5 things i learned as a bill collector
Growing up, I can distinctly remember my mother teaching me and my sisters about the importance of saving money. Like most children, money burned a hole in my pocket. Sure, I could brag that I opened my first savings account before I was 10, but it was rarely full.
When I got older, I wanted to be better with my money. However, my hatred for mathematics and love of shopping didn’t exactly help… Numbers and I have never been the best of friends. Yet one day I somehow found myself in a little cubicle at the tender age of 20 crunching numbers for an auto finance company.
School loan debt will do things to you. Trust me.
But while I was there, I began to take take more interest in the financial world as a whole. I was still living with my parents as a bill collector, so I didn’t truly understand the concept of money. Being sheltered, I was inexperienced with the concept of financial struggle. That is, until I started having to be the one to push for money from others. I thought I would hear textbook excuses from my customers. Instead, I learned about a myriad of real life problems I didn’t know existed.
Fast forward years later and I couldn’t be happier that I had that position and gained the experience I did. Learning about the financial world helped me to get my own finances in check; especially bill paying.
For those who are looking to understand their finances better, here are the top 5 lessons I took away from being a bill collector.
Number 1: Interest is no joke
Remember watching School House Rock and learning about money and financial success? Yeah, those cute, catchy songs barely scratch the surface of real life.
The company I worked for handled simple interest loans (the definition would be a post for another day). To see how interest accrued on my customers accounts was entertaining while simultaneously concerning. I can remember times some of my customers were so far behind, all their monthly payment was paying was interest; not the principal!
How much interest is collected depends on a number of factors like the initial amount of the item, the interest rate, whether or not you can make your payments on time and so on. Many times, learning how to play the game before getting started can help ease these factors. On the other hand, not knowing what you’re getting into can come back to hurt your credit. You might even get your items repossessed…
Don’t think that because the interest amount is small or your monthly payment is easy means you’re in the clear. Make sure you know how your loan works.
Number 2: Pay more than your standard payment.
Remember that interest I was talking about? Doing this step will help decrease it over time.
Again, my forte is in simple interest loans, so this post’s views might be a bit skewed.
However, in my experience, giving more than what is required can help you pay the loan faster and save money. Paying extra each month helps lower the amount of interest you pay over time. In other words, you pay less of what the bank wants (interest) and more of what you actually purchased (principal).
You might be wondering how much more a month you should pay, and the answer is anything you can afford. While I was a bill collector, I started paying off my school loans this way. While the company was asking for about $160/mo, I was making enough money to pay $200 biweekly. It didn’t take long for me to pay off all the interest I owed and having my payments pay strictly principal. Not only that, I was over a year ahead on payments in a short amount of time. The pride that came with that was unfathomable, and I’m sure you’ll feel the same.
Number 3: Know where your payments are going.
One of my most memorable calls while working as a bill collector came from a lady who started off the conversation screaming. She ranted on for a solid 5 minutes about how she had paid two month’s payments and was somehow still due that month.
It took me a minute to realize what had happened and I was able to explain to her where her money went:
Because she had paid two months’ worth at the same time, the second portion went straight toward the principal instead of the next month as she had hoped. I was able to tell her what happened and advise her to either call ahead next time or wait until she was closer to her due date.
I tell this story to say that it’s so important that you know where every payment is going. Even if you’re late, that interest that’s been accumulating will be paid off before your payments start hitting the principal. (As my mom used to say, “The bank gon’ get theirs.”) Don’t be afraid to call in and ask for information on how much of your payment is going toward the interest. If your bill collector is anything like me and my previous team, we appreciate the fact that you actually care about your funds.
Number 4: Know what you’re signing up for.
One of the most challenging aspects of my job wasn’t trying to collect payment for my customers’ loans. On the contrary; it was the complete ignorance of so many of my customers. I remember many of my calls lasting hours longer than they should simply because they didn’t read their contract before signing their name.
I don’t care how long it takes or how boring it seems: reading through the entire contract is worth it when you think about potential future consequences. The fine print is fine for a reason, friend. How many of you have actually read the Terms and Conditions? How many of you sign your name away without thinking twice about what you’re legally agreeing to?
And if there’s something you don’t understand, ask about it! Don’t be afraid to stand firm. If you’re about to sign your name on a legal contract, you have every right to understand what’s being said in it.
Number 5: Know what you can actually afford.
There’s a saying my mother used to tell me and my sisters when we were young:
If you have $50 sitting in the bank, you don’t have $40 to spend. Baby, if you have $50 sitting in the bank, you don’t even have $30 to spend. If you’re sitting with $50 in your bank account, you probably have $5 to spend.My Mama
There’s truth in her words that I wish more people had gotten the opportunity to learn. Many times I would contact people who thought they could afford their payments without taking every day life into consideration. The roof caved in and the sink fell through. During your vacation, the pool system exploded. The A.C. went out. Your boyfriend’s dog passed away. The doctor confirms that lump you were worried about is indeed cancer.
Life happens. Be prepared for it.
Just because you make X amount of money doesn’t mean you can afford a car that costs 3 months worth your paycheck. I can still hear my mom saying to us: “A $20k car gets you to all the same places a $70k car does.”
And she’s right.
My most memorable customers in this category were celebrities and workers in oil fields. While the pay is great, it was also unstable. Because of this, it was customary to have these customers suddenly unable to make a payment for 3 months at a time. Take the advice of my mother: spending more money doesn’t mean that it will work any better.
I hope the lessons in the post helps you with your own financial decisions. The only reason I left that job was because I moved, but there were so many lessons to have been learned.