I am forever discovering something new about the Philippines. Paluwagan was explained to me today. I thought at first it was like the old pyramid scheme but evidently not. I discovered my wife's mom runs one....
"Pooled money scheme (or locally termed as: “Paluwagan”)
Paluwagan is the local concept of mutual fund. But this “fund” doesn’t go directly to a broker. In Fact, this system has been so popular in the Philippines especially in the rural region. Informal settlers are also fond of this kind of practice because this is where they can get the fund to buy the appliances they wanted.
The concept of Paluwagan is to pool the participants money, by means of daily, weekly, or even monthly collections to be collected by a leader (sometimes called Aling or Manong). The participants will be having a “bunutan” (casting lots) to know who will receive the total pooled money. And believe me, this is a “fiesta” if one gets to be the first! Others would prefer to choose not to be the first and not to be the last, but rather somewhere in the middle.
There are other ways on how paluwagan system works. It’s up to the participants on how they should plan on what kind of rotation they will implement. But the bottom line is that they don’t have to hunt for a Bombay to borrow money because they can borrow the fund in the paluwagan. This is one advantage of being in this local practice."
Originally Posted by Terpe
we pay P500 every payday and then the first one on the list would get all the money..we're usually around 10 persons who do that so one would usually get P5000 every payday. 
