401k fees are notoriously difficult to find out and understand, because many of them are rolled into ‘program administration costs’. There’s talk of legislation that will require these fees to be more transparent.

The fees for your IRA account are easier to find out about, though no less complex.

There are two main categories of fees – fees charged by the IRA provider and fees charged by the funds/products you buy within the IRA. Remember, an IRA is like a shield. You can buy a mutual fund in an IRA, or in a regular taxable investment account, but the things you put within it have special tax status. So you’ll usually pay some fees for the shield (the IRA) and some fees for the investements themselves.

1) Fees charged by the IRA provider

Opening fees – The fee to open the IRA. Most discount brokerages don’t charge anything for this – after all, they want your business. If you’re opening an account at a brick and mortar institution, watch out for this one.

Annual fees - This is a fee for each year you have the account open. It might be 0, and if not it’s usually waived once your balance gets high enough – check with your provider.

Closing fees – If you move your IRA to a different provider, you’ll be charged a closing fee. Most brokers charge this – but check with your new provider, because they might reimburse you for the cost.

2) Fees charged for the funds within the IRA

Trade commissions – this is the charge to buy and sell things traded on a stock exchange. within the account. You’ll pay this each time you buy shares of a stock or exchange traded fund, but then you won’t have any ongoing charges. Some brokerages have different fees for different fund types.

Fund Load - this is the upfront cost of buying a mutual fund – like a sales commission. You can avoid this cost, which can be as high as 5%, by looking for ‘no load’ mutual funds.

Expense ratio - this is the annual cost of owning a particular mutual fund, expressed as a percentage. So a 1% expense ratio means that 1% of the fund assets are used for expenses. This cost is charged every year and can have a huge affect on your earnings, so try to keep it as low as possible – look for expense ratios of 0.5% or below.

For years, I used my mobile phone for all my telephone needs, insisting it was a simple budgeting trick that would save me a few bucks. After all, nearly everyone else I knew was doing this. And then my bill started to climb higher and higher, well above what I would have paid for a monthly land line.

Recently, I began actually reading my cell phone bill and researching ways I could trim those costs. I realized that monthly statements are occasionally wrong when you read them line-by-line, that cell-phone companies often will negotiate charges on the bill, that I was paying for more coverage and add-ons than I needed and that I could make small changes in my usage to bring that bill even lower.

Some creative ways to help you trim your phone bill:

1. The three-month rule: Compare the minutes and texts you use with those you buy for three months. This will give you a good idea of whether you need to increase or decrease your allotted minutes and texts.

2. Keep it in the family: Signing up family plans is always a better deal than going it alone, but if you don’t have a close friend or family member to split the bill with, consider a mobile-to-mobile plan that makes calls between the same provider free. Chose a carrier that most of your family and most-talkative friends use.

3. Sign up for OverMyMinutes.com, which is a free service that sends you an e-mail when you come close to going over your minutes or texts. This is a nice, lazy way of keeping within your means.

4. Avoid toll-free calls: These are not free from your cell phone and you will inevitably be put on hold, which drains your minutes. I found this out the hard way when I moved across the country and had to deal with employment and utility calls. Save all toll-free calling for when you have access to a land line.

5. Don’t call information: Dialing 4-1-1 means extra charges. Instead, try 1-800-Free-411.

6. Trim the fat: Ditch the insurance, road-side assistance, ring-tone downloads, games and video streaming. Web access is one thing, but all the other extras services and applications add up quickly. Separate those wants from needs.

7. Consider the prepaid option: If you are not one of those people who use their phones all the time, prepaid phone plans make a lot of sense. Research different services online – some can cost less than $10 per month.

8. Smart ways to get rid of the phone: When you decide to get a new phone, sell your old one. You might not think it’s worth anything, but somebody else will, so remove your personal data and list it for sale. If you don’t get any takers, donate it to the woman’s shelter in your area – many shelters take old cell phones that aren’t good for anything except dialing 9-1-1.

Did you know that gaining control of finances consistently ranks right next to “lose weight” on surveys of the most common New Year’s resolutions?

Something else weight loss goals and financial-health goals have in common: almost no one keeps them because reaching toward them sucks. It takes energy and commitment.

But, good news! There’s a simple, and dare I say it, almost fun way to create and stick to a budget. Envelope budgeting has presumably been around since the Great Depression , but it’s gained recent buzz as one of Dave Ramsey’s budgeting methods.

Here’s envelope budgeting at it’s simplest:

1. See how much you spend Keep a receipt or recording of every penny you spend for at least a month. Several months is better, because your numbers will be closer to average, and if you have a finance management account from Thrive or another service, you’ll really only need receipts for cash purchases as your card/check purchases can be tracked online. Add them all up (averaging if you have more than one month represented) and see if you’re spending more or less than you’re earning each month.
2. Decide on spending categories Once you’ve got at least a month of purchases recorded, lay them all out on the floor or table. If it’s easier for you visually, take a sheet of paper and write the name of the purchase and a dollar amount, instead of messing with receipts that might have multiple categories on them.  Start sorting your purchases into categories. Be as general as you want with these categories–if you want separate “eating out” and “groceries” categories, that’s fine. Or you can simply have “food.” Total up your spending by category. Don’t forget a “paying off debt” category, or non-monthly bills like insurance which you’ll average out into a monthly amount.
3. Whittle out the extras At the end of step 1 you learned whether you were spending more than you make. If you’ve been overspending, figure out how much you’re going over. Eventually you’ll cut back even more to build up savings, but start small if you need to at first: simply go through each of your spending categories and find places to cut back until you even out; but don’t cut back on the “paying off debt” amount. These are your new totals for each category.
4. Pick an “envelope” The perk of using tangible, paper envelopes and cash is that you’re less likely to overspend than with cards. If you like the tactile/visual stuff, grab enough envelopes (a coupon filing book with labels also works) for your categories and cash your paycheck. Divide the cash as you decided among the categories, and dedicate the remainder to savings or debt-payment only. More on this in a minute. If the basic cash-in-envelopes method bothers you–perhaps because you don’t want to pay for gas with cash when it’s pouring rain, or you may be unwilling to carry around several envelopes full of your hard-earned cash all the time–more good news! You can create a hybrid system by making a “checking account/credit card” envelope. When you purchase a shirt, for example, on your debit card you save the receipt and move the cash from the “clothing” envelope to your “checking/credit card” one. Also, there are cool, simple downloads that keep the envelope concept in mind for you. Click here for a description of some popular options.
5. Don’t cheat The key to making this work is that once an envelope is empty, you have to decide not to buy anything else in that category. Also, when you have cash left over at the end of the month–put it directly toward savings or debt-payment, and nothing else. Did I mention it’s OK to have a “fun” envelope? See? Budgets can be your friend, but they’re only as good as your determination to stick to them!
6. Reevaluate Are you consistently emptying out “food” early on, even though you’re doing everything you can to eat cheap? Or is your “entertainment” envelope usually full at the end of the month? It’s good to step back and reallocate your money periodically; but remember that the goal is to beef up savings and slash debt by consistently spending less in the other areas. You should be aiming to consistently whittle back wherever you can so you get in the habit of spending less and saving more.

It’s wise to try out envelope budgeting for four months or so before you drop it. It takes time to get used to any new system of money management; and consistency is important even if you’re planning to switch budgeting plans, because you’ll have all your records in order to transfer to another system rather than going over step 1 all over again! Have you tried envelope budgeting? Tell us about your experience b

What if Tiny Tim was actually a perfectly healthy and mobile child, but his parents pimped him out as an endearing charity case?

What if Tiny Tim was actually a perfectly healthy and mobile child, but his parents pimped him out as an endearing charity case suffering from … I don’t know what (but here are some ideas)? No one could blame Ebenezer Scrooge for holding onto his money if he couldn’t even trust ol’ Bob!

Misuse of charitable funds isn’t the stuff of classics, but unfortunately it occasionally happens among the throngs of organizations collecting donations this season. It’s important to find out who you can trust when it comes to charities, because your time and money can make a difference in the right hands.

Here are some tips for making the most of your giving:

• Remember that only charitable gifts given by Dec. 31 qualify for tax deductions for this calendar year
• Human services charities, which serve people in need (whereas many charities are for organizations like museums), lose the most donors during tough economic times. They also see the biggest increase in need during hard times; so consider giving to  a reputable HS charity
• Research and be comfortable with how programs work. Don’t assume. There’s been some recent discord concerning Kiva, a micro-lending organization, after they made it clear that donors are not lending directly to entrepreneurs in developing countries, but rather paying back Kiva for lending to the entrepreneurs. Details like this may matter to you, and they may not! The important thing is that you understand and agree with a charity’s policies.  Here Beau from Walletpop.com explains why he still supports Kiva
• Review charities on CharityNavigator.com or American Institute of Philanthropy’s Charity Watch. Here you can check out where donations go, as well as find tell-tale information like the salary each organization’s director.

• Along with a background check, CharityNavigator.com suggests you ask these six questions before you pull out your wallet:

1. Can the charity clearly communicate who they are and what they do?
2. Can the charity define their long-term and short-term goals?
3. Can the charity tell you the progress it has made (or is making) toward its goal?
4. Does the charity’s program make sense to you?
5. Can you trust the charity?
6. Are you willing to make a long-term commitment to the charity?

Some unconventional ways to give:

• Does the growing national debt upset you? Do something about it. Click here to read more. You can actually send the government a check to help cover national debt!
• In some cities you can now donate to the Salvation Army by credit card . Crazy, right? Expect to card readers next to the red buckets in a city near you soon, as the plastic option has increased giving in test cities
• Of course you can give even when you’re broke. Look out for local blood drives, or volunteer your time at a church, shelter or other non-profit organization

Do you have  a favorite charity? What makes you trust them? Or maybe you’ve run across some shady practices. Post your recommendations and comments below!

Visual learners work best with concrete, tangible problems, so they have the hardest time with abstract concepts—making math pretty loathsome. I’m visually-oriented, and while other analytical feats come easily to me, my equations are usually frighteningly off due to the merciless journey they make through the cogs and shredders of the math-processing centers of my brain.

Luckily, no matter your reason for hating math, you only need some basic math skills and tools to have a full, healthy financial life. And, you can thank the math-people for making technological and software advances that make math-lite life possible! There’s no excuse for losing control of your finances now.

Look, don’t assume

• Bulk isn’t always better—Rules of thumb can help you avoid math at the grocery store, but get rid of the assumption that buying a bigger package (or the product with the lowest shelf price) of anything is cheaper. The only way to know for sure is to compare unit pricing. Unit pricing is usually a small number on the left side of the shelf price-sticker. It has the price per ounce, unit, pound, etc. No equations necessary— just a little “greater than or less than,” and that was fun in school
• Look at the big picture— Saving money can be counterintuitive. A $50 programmable thermostat (that isn’t necessary to heat your house) seems like an unnecessary expense, unless you take a minute to do some simple multiplication. As Trent from The Simple Dollar explains, this “unnecessary” expense can save you $60 a year in energy costs. Multiply that by the number of years you plan to live in your home, and you’ve got a truly frugal purchase

Identify your tools

• Cell phone calculator—If working equations in your head gets messy, never feel bad about busting out your phone. It’s better to humbly accept help with some simple calculations than to pay too much or blow your budget
• Math-savvy friend—Some people love crunching numbers. Find out if one of your friends gets all excited about setting up budgets and graphs, and trade one of your skills for their help
• Personal Finance services—You can buy PF software for about $30, or use a free online service that pulls information (securely) from all of your accounts to help you manage everything in one place. Thrive’s personal finance management service is exceptional because it offers adaptive advice for making the most of your unique situation in savings and budgeting. Math-savvy or not, finance management is so much easier with a good service. For the organizationally-challenged and the visual-learners it’s hard to beat the charts and graphs a PF service provides
• Pen and paper—One of the main reasons people feel like they can’t do math is that it seems abstract. Carry a little notebook and pen so you can “see” the steps of your addition, subtraction, multiplication and division.

Brush up your skills and boost your confidence

• Do a couple online math exercises—The Mira Costa Community College has free exercises in pdf form. The answers are on the bottom, so you can brush up your skills on your own
• Round up If decimals, cents and fractions throw you for a loop, just round to the nearest whole. I knew a woman who drove her husband crazy by always rounding when she balanced the check book. After a year or so they compared the actual and rounded final sums and found only pennies of difference
• Look up financial lingo Obscure financial terms are just as abstract as numbers for us visual people! I use Investorwords.com for simple explanations and definitions of things like “amortization,” “divestiture” and “arbitrage.”

Math should be the last thing between you and well-managed money. Whether or not math and abstract thinking come easily to you, someone gets them—and luckily those someones made it easy for you! Go revel in your right-brain thinking and budget at the same time.

Did you know that Retail Therapy and Comfort Food have a lovechild?

Women have a reputation for using “retail therapy” after a hard day (or week, or year), and both sexes are known to use high-fat comfort foods to soothe the soul; but did you know that Retail Therapy and Comfort Food have a lovechild?

His name is Recession Obesity.

Recession Obesity is a phenomenon born of both the gratification and convenience of a new purchase, and of the quick mood-boost offered by fatty and sugary foods. Though many people blame their declining diet standards on healthy food becoming more expensive, Time Magazine and The Wall Street Journal have been documenting America’s changing purchasing habits, and waistlines, over the past year. Their findings are that junk food sales aren’t up primarily because they’re cheap, but because they feel good.

The recession has done some good things for our health (bike riding is up 14 percent from 2007); but they don’t outweigh (pun intended) the bad. McDonald’s sales, as well as those of  chips, donuts, beer and microwaveable meals rising.

It’s all a matter of perception. We perceive that the unhealthy food is the better option because we know it will make us feel satisfied and comforted when we need a boost; and it seems cheaper than healthy food. Heck–it’s hard to turn your nose up at a dollar menu. We know that it will make us feel worse in the long run, but the carrot (or, you know, french fry) of  instant gratification dangling in front of us wins. The trick to avoiding Recession Obesity is to call him what he is: a fun friend who makes you forget your problems, but leaves you feeling like crap.

Here are some easy, recession friendly ways to satisfy your need for health, as well as comfort food:

Think happy, vegetable-y thoughts

• Getting fresh, whole foods into your body will boost your mood and energy in the long run. Veggies don’t have to be expensive. Most are seasonal, so stock up on your favorites when they’re cheapest
  
• Wash and chop all your veggies after purchase, to save time when you’re cooking. Store them in bags in the fridge
• Take sliced veggies with you for snacks. You’ll feel better about yourself and save money if you can avoid the vending machine
  
• Carrot sticks not your snack-style? Try sliced zucchini, or get a little crazy with a handful of peanuts. They’re cheaper per serving (about 12 cents) than chips if you buy the big 3 lb. can

Make cheap, healthy comfort food at home

• Pizza Using this easy pizza crust recipe and this marinara sauce recipe, plus a little cheese and some chopped veggies, you can have two low-fat, high vitamin pizzas (easily enough for two people) for about $0.75. All told it takes about 30 minutes to make them. To save time in the future, make a couple extra crusts. I save them (uncooked) between sheets of cooking-sprayed wax paper, and then in a large zip bag in the freezer
• Oatmeal Buy the big canister, not the instant packages. You’ll save money and calories by adding your own brown sugar, and some raisins or cut up fruit. As with veggies, look for seasonal fruit to get the best deals.
• Ice Cream Gena, of choosingraw.com has the most amazing ice cream alternative: freeze peeled bananas and throw them in a food processor. They get all light and rich like softserve; and I swear they taste like a Wendy’s Frosty if you add cocoa powder and a little sugar

Plan ahead

• Decide what meals you want for the week, and make a list before you hit the grocery store. You’ll save money if you know what you want
• Make large meals and store portion-sized leftovers in the fridge and freezer. You’ll cut out the preservatives, fat and cost of store-bought microwaveable meals

Ultimately, Recession Obesity is largely the result of an emotional need, not frugality. If you take the time to plan ahead,  and occasionally reason past the instant gratification and fatty-goodness of fast food and processed snacks, you’ll have little trouble getting through hard times with a rockin’ body

Avg. cleanup time for ID theft: 81 hours

According to a survey by Nationwide Mutual Insurance in 2005, even after an average of 81 hours of fighting about 16 percent of victims end up being held responsible for some or all of the thief’s fraudulent charges, which average $4,000.

If you suspect identity theft

You may have been tipped off by a creditor calling you about an account you didn’t open, or received a card you didn’t apply for in the mail. Whatever made you suspicious, it’s important to keep a record of it.

1. Hang on the suspicious mail, or try to remember any details you can about a creditor’s call. Call back for details if you can. Access the most recent statements for all of your credit and bank accounts and check for unauthorized charges.
2. This step is important: Get your credit report. If you saw fraudulent charges on one of your statements, the report will be free when you contact a credit reporting agency (click here for contact info) to place a fraud alert on your report. If you didn’t see anything unusual in your statements, access your credit report anyway (click here if you don’t have evidence of theft)  and scour it for any accounts you didn’t open, debt you didn’t accrue and accounts with the wrong address or SSN, or initials. If everything is normal, breathe easy and consider a security freeze to help protect you in the future.

If you know your identity was stolen

A moment of panicked rage is allowed here; but once you pull yourself back together, it’s time to work the phones.

1. Grab a notebook or a folder to take notes on every conversation from here on out. Get names, numbers, dates and times from all the people you talk with, and keep copies of any correspondence.
2. Place a fraud alert with one of the big three credit reporting agencies with the contact info link above. The one you contact will notify the other two.
3. Close out compromised accounts. If your bank account was ripped off, you’ll need a source of money while you wait for your new accounts to be opened. Ask a representative at your bank if they advise you to withdraw a store of cash before closing the account. Notify your employer of the account closing if you have direct-deposit payment. Card and account closings can be initiated over the phone, but you will need to send the companies copies of fraud evidence. The FTC recommends sending everything through certified mail, and requesting a return receipt, so you can document when they receive your letters. Ask each company for forms to dispute fraudulent charges and accounts.
4. Fill out an ID theft complaint form with the FTC (click here, or call 1-877-ID-THEFT) and keep it, along with the cover letter, to take to the local police.
5. File a police report. Don’t take no for an answer if your jurisdiction won’t file the report. You may need it to prove to creditors that there was a crime, and it will assure you a free security freeze (highly recommended to stop new fraudulent accounts) in any state. If your jurisdiction won’t file it, try your state police. It is best to fill it out in person, and not over the phone or internet. Ask the officer helping you to incorporate the FTC theft complaint form into the report. Make copies for companies that ask for your identity theft report.
6. Get back in touch with the credit reporting agencies (Experian, TransUnion, and Equifax) in order to get the thief’s activity removed from your credit report. Mail your identity theft report (steps 4 and 5) to the fraud department of each agency, along with a letter like this and any supporting documents you have to prove the charges and accounts are not yours.

These steps will get you well on your way to cleaning up your name and credit score. Be aware that if your bank card was used fraudulently you may be liable for up to $50 of the thief’s charges if you report it within two days, but that number jumps to $500 between three and 60 days, and there may be no limit to what you have to pay after 60 days. Act immediately if you suspect someone has your bank ATM card, or card numbers.

Here are some helpful resources:

http://www.ftc.gov/bcp/edu/microsites/idtheft/consumers/index.html

http://www.ssa.gov/pubs/10064.html#using (if your SSN was stolen)

Recession or no recession, impulse purchases are the bane of the financially frugal, especially when sleigh bells start jingling.

Impulse purchases represent what you want, while your shopping list or your budget represents what you need. Even when you budget your groceries for just a few items, extras manage to sneak into the cart.

To get avoid impulse-shopping, you must trick yourself. Here are 10 easy tactics:

1. The 10-minute rule – One of many great family budgeting tools. When you feel the urge to buy something that you weren’t intending to buy, think about it for 10 minutes before placing it in your shopping cart – if you don’t have 10 minutes to spare, put the item back.
2. The limit – Set an amount you will allow for an impulse purchase – whether it is $10 or $50 – and don’t even consider something above that limit.
3. The list – Keep a small note card in your purse or wallet. When you find an item that you want, but haven’t budgeted for, write it down. Now, wait 30 days. If it is still available and you have budgeted for it at that time, treat yourself. They key here is to save for goals, a method of debt management, removing the thrill of buying something on the spot. You only get one item on your list at a time.
4. Sales – Only buy a sale item if you would have paid the full price. If not, it’s not really a good deal.
5. Leave the plastic at home – If you are limited to just enough cash to get you through your budgeted shopping list, you won’t go overboard.
6. Don’t shop for the sake of shopping – How often do you go shopping “just to look” and end up buying something? You know yourself, so avoid those “danger” places altogether (mine is Target).
7. Shop in a bad mood – I find that I buy less when I’m not feeling tip-top. When I feel and look great, I want to celebrate by showering myself with purchases. Plus, I’ll think that everything I try on looks fabulous! My advice: shop frumpy and grumpy.
8. Get offline – Unsubscribe from mailing lists and don’t keep your credit-card information saved on retail sites. This will make purchasing a chore. Again, it’s all about taking the ease and thrill out of impulse buying.
9. Inspire yourself – Use something visual to remind you not to impulse-spend. For example, put a sticky note with your savings goal or a warning (“Danger: Do Not Use!”) on your credit or debit cards. Seeing that note every time you open your wallet will help you respect the budget.
10. Wear uncomfortable footwear when shopping – If shopping is physically painful, you will just want to get in and get out ; no time for impulse-spending.

The holidays are when most people rack up debt they’ll be paying off the rest of the year. Nobody wants to start the New Year with credit-card payments looming – avoiding impulse spending is just one way to survive the holidays, debt free.

Remember, the holidays will still be full of cheer if you spend less money than last year.

Did you know Facebook, cell phones and new operating systems could all be used to steal your personal information?

Identity thieves are increasingly creative as changing technology allows them new tools to pilfer; but with a little awareness and some creativity of your own you can keep your private information out of sticky fingers.

New ID theft tactics

TMI on social networking sites Did you know that information posted on fan-sites helped a man steal Will Smith’s identity back in 2005? The sites had seemingly innocuous tidbits like his legal name and date of birth.

What you can do Learn from Big Willie: tidbits like nicknames and pets’ names (if you use them as part of your passwords), addresses, phone numbers and your date-of-birth shouldn’t be public on your Facebook or Myspace page. It’ll be hard going a whole birthday without practical strangers wishing you a good one, but it’s a small price to pay to reduce your risk of ID theft.

Zero Day attacks Commonly written “0-day,” these babies are hackers’ ways of showing the big software companies how much more awesome they are, even without girlfriends. What happens is new software (like an operating system) falls into to hands of a hacker with something to prove, and he or she finds and exploits vulnerabilities to wreak havoc— and sometimes steal information from users’ files. Older Web browsers also occasionally fall prey to 0-day type attacks.

What you can do Keeping your Web browser (Internet Explorer, Firefox, etc.) updated is helpful, as some of the browser-based attacks are launched in countries like China, where the newest versions are not common. It is also best to wait a few months to purchase a recently released operating system, such as the new Windows 7—which hasn’t had any reported 0-day attacks as of this writing. Why wait? Because when an attack reveals a weak spot, software engineers develop a patch to fix it, giving you a stronger product.

Cell phone camera snooping Those hi-def little cameras aren’t only handy for taking pouty profile pictures (more on Facebook later). Some identity thieves are using them to record credit card numbers and pin-pad action at restaurants and stores.

What you can do Get in the habit of leaving your card upside-down on the table when you’re waiting for the waiter to pick it up. At stores keep the numbers concealed as much as possible while you swipe, and do a quick glance around or cover the PIN pad while entering your PIN number.

Older ID theft tactics

Dumpster diving Tried and true, this method is still an effective way for thieves to find your private info. Why? Because many people have a mountain of documents and letters ready for shredding, but they never buy or use a shredder. Eventually it gets thrown in the garbage intact.

What you can do Use a shredder! You can find a crosscutter online for as little as $35. Or use my husband’s guy-friendly alternative: take out all the plastic cards and incinerate the paper on the grill. What needs to be destroyed? Any documents with your SSN or PIN numbers, account numbers, credit card offers, billing and account statements and ATM receipts.

Intercepting your mail/opening new accounts If someone intercepts a “pre-approved” credit offer or a paycheck from your mailbox, it’s fairly easy for them to follow through and accept the credit offer (often changing the address so you won’t receive statements) or cash the check.

What you can do Opt out of pre-approved offers. You can do this here or by calling 888-5OPTOUT. If they never get in your mail, they can’t be picked up by mail thieves. Freezing your credit score is also smart because even if someone has your SSN they won’t be able to obtain credit from most lenders. Check out this article to see if a security freeze is right for you.

You can cut more mail-theft risks by asking your employer to pay you through direct-deposit, so your checks never get “lost” in the mail.

Ten million Americans can’t be wrong (the number of US ID theft victims in 2008). Identity theft is big business; but with a little knowledge and caution it’s easy to keep your information safe. Shred away, my friend.

All the participants – mostly members of his extended family – would get together for a celebratory dinner.

During the evening, everyone would give their kuri contribution to the oldest brother, and a name would be drawn from all the contributors.

The winner of the draw received all the money contributed that week – they could pay off an interest-bearing loan, invest in their fledgling business, celebrate a wedding, or help pay their children’s school fees.

Then the next month it would happen all over again. Previous winners were removed from the drawing so everyone was guaranteed a share of the money at least once. And the whole group could make future plans, knowing a larger sum of money was headed their way in just a few months.

Groups like this exist all over the world. In Africa and the Caribbean they’re often called ’susu funds’. In spanish speaking communities they might be known as ’sociedads’. In other parts of India, they can be called ‘chits’. These groups, which are collectively described as “Rotating Savings and Credit Associations” (ROSCAS), have a centuries-long history in Kerala and elsewhere. Women in the world’s poorest households use this strategy by each contributing a handful of rice from the week’s allotment, which can be pooled and sold to create a much-needed source of cash money.

For communities without dependable banks, it makes sense for everyone to pool and quickly use large amounts of savings, rather risk having money stolen from home. Such clubs also continue to form and function in ‘global North’ countries where people have access to interest-bearing savings accounts and bank loans.

Kuris, susus and other ROSCAs don’t pay out interest, and in some groups it’s expected that the organizer will take a small cut of the total pool in return for her time. But what ROSCAs offer instead of interest is peer pressure to keep contributing and saving on a regular basis, in order to keep up with your obligation to the group and avoid having to explain to your friends why you can’t give your share.

This kind of peer pressure and obligation to keep up your good name is called social capital, and it’s what makes ROSCAs successful. By making sure you don’t miss a payment, it’s possible for you to come out ahead of saving in a traditional savings account. How? Well, if you put $200 in a savings account each month for a year, you’d earn about $22 in interest over the year, leaving you with $2422. But if you miss even one monthly contribution, you’ll be left with $2220 at most (the exact amount depends on which month you miss).

On the other hand, you won’t earn any interest from the ROSCA but your family and friends will be there to help and hassle you, keeping you accountable to make the payment. So you’re likely to contribute – and receive – the entire $2400.

It’s up to you to decide whether you can stay accountable to yourself to make regular deposits to a traditional bank, earning interest all the while, or if you’d benefit from the support and social experience a ROSCA can provide.

If you decide to participate in a ROSCA, check out the excellent tips in this article on Susus from Black Voices: And be aware that some people can claim they’re running a ROSCA but really be setting up a scam – it’s always best to participate in a group with people you know and trust.