Javier Vergara, Co-Founder of FinKratt: "We want people to not live in financial vulnerability"

A Chilean who arrived in Estonia 7 years ago, tells Entreprenerd how the idea of creating FinKratt arose, to help people stop living under the paycheck-to-paycheck concept.

How does a Chilean end up in Estonia to “make an impact” on society? Well, this is the story of Javier Vergara, Co-Founder of FinKratt, a platform that aims to help people organize their personal finances and avoid living paycheck-to-paycheck .

And of course, because these types of situations are not only experienced in Latin America, where a person’s salary is entirely spent on paying off debts, but also in Europe. Vergara explains that several studies from the European Union indicate that around 50% of people living on the old continent live paycheck-to-paycheck.

With this analysis, Javier Vergara, along with Kaspar Taumann, decided to create FinKratt, – a name taken from Estonian mythology: the Kratt, a creature that came to life with the purpose of accumulating wealth for its creator– to help, initially, people living in Estonia to review and organize their personal finances, to achieve the desired savings that kickstart a cycle of well-being.

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A universal headache: paycheck-to-paycheck

“Today, people in Estonia live from month to month. They are not putting enough money into pensions and obviously are not maximizing their money. So, there starts the hypothesis of FinKratt, how can we help these people?” explains Javier Vergara in an interview from Tallinn, Estonia with Entreprenerd.

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This is how FinKratt is conceived as a Financial Roadmap, “currently, it is basically an automated report that you can receive about your finances with steps to follow to improve your current financial situation,” explains Vergara.

The Chilean entrepreneur maintains that beyond helping or guiding people so that they can live better with the salary they receive, what they seek with FinKratt is for their solution to effectively “have an impact on society”.

“We want the needle to move. We want people not to live in financial vulnerability. Because in many cases, there is no reason why. Many of these people do not earn a salary that does not allow them to do anything. They do not live in precarious conditions. Maybe it’s harder in Chile, yes, but here it’s not like that,” he emphasizes.

This is because, as he argues, for years there have been fintech companies specialized in financial education, however, people still live “on the edge.”

HOW DO YOU PAY OFF YOUR DEBTS? THE TWO METHODS YOU SHOULD CONSIDER

“One of the things that interests us the most is helping those people who are in debt. So, we want to know what those debts are and be able to help people pay them off, because there are different ways to pay off debts,” explains the CEO of FinKratt.

“The other day I was talking to a girl who explained to me how she paid off her debts. I was impressed. She had quite a few debts. And she told me that she paid her debts relative to which one she had requested first, the oldest debt. And I told her, ‘well, I understand why you do it, but it doesn’t make any sense (...) you should pay off the debt with the highest interest rate first, or lastly, if you don’t want to do it that way, why not pay off the largest debt first to the smallest debt?'” explains Vergara.

“So, there are different methods to do it, basically the two methods are: the snowball method, which goes from the largest debt to the smallest – which is what I was telling her -; and the other one is the avalanche methodwhich is from the debt with the highest interest rate to the one with the lowest interest rate. But that thing about the oldest debt sounded kind of strange to me, I told her it wasn’t the best,” Vergara states.

Vergara emphasizes something important in order to make a difference with other fintech companies, “Here we are not saying that you should start investing in cryptocurrencies or investing, it’s just that you put basic order, that you learn the ABC of your finances and that’s it. And that’s all.”

“If we taught people the ABC of finances, they wouldn’t fight over money and they would have the basic tools for the ‘safety net’. So, we want to set a trend, we want to help as many people as possible, and we are working towards that,” he emphasizes.

WHAT’S NEXT FOR FINKRATT

While at this moment, the platform is in prototype mode, they expect to finish building an MVP in the coming weeks, “we want to do the best we can, release the best product we can to the market, a product that is not only a money-making product, of course, that’s important, but also a product that has some impact, as I said, that is really useful.”

FinKratt is available in both English and Estonian, however, anyone can try the platform.

“Chileans of the world or other Latinos of the world, I invite you to go to Finkratt.com where you will simply see a button there that will say, ‘Try Our Proof of Concept’, you click on it and it will immediately take you to our prototype,” he explains.