These days, it seems we all want to find creative ways to save money – or stretch that dollar. Some people are doing this through a unique strategy. Although, it’s actually an old system being modernized for today’s times. And driving this modern twist are communities of young immigrants. In this story, KVPR’s Israel Cardona Hernandez reports what this financial system is all about.
ISRAEL CARDONA-HERNANDEZ: Last December, David Medina of Fresno found himself in a tight spot.
DAVID MEDINA: When I was looking at my numbers for Christmas shopping and all. Oh, I don’t have enough money.
CARDONA-HERNANDEZ: But he had a solution. He was a member of something called a tanda. It’s a lending circle common in Latin America. You pay small amounts into a communal account, then you get your money back in a big payout.
MEDINA: And then I remember, wait. I’m about to get my money from the tanda. Like that money can go straight into my Christmas shopping.
CARDONA-HERNANDEZ: And that’s exactly what happened. He was paying $100 per month, and got $1000 back, right before the holidays.
MEDINA: That money that I didn’t know that I had put aside, I had it and it worked perfectly.
CARDONA-HERNANDEZ: This is how a tanda works in Latin America. It’s kind of like a community loan program, or an interest-free savings account. And it runs on an honor system. Vianey Barraza is a special projects manager at the Education and Leadership Foundation. It’s a Fresno-area non-profit that runs tandas more formally. She explains how they work.
VIANEY BARRAZA: You get a group of people, usually between six and 10 individuals, and they decide to lend to each other. They decide on an amount, and usually every week or every two weeks; one person will get the full loan amount and everybody will be paying in, including the person that receives it.
CARDONA-HERNANDEZ: Her organization teamed up with a Bay Area non-profit to run the tandas electronically. It’s called Mission Asset Fund. These types of savings have been around for a very long time. But traditionally, they were done with cash. Now, in the Central Valley, they are gaining new traction. As immigrant diaspora adapt them to technology, managing their accounts using computers and phones. It’s a modern usage of an old technique that is attracting younger generations.
RAUL HINOJOSA-OJEDA: Immigrants started adopting digital technology much more than even regular people, if you will.
CARDONA-HERNANDEZ: Raul Hinojosa-Ojeda is a professor of chicano studies at University of California Los Angeles. He shares the origins of these lending circles.
RAUL HINOJOSA-OJEDA: They’re not new. There’s multi-thousand year old roots of communal labor in Mexico, there’s 1000-year-old roots in Asia of communal work and communal savings and lending.
CARDONA-HERNANDEZ: He says the current tandas took shape in the 19th century. When immigrants from China and Mexico brought these collective savings practices to California. A key element of tandas is trust. Traditionally, participants knew each other. Then, they were less likely to take the money and run. Hinojoda-Ojeda says now, the participants in electronic tandas are strangers, and the organizations running the apps guarantee the funding. Carmen Cardenas is also with the Education and Leadership Foundation. She helps people join the tandas, and sometimes she participates. Like when she celebrated her 24th birthday.
CARMEN CARDENAS: When I received the loan, I wasn’t wanting to go into credit card debt for my birthday celebration, so I saved the money that I got from the lending circle to put it towards that. So, I was able to use that money and then keep paying it back as the lending circle went on.
CARDONA-HERNANDEZ: She stays up to date on her phone. Meanwhile, David Medina has found love for tandas. Not only because he can save money, but also because he’s building his credit score through the Mission Asset Fund app.
MEDINA: After college I didn’t really actually build my credit. The idea was pitching to me about if I was interested in building my credit score with this type of method.
CARDONA-HERNANDEZ: After his last payout, he got involved in another tanda. He will get more than seven hundred dollars back, later this year.
For KVPR News, I am Israel Cardona Hernandez.
