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Every day there are families who struggle to make ends meet. On paper, many do earn enough to pay their bills but they fall behind because of timing, like when the rent is due on the 10th and payday isn't until the 15th. There's a research project called U.S. Financial Diaries that's been tracking several hundred of these families. And we're going to hear now about one solution that they found people turning to. Marianne McCune of Planet Money and WNYC reports on informal banking.

MARIANNE MCCUNE, BYLINE: How informal? Meet Miguelo Rada. He just spent 32 years in prison. He lives in a halfway house in West Harlem. He's on public assistance. He's also a banker.

MIGUELO RADA: One time a guy came to me and he said, look, I gotta do something over the weekend. I need $20.

MCCUNE: People ask him for help a lot because Miguelo Rada has a reputation for penny-pinching. The man just took a personal finance course at a local credit union called Neighborhood Trust. To manage his money, he says he just asks himself...

RADA: What do I need for this week? Do I need car fare? No, my metro card is still valid. So I'll put 10 away, and I'll keep 20.

MCCUNE: So if you need to travel to see your mom and you don't have money to get there, in Miguelo Rada's pocket is a tiny bank. He's actually helping people do something economists call consumption smoothing, basically figuring out ways to pay for regular needs even when income is erratic. A lot of people use credit cards or banks.

The people you're lending to, could they borrow from a credit card or a bank?

RADA: Some of their credit is so bad, you know, it would be virtually impossible.

MCCUNE: His version of a credit check?

(LAUGHTER)

RADA: I might ask somebody what's the problem? Is there a way out?

MCCUNE: His ledger?

RADA: I keep it up here in my head.

MCCUNE: He doesn't charge interest, and if somebody doesn't come back with his money, he says he doesn't bother them. But there are ramifications.

RADA: If you don't pay, it won't happen again.

MCCUNE: For people who need help saving, here's a more surprising bankish thing Rada does: He accepts deposits, like from his much less frugal brother.

RADA: I say you, yo, you want me to hold something for you? Yeah man, hold this hundred for me.

MCCUNE: The last time his brother came back for it...

RADA: I asked him what's going on? You know, what do you need this for? And he told me I gotta take care of this bill, I gotta do this here. And I went with that.

MCCUNE: And that is the kind of scenario that would make Tamara Bullock feel ill. She never borrows from family.

TAMARA BULLOCK: Because when you put family in, then they have the right to critique.

MCCUNE: Bullock is in her tiny office at a Harlem funeral home. She's a single mom, climbing her way out of a decade of debt. She has a different informal savings strategy. It's called a sou-sou, a savings group. And the last one she was part of is pretty typical: 13 colleagues and friends promised to pitch in $100 every two weeks for a total of 1,300 each time.

Every two weeks, somebody in the group gets the pot. Bullock says she loves sou sous because they force you to save.

BULLOCK: You have to. Like, there's no ifs, ands or buts because other people are depending on you to be accountable.

MCCUNE: Two weeks ago, when her turn came to get the $1,300, she used it to pay a lump sum to a collection agency, which actually saved her money in the long run. She does have a savings account, too. But the sou sou? As someone who loves shopping a little too much...

BULLOCK: I like that I can't access it.

MCCUNE: As for what to do with her next pay-out, in the office next door, 62-year old Patricia Hamilton says she wants to repeat an adventure they had together awhile back.

PATRICIA HAMILTON: She's gonna sky dive again. We're going to go swimming with sharks also. She's gonna sky dive again.

BULLOCK: I'm not sky diving again.

MCCUNE: Informal lending can be a great tool. But Rachel Schneider with the Center for Financial Services Innovation - that's one of the groups behind the Financial Diaries Project - she says there are some down sides.

RACHEL SCHNEIDER: A key issue is that with that form of lending, you don't necessarily build up credit history. And yet, the repayment behavior is just as good as if you had a credit card and your payments got reported to the credit bureau.

MCCUNE: Schneider's group and others are taking note. At least one bank is trying to make people's unofficial good credit with friends and family count on their official credit history. And there's a lot of unofficial good credit out there. Remember that friend of Miguelo Rada's, the guy who borrowed $20 for the weekend? He just needed to get to a job, where he got paid.

RADA: Monday morning he came to me and he says, here, thank you very much. I appreciate it. I needed it. I said no problem, man.

MCCUNE: Come back again. Marianne McCune, NPR News, New York.

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