Dollars In The Mail

Gary is very poor, and he’d like his dollar back.   It’s an ingenious plan, and Gary has been making up to $90 a month by simply asking for his money back.

Gary’s plan started in 2003 when he had some medical problems and things were actually quite tight.  He’s by no means a rich man today, but Gary still writes his name and address on the dollars he spends.

It’s an interesting plan:  why would a person actually send a dollar to somebody they don’t know?  Gary had used the money to purchase something, and then the dollar moved through the system, whether it made it back to a bank or just got passed between customers as change, eventually it ends up in the pocket of somebody who received it during a purchase, as part of their change.

There are a lot of charities and organizations that rely on this: to one person, the value of the single piece of currency isn’t worth much, so they’re willing to part with it.  Cashiers probably ask you all the time if you want to donate a buck to some medical charity or homeless shelter, that they’ll just add it onto your tab.  Or, you can ’round up’ your purchase to the nearest dollar, with the difference going to charity.  They are banking on the fact that a small amount might not seem like much to part with, and you’ll be likely to agree to donating a few cents.

Those little bits add up: individuals may not see value, but when enough individuals give up their dollar or less it begins to total into a tidy sum.   By being a small amount, it’s easier to get five people to donate a dollar than to get one person to donate five dollars, at least that’s the strategy.  In the end, the contributions of many increase in value, like what shows up in Gary’s mailbox each month.  It may not be a tax-deductible charity, but for the people who mail their money back the loss of that dollar might not mean much, but the legally-blind Gary might reap a greater value en masse in what is returned by relying on the perceived value of one bit of currency.

The Children’s Bank

They always say you need to start kids young when it comes to financial learning, and an unusual group in India is taking that to heart.  The Children’s Development Khazana is a child-run bank focused on helping street children build financial security through microtransactions. The project has been around since 2008, but only in the past few years the project has seen huge increases in membership, and has expanded into other south Asia countries as well.

The system works as a credit union of sorts, with membership only allowed for kids who make their money ethically, not through begging, drugs, or other illegal activities.   The bank offers passbook savings accounts, in the traditional “write by hand” method, for their members.  The bank, as a whole, manages a single savings account with a financial institution, which earns interest that is distributed to accountholders.   The ‘peer review’ method of operation seems to be successful:  rather than being told by adults how to handle their money, the bankers and tellers are mostly children, and are accountholders as well, so negotiations are handled between people of similar age and stakes in the bank.

Also, like most microfinance systems, the CDK also does microlending, requiring a defined business plan of course, making them as functional as a full-service banking institution for the poor and homeless children of India.   Hopefully the goals of the Children’s Development Khazana will come to pass, helping elevate the children out of poverty, and put them on a track of financial independence by teaching them how to properly manage money at such a young age.  Similar programs are also thriving in a few places around the U.S., largely with educational goals rather than povery-reduction, making the stakes not nearly as high.


Being Poor Messes Up Your Head

Cracked, for being the website of poop jokes and making fun of the low-hanging fruit called “reality TV”, has a few real writers.  Writer “John Cheese” (if that really is his name) seems to have followed the normal path of being a writer and have been utterly destitute at some point in his life.  For the rest of our benefit, M. Cheese has compiled two lists: The Bad Habits of Being Poor and Things People Don’t Tell You About Being Poor.   Cheese points out that most of the 10 things on his list are self-fulfilling: being poor keeps you poor.    Who cares how much gold you buy, or how well invested you are: the bad habits and treacherous slope out of poverty can demolish the best-laid financial plans.  Just recently, I’ve been getting back on track after losing a job five years ago, and I see these in my behavior.

Don’t worry, though: rather than just laughing at ‘oh it’s so true’ moments in Cheese’s articles, what I’ve been doing is breaking those cycles.  It doesn’t take a lot of money and willpower to stop behaving poor.  That’s not to say that overstretching finances is the solution – it’s more harm than good – but recognizing that constant upkeep and responsible behaviors is what brings stability.   Most get-rich-quick people act like it’s simple to say, “stop making bad decisions!”   Cheese took the time to lay out what those decisions are, so you can take those steps to financial success, because, as Cheese also wants you to know, money can buy just a bit of happiness.