November 2000 Newsletter

25 Days 'til PIF - Taking a Retail Approach to Collecting

It's a wonderful time of the year! Especially if the professional debt collector has prepared for the holidays. Let's take a moment to reflect on the past few weeks. As Halloween approaches, the leaves are turning and the air is turning crisp and chilly. Collectors are just recovering from the "Back to School" woes of consumers as the holidays are approaching. So how can the collector be motivated to collect payment in full? By taking the "retail approach."

What is the "retail approach?" Stop and think a minute. What do you begin to see in retail stores at the beginning of

October? Halloween, Thanksgiving and Christmas items galoreóall at the same time. A decade ago, you would have seen Halloween and fall items, but not Thanksgiving and Christmas items. Why the change?

Retailers realize that today's consumers are more debt burdened than ever before. American Collectors Association statistics show that since 1997 consumer debt has risen 6.7% to 1.308 trillion dollars as of the end of 1998. At one point the urgency of timing wasn't so great because consumers could resort to credit cards for their seasonal shopping. However, by the end of 1998 consumers owed approximately 560 billion dollars in credit card debt. The numbers seem to be escalating instead of declining.

Timing of when the discretionary portion of a consumer's paycheck is available to the collector is critical to collection optimum dollars for our clients. Just as retailers advertise the number of shopping days left before a particular holiday, collectors must be aware of the calendar's role in developing the best possible payment arrangement.

Take a look at the calendar in a selling mode. Identify the number of workdays before the approaching holiday and notice when your consumers will be paid (Fridays, 1st and the 15th, 3rd for Social Security recipients, last day of the month, etc.). Remember that if the payday falls on a weekend such as the 15th, the consumer will typically be paid the Friday before. You must arrange your calls and most importantly, your promises, accordingly.

Just as a retailer designs sales opportunities according to this plan, so must the collector by using the calendar. A window of opportunity will emerge to the goal-oriented collector, and success will be found no matter what time of the year is eminent. Strong recovery percentages will ensure record-breaking results!

Certified Mail Winter 1999

When to Send an Account to Collection

• Payment stops for no valid reason.
• You lose contact with the debtor.
• The debtor repeatedly gives unfounded complaints and doesn't pay.
• The debtor moves away without notice.
• There are frequent changes of address.
• Debtor denies he has any responsibility to pay.
• Delinquency is due to marital problems.
• No payment schedule is in place, or not payment in full is received by 90 days.
• Pre-collection letters sent from a collection agency do not work.

Tips to Teach Your Children About Money

While many children know that money doesn't grow on trees, they may think it comes out of a wall ó at an ATM.
The American Bankers Association Education Foundation fosters understanding of money and personal finance and
believes that good money-management habits, like savings, bring lifelong benefits. We offer these tips for parents to
cultivate the savings habit in their children:

1. Give them an allowance with the understanding that part of it goes into their own savings ó a first step towards learning to budget.

2. To make their savings visible and real, have them build up savings in a piggy bank. Then help them open their own bank savings account, and have them make deposits each month.

3. Use their monthly statements, or the record in their savings passbooks, to show them how their money is multiplying.

4. For every dollar your children earn, encourage them to spend 25 cents on what they want or need now, put 25 cents away for a bigger-item purchase later and save or invest the rest. (That's a 50 percent savings rate!)

5. Make savings and investing fun. Give your children play money to "invest" in stocks they can track in local newspapers. If the stocks go up, pay them in more play money; if the stocks decline, they pay you.

6. Best of all, show your children how to save by example. Adults can save by having a portion of their paycheck directly deposited into a savings account, IRA 401(k) account or other savings options.

American Bankers Association
Consumer Connection website

High School Seniors Flunking Personal Finance, Survey Shows

Many high school seniors' knowledge about money management, investing and saving has gone from bad to worse, according to a recent national survey.

In a multiple-choice examination given in February and March 2000, 723 high school seniors correctly answered only 52 percent of the 30 questions about personal finance and economics, the Los Angeles Times reported in April. The seniors' scores equal failing grades, based on the typical high school grading scale. In comparison, 1,509 seniors took a similar exam three years ago and correctly answered 57 percent of questions.

Stephen Cecchetti, economics professor at Ohio State University, and other experts believe that the low scores could be improved if schools focused more on teaching students early-on about personal finance. They also suggest integrating some of the basic concepts of personal finance into mathematics coursework.

"If people are well informed, they can take advantage of the choices; if not, they become vulnerable," said Lewis

Mandell, dean of the University of Buffalo's School of Management.

According to the survey, only 21 percent of respondents knew that they might have to pay income taxes on savings account interest. Three years ago, 32 percent of seniors answered this question correctly, the Times reported. In addition, 46 percent knew that retirement income paid by a company is called a pension; 30 percent thought it was called Social Security. According to the 1997 survey results, about 64 percent of respondents answered this question correctly.

Other survey results include:

• 63 percent of surveyed seniors said that they would have no liability if their credit card was stolen and a thief rang up $1,000 of charges (liability is limited to $50 after the card issuer is notified of the theft.) Only 15 percent knew that they would be responsible for this $50 fee.
• 46 percent mistakenly thought that a bank certificate of deposit is not protected by the government, while 21 percent thought U.S. savings and Treasury bonds are unprotected.

The surveys were sponsored by the Jump$tart Coalition for Personal Financial Literacy, a nonprofit group that wants students to hone skills to be financially competent. For more information about the coalition, got to www.jumpstartcoalition.org/welcome.html.

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