Want a steady income? There's an app for that

tl;dr App called "even" allows people with incredibly variable income (case study is on a massage therapist, lots of money one week, little the next) to even out their income. They evaluate their income history, then offer a stabilized value, say $380/week. Weeks they make more, the application takes it and puts it aside. Weeks they make less, it either pulls it in from a reserve, or an instant loan is made.

Costs users $3/week. Which is non-trivial, but less than a payday loan company.

The article opens with the story of Heather Jacobs, a masseuse whose income is volatile, and it implies that she's a prototypical Even user. But she actually seems to be an undesirable user, from the company's point of view.

It sounds as if she's struggling not just to budget but to earn enough money to pay for all her expenses, both recurring and unexpected. (She says she's often "desperate" around the end of the month.) That's exactly the kind of user that Even should try to avoid.

I'm not necessarily faulting the woman for not being able to make enough; I'm just saying that Even's ideal user should be someone who, over time, earns enough to cover their expenses, but either has trouble sticking to a budget or would prefer the convenience of an app to handle budgeting for them.

For instance, my parents (one a teacher, who got paychecks from September to May, and the other a landscape, who earned little during the winter months) could have used an app like this when I was growing up. Between the two of them, they made ends meet, but they struggled to figure out how much to save so they'd have a reserve during the months when their incomes dipped.

One thing I am curious about, which the article doesn't touch on: What happens if I have a surplus in my Even account (which the article says is kept in a savings account), and I run into a huge unexpected expense? What are my options for tapping into that surplus?

If I have the same access to it as a regular savings account, does that kind of defeat the point of the app (to prevent people with poor willpower from spending their surplus instead of saving it)? Or is it treated like a withdrawal from a 401(k), with penalties for taking the money out earlier than scheduled?

Looking at their website (https://even.me/)- this app both acts as a bank itself and interacts with a person's bank account. Some interesting notes - even is actually FDIC insured, so at least the money they are moving out of a person's bank account is insured in case the company collapses. Their linkedin page also notes they are...

"A bank that automatically manages its customers' finances. Pays their bills. Balances their budget. Saves and invests. And at the tip of the iceberg, gives each and every customer a weekly paycheck of purely disposable income. "

So not only is the income you get each week stabilized - the long term intent is the income you get is solely above and beyond bills and, presumably, investment goals.

At some point - Even could issue debit cards, link up with paypal accounts, and literally supplant the banks that they are working with currently.

Loans are a tricky concept, and Even is attacking a very appropriate market - more than 69% of payday loans are used just to pay normal bills, counter-intuitive to what I would have guessed (emergencies such as health and auto-repair are only around 16%).

Some math: $3 a week = $156 a year - savings of ~$360 versus average payday loan interest. 12 million people use at least one payday loan during a year, with numbers skewed as a higher % of population in states with "looser" regulations on payday loans (6.6% of pop) rather than states with "very strict" regulation (2.9% of pop). Average loan = $375, 8 separate loans taken during a year, plus $520 on interest payments across all loans. 6 of those 8 loans are actually extensions of just 2 loans!

If regular bills are budgeted for, and the money is literally reserved by Even, that eliminates the need for 70% of all non-extended payday loans. Add in budgeting for emergencies, and 84% of payday loans are gone - so whatever interest they do or do not charge for the other 16% is not going to approach normal interest costs.

As jawns points out - majority of loans are because people can't afford their bills...

Since they are FDIC insured - I'll assume they operate like a standard credit union overall and are buffering people's loans using other people's savings...again they also claim they want to invest people's money for them.

> If you have no money saved, Even will boost your pay with interest-free credit. You'll automatically pay the credit back the next time you earn more than your average pay.

... then later

> ... Even is not a lender and Even does not provide loans.

I'm guessing this is to stay on the right side of lender regulations, but talk about being slippery with semantics!

That's a seriously fucked-up webpage without Javascript =/ http://i.imgur.com/Lr53m7u.png

Amidst all these verbose vignettes of precious characters, what DOES Even DO? Oh, ok, there's one paragraph in there that sheds some light:

"The app then holds back an “Even cushion” — a savings account it manages for the user. In the demo I saw, the app, drawing on a sample bank account, reported that “if you earn less than $380, Even will automatically boost your paycheck. If you earn more than $380, Even will automatically pay back boosts and save the extra to your cushion.”

Duplicate of https://news.ycombinator.com/item?id=9460628

This interest free loan makes it VERY susceptible to fraud or abuse.

Lets consider for example, a technology contractor, making $120,000 a year from various contracting jobs. The contractor could sign up for Even, and then retire, collecting a $2500 "paycheck boost" interest free.

I think this idea has a lot of value, but their current business model can't be profitable.

I worked with a company a few years back that did this exact thing, although we couldn't get past regulations and ended up shutting down.

http://finovate.com/videos/finovatefall-2011-tandem/

What is to stop someone simply opening two bank accounts. Then paying their unsteady income into one and then transferring a steady amount of money into the other.

Combined with the old adage about spending less than one earns and the result is happiness.

The article is very good and the business idea seems solid too. It reminded me of the article from last week about how etsy is a "B corporation" and they've committed to put social and environmental concerns before profit. It sounds like that would be a good choice for this company too. Providing financial products to poor people is a slippery slope if you're trying not to be evil. Payday loans, rent a center, layaway, check cashing all serve to perpetuate a cycle of poverty. If even can be a profitable company and also help to break that cycle it will be really great.

I wanted to really hate this, but it sounds like a really interesting idea.

It seems like it would either be very capital intensive, or it's going to need to operate like a bank. Also, folks in these situations tend to be very transient and have fluctuating income. How do you establish an adequate virtual salary when the terms of the person's employment change?

Forget about massage people -- they are a bad example because two or three customers may make for a windfall-like experience. How about a person who works at the Gap or BestBuy? You might get 35 hours one week, 20 the next, then 18 for a month.

Its kind of marketing tactic? Spend some dollars to get viral!

TL;DR?

Thank you for double posting the infomercial for an app (https://news.ycombinator.com/item?id=9460628) within a mere 6 hours of it's last appearance. (HN really should have a built in filter for this).

Also a big thanks to the new york times for their uninterrupted commitment towards high-quality journalism.