In a declining economy of unstable employment prospects and with credit card and bank interest loans reaching astronomical heights the decision to take any type of a loan can lead straight into bankruptcy. Money pooling, also known by the name “Susu” is a way of creating a small scale community-based no-interest savings and credit association to fund projects and quickly accumulate savings.
People who have classically been without access to bank credit in this country, most notably new immigrants have often depended on pooling their community's resources to improve economic prospects for individuals providing along the way a valuable example to the rest of us: When money needed for life's emergencies or to fund entrepreneurial and home-ownership dreams cannot be accessed through traditional financial institutions those belonging to money savvy, well-connected groups have a clear advantage.
How it's Organized
The basic structure of a money-pool or Susu centers on a group of individuals where each inputs a set amount of cash, according to a certain time schedule and at regular time intervals. The money is given to a trusted and reputable member of the group designated to be in charge of keeping tracks of the funds given and the order in which they are to be re-distributed.
Each individual is assigned a number drawn at random, signifying the order in which they will receive payments. At the agreed time interval all members will pay the assigned amount to the organizer who will then give the entire collected sum to the individual with the number to which the funds are due at a given time.
The person holding the number 1 will be payed first, 2 second, and so on, with the highest number being payed last. All members continue to make their payments until everyone has had their turn to receive the lump sum. Those being payed first will in effect be receiving a no-interest loan while those paid last have had achieved a handsome sum of savings they may otherwise have easily spent
The process can be ongoing or done once or a few times, depending what the needs and preferences of the community and the individuals are and the stability of its membership. Since each rotation can start with a new number drawing and assignment, each member can have the opportunity of experiencing the money-pool as a credit-giving association or a savings account arrangement, at different times.
Built-in Flexibility
Susu is designed with the closely-knit small community environment in mind, as per it's origins. One of the best features of such an arrangement (outside of, of course the no-interest line of credit) is the flexibility in both the amount that can be agreed upon as well as the size of the group it is contained within. The more members there are the higher the lump sum payout will be for each individual when their turn comes, but also the harder to sustain the system can become.
The amount given and how often it is given is something the group can vote on, with the understanding that smaller amounts will make the association more sustainable but less impactfull for those looking to raise large sums. An aspiring business owner and a low-wage worker have different needs and financial capacities and therefore would probably not seek out the same type of a money-pool.
A Susu geared to a low-income savings community may require a contribution of only $25.00 every two weeks while one meant to expand business opportunities may depend on contribution of $1000 week, and higher. A larger number of players with stable incomes - ideally co-workers within a department of a larger company (or other highly co-dependent groups with a finger on the pulse of each others employment situation) - can shoot the size of the payout into the stratosphere and turn a member into a business or home owner fairly quickly.
No Legal Protection
Unlike the classic banking systems, there are no legal assurances and often no way to legally pursue a violator of terms. Susu is very much an honor system and as such is entirely based on community cooperation: The members should know and trust each other and also have a certain amount of co-dependency, such that violation of the terms of the agreement would cause an individual to be affected far beyond just being excluded from future money pooling.
Friends, family, co-workers and small town dwellers will see their reputation ruined and themselves ostracized if they exit the money pool after collecting at their turn but prior to paying off their dues. They are also more likely to be aware of each others' personal and financial attributes and therefore better guard the money-pool membership. It is the responsibility of the recruiting organizer to only invite those known to be reliable, trustworthy, stable in their employment and arguably standing to lose a lot more than they could ever gain if they were to violate membership terms.
An organizer is also unlikely to get any sympathy from members if he or she were to somehow lose the funds received, presumably to robbery or natural disaster. The former is best guarded against by placing funds in secure locations and not spreading the news of the money pool beyond just the participants. Luckily, baring a lack of care or extreme misfortune such events don't normally happen often and so this no-interest credit line is usually more than worth the risk to everyone involved.
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