eMoneyPool Blog
The Aranda Tanda
TANDA PAYMENT SCHEDULE
Ten Mexican American women from Santa Ana, California make jewelry, straw hats and blankets for sale at the swap meets in Southern California. They are all sisters and cousins in the Aranada family who have painstakingly developed small craft businesses to support themselves in a culture that has marginalized them. They are loving mothers and aunts living in a society that has always oppressed and exploited their people.
They have survived and prospered, however, by developing social support systems to help them rise above their implanted immigrant status and lack of social capital. One of these systems they call the Tanda or Cundina. The Tanda is a form of rotating credit association that is deeply rooted in the Mexican and Latin American culture and has evolved into a common practice within Mexican-American and Latino-American enclaves in southern California.
A Tanda (rotating credit association) is formed by a core of participants who agree to make regular contributions to a fund, which is given in whole, to each contributor in rotation. “The tanda is our trust bank,” Rosalba Aranada says. “Without trust that everyone in the tanda will make their payments, the tanda would collapse.”
The Aranadas have developed a system of repeating tandas (one opening as another closes) that the sisters and cousins use as a small business bank. Periodically, each participant needs to replenish her raw materials in order to produce more hats or jewelry or blankets. It is critically important for their ongoing business that they time their savings to their raw material needs. The money pool insures that every participant will save enough money to buy raw materials when necessary. “We have been doing this for so long,” Rosalba’s sister, Carmine, adds, “that we can even set up the rotation to match each member’s materials needs. Even if we could get loans from traditional banks, we could not afford to pay the interest. Our businesses are only profitable because we are the labor. The tanda is perfect for us. We contribute a little of our cash every week and get the lump sum we need to buy materials exactly when we need it.”
“Every ten weeks a different relative is appointed organizer, so that no one is always burdened with collecting and distributing the money,” the elder sister Carla said. “Our family has been operating our business this way for two generations. With the help of the family, everyone has the time and the money to produce their goods.”
“I’m addicted to the tanda,” Rosaria said. “I admit it. I would feel very nervous if I was not putting a little money in the tanda every week. It makes me feel safe.”
The Aranada family has refined the tanda (money pool) to function as efficiently as a commercial business bank. Not everyone is in exactly the same circumstances as the Aranadas, but their tanda demonstrates the sound financial and social principles of a money pool.
TRUST – Each member supports the others, not only by contributing money to the pool, but also by trusting the other members to contribute as well. Being trusted has an even more powerful positive effect on the members than trusting. “I know that my sisters trust me to make my payments. It makes me feel good about myself,” Carlotta says.
MUTUAL SUPPORT – By saving together, the members are more likely to save, rather than spend, simply because the other members are watching. Peer pressure can be a very powerful motivator to do something you might not do in private. Saving-up alone allows the saver to ‘cheat’ along the way. Solo savers rarely reach their goal.
TIMING - Saving together creates a pool of money that enables each member to time her needs to her position in the rotation. “When I need the stones and the silver,” Rosaria says, “the money is always there.”
The Mexican American community in southern California relies on the tanda as an essential social support system. “Not only is our tanda a financial support system,” says Carlotta, “but it seals our family more tightly together. We all feel trusted and helpful at the same time.”