The Bank-Free, DIY Lending System That Helps Friends and Families Finance Themselves

Women's Finance.... from around the world....

I've heard about these women's clubs several times - mostly the Japanese ones. This one mentions a Armenian tradition....

www.truth-out.org...

Each woman puts $100 into a pot every month, and at the end of the night the host keeps the money. Most recently they met at Kharadjian's house, so she got to keep the $1,000. She plans to use that money to pay a credit card bill. Next month someone else will host the party and keep the cash.

This type of system is called a tanda in Latin American cultures. It is seen throughout the world with many different names, but the principle remains the same: A group of people—usually relatives, neighbors, or close friends—gets together and agrees to contribute a certain amount of money over a certain period of time.

Tandas are usually small and informal, but the model is being scaled up. Mission Asset Fund (MAF), a San Francisco-based nonprofit, helps connect clients interested in this type of system, which they call "lending circles." In the eight years since the program started, it has facilitated almost 4,000 zero-interest tanda-style loans.

But mostly...

Even with all the financial benefits, Kharadjian said her favorite thing about participating in shirkets is still the monthly gatherings. "I'm so glad I did it," she said. "It provides us a chance to step away from our daily routine and enjoy each other's company for a couple hours."

a reply to: FyreByrd

Sounds like a credit union, they have those everywhere.

originally posted by: soulpowertothendegree
a reply to: FyreByrd

Sounds like a credit union, they have those everywhere.

Credit Unions are 'in principle' scaled up versions but without the 'human relationship' factor.

Read the article ... it's different ... it's local ... it's personal.

a reply to: FyreByrd

So are credit unions. This is how they started, personal and community related. I think it;s great, but they did not reinvent the wheel!

a reply to: soulpowertothendegree

Women and Men have been doing this together for a long time before any one thought of a 'collective' credit union...

Again I suggest reading the article.

From Wikipedia...

The first successful credit unions began in Germany under the leadership of cooperative pioneer Hermann Schulze-Delitzsch. These credit unions would be recognizable today, since they adhered to the basic aspects of the co-operative identity: that is, they were “based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others.”[1] Shulze is credited with developing the bond of association which still forms the legal basis for credit unions today.

The first working credit union models sprang up in Germany in the 1850s and 1860s, and by the end of the 19th Century had taken root in much of Europe. They drew inspiration from cooperative successes in other sectors, such as retail and agricultural marketing (see history of the cooperative movement).

Again, the article referenced, is about small and personal finance models and how they help people improve their credit and help one another - and get to know and trust other people.

This is very common in South Asia: women in Bangladesh, India and Sri Lanka all do it.

It works very well in small, close-knit village communities where everyone knows everybody else and default is impossible. It doesn't work so well in urbanized societies with a lot of mobility, because it's all too easy to take the money and run.

Seettu, the Tamil money club

Seettu, like any money related product, is not without its share of risks and troubles. I have heard of someone running away to Vancouver from Toronto with the pooled money. An over borrowed business person on the brink of bankruptcy can bring the smooth running Seettu down. Seettu is not legally binding and therefore there is no recourse for settling any disputes. It is based on trust and overall it has worked well. The organizer plays an important role in making it successful. The organizer would only bring people she thinks is trustworthy, often her friends, relatives or people from her village who would know of their financial history through the grapevine, someone with not more than 2 degrees of separation. This provides incentives for everyone to contribute on time until the end of Seettu or else they would lose face with others and damage their reputation. It is not a get rich scheme. It is simply a mechanism to transfer capital from one set of participants with varying degree of needs to another set with varying degree of excess capital, spread over time to make it manageable and less susceptible to failure.

a reply to: FyreByrd

This is the dumbest thing I ever heard of.

So I get in a group with 9 other women. Each month we meet and I contribute $100, one of the others gets the whole pot. On the 10th month, we meet at my house where everyone gives me $100, meaning I get $900, the same exact thing I spent $100 at a time over the preceding 9 months.

There is literally no point, I could have either spent the $100 each month on something I needed, or put it in a savings and drawn interest and still come out with the exact same thing.

This must work only for those with 0 impulse control, like toddlers.

a reply to: Ameilia

This is the dumbest thing I ever heard of.

This is a traditional form of savings among South Asian women. Women who have very little money, certainly nothing left over for luxuries. Women whose lives are full of shortages and emergencies, whose household earnings are barely enough to cover expenses. Whose husbands help themselves to any money they find lying around, and to hell with the children's milk and schoolbooks. Who would be abused and probably beaten if they hid money away from their husbands.

Who's really being dumb here? Who can't step out of their rich, pampered, overfed little world and see how things look to others?

a reply to: Ameilia

a reply to: Ameilia

Please read the article. It may be 'dumb' to you, but it's it isn't to thousands of others over time.

There is logic in spending money as soon as you receive it because it is 'worth' less tommorrow.

This system, as I perceive it, is more about community and supporting one another save and set goals over time. It's more social then financial in that sense and as an earlier poster noted requires trust among all the parties which is sorely lacking in many urban communities. These 'lending groups' have been imported into the US by immigrants and used as a way of staying connected with their mother cultures.

But if you don't have or can't build a small community of trust or just don't like the company of others, this wouldn't be for you (might be good for you but whatever).

The social aspect attracts me but the idea of a 'stash' that I can't touch is appealing too. I'd still maintain my cash stash and savings but those get used as needs arise. At the end of the 'turn of the wheel', it would be nice to cook for the others and have an extra 'wad' to save or spend or whatever....

Nobody cares about your (or my) opinion, on this forum, but they (well I) do want to hear what to can add. Mostly I've received derogatory comments on this practise or negative commentary.

Astyanax added content when mentioning how hard it was to develop such a group in urban settings and I agree. And it would be wise to consider 'theft' and 'death' among other things before entering into such an arrangement - but all those can be managed by 'people of good-will'.

Ultimately, we are being dis-connected from one another; the ranks of the social-phobic, anti-social, lonely, etc are growing due to lack of 'face-to-face' interaction in daily life. Any excuse to spend regular time (without media) with others is beneficial personally and collectively.

It's not dumb whatsoever.

originally posted by: Astyanax
a reply to: Ameilia

This is the dumbest thing I ever heard of.

This is a traditional form of savings among South Asian women. Women who have very little money, certainly nothing left over for luxuries. Women whose lives are full of shortages and emergencies, whose household earnings are barely enough to cover expenses. Whose husbands help themselves to any money they find lying around, and to hell with the children's milk and schoolbooks. Who would be abused and probably beaten if they hid money away from their husbands.

Who's really being dumb here? Who can't step out of their rich, pampered, overfed little world and see how things look to others?

It is not "saving" anything when a person ends up with the same exact amount of money at the end of it. You could set aside $100 every month, or do this weird trading thing, and either you end up exactly where you were before.

I suppose there might be a small social benefit. They (the people doing this) would gain more to form a coupon group, thrifty group (whether shopping or re-purposing, anything 'thrifty') or any kind of group that actually functioned to get them AHEAD instead of keeping them in the same place.

I don't see why you would call me rich, pampered, and overfed, for stating the simple fact that these women are doing something that PREVENTS them from getting AHEAD in life by keeping them in the SAME PLACE.

I'd rather seem them GAIN SOMETHING which apparently makes me 'overfed.' For all the logic you have there.

a reply to: Ameilia

It is not "saving" anything when a person ends up with the same exact amount of money at the end of it.

Why not?

I don't see why you would call me rich, pampered, and overfed, for stating the simple fact that these women are doing something that PREVENTS them from getting AHEAD in life by keeping them in the SAME PLACE.

Because you live in the West. Where poverty is defined as not having as much money as you'd like to, where disease, crime and hunger are small, distant threats, and where the majority of the population is overweight, while many are obese. Where conditions are so comfortable for all except a tiny underclass that people have no idea what it is like to face real difiiculty. And where people have no idea how offensive their ignorance, prejudice and know-it-all prescriptions are to those who live in the real world.

It is not "saving" anything when a person ends up with the same exact amount of money at the end of it.

Why not?

Well, if you don't understand the example I detailed previously, before being told I was rich, pampered, underfed, ignorant, prejudiced, and know-it-all,

then I can't help you.

Here is the example I gave:

So I get in a group with 9 other women. Each month we meet and I contribute $100, one of the others gets the whole pot. On the 10th month, we meet at my house where everyone gives me $100, meaning I get $900, the same exact thing I spent $100 at a time over the preceding 9 months.

It is basic math. You're just too busy, or lacking the ability, to add it up. When a person ends up in the same place they began, they've gained nothing. I would even go further and say they have harmed themselves. All those months they could have used 1/9th of the money and didn't, and the time value of money. The thread isn't ready for TVM calculations.