Money, Money, Money

I am quite money conscious. I like to know how much I have, how much things cost, and how much I spend. At home, I save all my receipts and file and record them and I keep track of my cash versus credit spending. And, if I lose a receipt, I can usually go online and check my records to double-check my purchases. Here in the DR, I am able to keep track of my purchases only because I’m unusually motivated and perfectionist about recoding every peso on the notepad I carry with me everywhere. Personally, I enjoy my experiences and purchases most fully when I am aware of all the financial details. When I don’t have them, I worry or feel like I’m living in a minor state of denial.

But this requires a conscientious effort on my part because this is a cash/receipt free (go green?) economy, so I must record immediately. Also, most things don’t cost very much and so it can be tempting to write off these purchases and taxi rides as negligible. But when everything costs a little bit, those negligible costs quickly add up and pretty soon you have no idea where your money has gone—se fue el dinero. Now, this is a tad frustrating for me, but I imagine that for many (those who travel and live here) it is an obstacle this is not overcome—the activation energy is just too high. Also, everyone owes everybody else 50 pesos here and 50 pesos there. The philosophy seems to be that it will all come out even in the wash, which is quite contrary to my monetary philosophy—I think one person consistently ends up chipping in more.

Amidst this relaxed approach to money, I can imagine that starting to save and financially plan for the future must be like trying to change the rhythm in which one’s heart beats. However, this change is crucial with respect to microfinance. When you receive a loan of $100, every peso counts…and so you need to meticulously manage and budget every peso. One of the things Esperanza emphasizes is that all of the money from the loan must go into the business and that it is best to use your profits either for the family or to further expand your business. This might seem obvious, but I’ve visited innumerable houses where there is a dirt floor, a leaky roof, and satellite cable. There is a difference between needs and wants and while it’s certainly ok to have wants and to fulfill some of them, there must be a sense of prioritization and proportions. In econ, we talk a good deal about consumption smoothing…that when you have money, you don’t spend it all; and when you don’t have as much money, you borrow a bit. Thus, rather than spending in high peaks and low troughs, your quality and stability of life is more constant. The tendency here, however, seems to be to spend when you have money; the idea of being forward-looking consuming doesn’t seem to be programmed into families and communities. Esperanza aims to help associates understand the concept of consumption smoothing and prioritization via their business loans and, ideally, their children can grow up with different philosophy instilled in their hearts and minds.

Finally, one major difference between micro and regular finance is the use of cash. In the standard banking system, we use checks and credit cards and move numbers from one account to the other. Microfinance aims to serve those who the regular system does not and it’s all done in cold, hard cash. This means the loan officers must make daily trips to a bank that is twenty minutes away because you don’t want to be carrying around thousands of pesos. This effort and the visits that loan officers personally make to each community we serve represent some of the costs associated with the reality of microfinance.