Many of us are worried about the economy.  We are worried about our savings, our retirement, the value of our homes and even our jobs.  The sudden downturns we have seen, of historical proportions, first in real estate and then Wall Street, the credit market and now the job market are giving many of us cause for concern.

But as a nation of can-doers, Americans need to take stock of what tools are available they may have overlooked; tools outside today’s financial turmoil.

There are many opportunities coming from the very same conditions that concern us.  Mortgage applications for new purchase (not re-finance) were up 38% end of November.  With credit less available though, opportunities still require funding. In the past six months, there is an accelerating trend in person to person or social lending. 

Actually, person to person lending, (peer to peer lending) is an age old practice much older than Wall Street and even older than banks themselves.

In the old days, if you were considered wealthy, someone whom you knew to be of good character and in need, might come to you, explain their finance needs and often on a handshake, you gave them a loan.

To guarantee these personal loans, something the borrower valued very highly was put up as collateral.  Common sense dictated that collateral needed to be whatever was MOST VALUED by the borrower not necessarily the lender.  The important thing to remember about collateral is that if chosen well the borrower will do most ANYTHING to keep from loosing it therefore increasing the chances of repayment. 

Today, borrowers and lenders alike consider a person’s home to be their most valuable financial possession.  This fact is confirmed by national statistics identifying owner occupied single family homes with a 95% success rate of repayment even under the current economic conditions. 

Accelerated by today’s credit crunch, people of average financial wealth, in increasing numbers, see lending to others as an opportunity to provide a safer, long term investment and one that also creates monthly income. 

People on fixed income, people facing increased expenses or facing job cuts are increasingly turning savings and even home equity into monthly cash income through peer-to-peer lending programs.

A year ago, it was reported that peer-to-peer or social lending was expected to grow over 800% over the next three years and by 2010 would represent 10% of the personal loan market.  Today, a year later, with credit so tight, social lending is expected to accelerate at an even faster rate.

By choosing secured peer to peer lending rather than unsecured and using solid collateral, you will add stability and accountability to your financial picture as well as increase your monthly income.  At the same time, you anchor some of your investments, outside today’s troubled economy.

Renewed growth in an age-old common sense practice may turn out to be Main Street’s answer to Wall Street.