Have you ever picked up a friend's kid from school because they would do the same for you, or fed their cat while they were on vacation? Have you ever been to a potluck, been a part of a book club, or had a friend house sit for you? We have trusted networks to help us with the things closest to our hearts. Often these have personal and/or financial value - like our children, pets, and apartments. Can we utilize similar trusted networks to promote mutual financial wellness? The answer is unequivocally yes!
These types of networks - known as friendly societies, housewives’ saving clubs, mutualistas, and informal lending clubs - have existed for hundreds of years, all over the world, providing interest-free loans to their members. These loans are made on a strict schedule and used for the same types of expenses where credit cards fall short: expenses too small for a bank loan, and too big to use a credit card without accruing significant debt. These in-between large expenses - family vacations, a rent deposit, medical bills, household appliances, car repairs, debt repayments - are the types of purchases that many consumers can’t pay off in 30 days, putting them in situations where they are burdened with paying high-interest rates over an extended period of time.
Don’t let the “friendly,” “housewife,” and “informal” aspect of this financial tool distract you from its absolute ingenuity as a zero-interest financial tool. These networks can save participants hundreds of dollars in interest by helping them pay off high-interest debt, or be an instrument for a big-ticket purchase.
Being communal, these types of networks are not just good for the pockets but also good for the soul.
Image Source: https://www.pexels.com/photo/men-sitting-beside-table-on-pathway-near-people-walking-beside-rail-1543767/
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