 20% interest is not doing them a good service for any reason or at any time. Period.

mrsmicah December 30, 2007 at 5:16 pm

I would have to disagree, Eden, if their debt is at 29.9%, then 23% would be a very good deal for them. But I still don’t feel comfortable enough with lending to do it myself.

You should post on how you feel about Prosper, it’d be an interesting read.

Fabulously Broke December 30, 2007 at 6:32 pm

Even if he could pay it back, $5k is nuts for a ring if he cannot afford it.

The point of a ring is to save your cash so you can buy it in full and propose to your gf to show that you have a commitment to her, and you’re ‘storing’ $5k (or whatever) in that ring as a promise of being together forever…

That’s important because it’s a strong symbol of their eternal (supposedly) love, because in a famine you cannot eat the $5k ring or sell it for exactly $5k (maybe hock it for less?)…

Man I just read that and I feel incredibly hypocritical but then again, I have other ways of justifying what happened afterwards .. unfortunately.

He should’ve saved as much as he could even if it ends up being only $2k (if he says he can pay it back in no time it means he can SAVE in no time as well), and then buy the ring…

Money Blue Book December 30, 2007 at 8:12 pm

With nearly half the world’s diamond production, DeBeers has one heck of a marketing team. They’ve managed to make us all think that buying expensive diamond jewelry equals love – myself included!

Susan December 31, 2007 at 9:41 am

My BFF’s hubby not only charged her ring, he had to put it on his roommates credit card because his credit was so trashed he couldn’t get financing. I don’t know how much he paid, but I suspect it was in the $3K range for the set. The mindset is that it’s an “investment.” Uh huh. My first engagement ring came out of a 25 cent gumball machine at Taco Bell, but that’s another story. My real set was under $1,000 for both rings. We didn’t have money to “invest” at the time. Today, just a little over a year later, we’re 6 months from having our mortgage paid off, THEN we’ll have money to invest. In index funds!

CatherineL December 31, 2007 at 10:48 am

Mrs M – I would tell him to buy a fake diamond ring from QVC.

Seriously – there is no way I would lend the guy the cash. Because if he is willing to get into a huge amount of debt to pay for a ring, he might borrow to buy other things and get into so much debt that he is unable to pay you back.

deepali December 31, 2007 at 11:47 am

My issues with diamonds aside, that type of loan rate is just not worth it for a luxury item. Luxury is just that – luxury. Financing it doesn’t seem to make much sense to me.

Becky December 31, 2007 at 12:52 pm

I agree with everyone here – this guy needs to get his financial priorities in order. Bought just 6 months ago, my engagement ring and wedding ring together cost under $800 (of course, I actually dislike large diamonds and requested a small ring from my now-husband).
Also, if this guy has been on Prosper for a while now not getting any bites, he should have saved up some of the $5000 in the time he’s spent waiting for someone to give him a loan. Why do I have a feeling he still has $0 saved for a ring purchase?

wealthy_1 December 31, 2007 at 4:34 pm

I think we’re pretty much all on the same page. And like racerx said the jewelry store probably would have loaned him the money for the ring. And why did she need a $5000 ring??????????

As someone who has been with the same guy for 30 years, now is the time I appreciate when we had no money and relatively little debt and he would give me inexpensive homemade items as tokens of his love.

Anitra January 2, 2008 at 2:41 pm

My hubby had my engagement ring custom-designed (not cheap, but a lot less than $5000! IIRC, it was somewhere between $1200 and $2000.) HOWEVER, even as a poor student, he saved up his money and paid the jeweler the entire amount (in installments) before receiving the ring and proposing.

Buying engagement rings on credit seems to me to be just another symptom of our gotta-have-it-now society.

Shauna January 6, 2008 at 11:43 pm

That’s depressing that someone would buy a ring they can’t afford–what a terrible way to start a marriage! Hopefully the person is adult enough to realize what marriage is about, and understand that newly-weds are SUPPOSED to make sacrifices together! My only wish for my ring is that it’s “conflict free,” (another issue entirely) otherwise I don’t care how big or expensive it is.

WealthBoy January 10, 2008 at 4:11 pm

I like the idea of peer-to-peer lending. I think the credit card oligopoly needs some competition to bring their outrageous interest rates down. I don’t know if the peer-to-peer lenders will take enough market share to really do this, but it will be interesting to see what happens.

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